CRITICAL CHAIN

ELIYAHU GOLDRATt

AZAD RZ
EMINE TACI
MERVE ESRA AKKAN
SEVTAP SEVGL
ERIFE ZG

THE PURPOSE OF THE BOOK

To

change

Goldratt

educational

systems

to

better

accommodate the quickly changing world of business.

The book starts by pointing out the problems with how

time estimates are normally done on projects.

To provide a primer on the Theory of Constraints and an

example of its implementation in a steel mill.

To proceed to show how the Theory of Constraints can be

applied to schedule generation, resources constraints
and multiple projects.

KEY IDEAS

An information technology saying: "A project will run

out of time but will never run out of excuses.

Top management blames externalities, while project

participants more-honestly place direct blame on
internal politics and management.

The estimate is judged at an 80% confidence point.

That is, the estimator believes there is an 80% chance
that an activity will be completed within this time.

As a summary of book
The main story in the book is about an associate
professor named Rick Silver who is struggling to
make it in the academic world. young business
professor.
He and his Executive MBA class learn together,
using the Socratic method, as they discover and
apply radical new project management concepts.
The principal side characters are a young task
force charged with dramatically reducing a modem
manufacturers time-to-market cycle. He is a very
good teacher, but he wants tenure and is in need
of publications. His area is project management
and he wants the articles to make a difference in
this field. The fact is that the theories applied to
project management are not effective and projects
are running late at high expenses.

Think Tank:A group

or an institution
organized for
intensive research
and solving of
problems, especially
in the areas of
technology, social or
political strategy

Budget Overruns:
The amount by which
the actual cost of a
project exceeds its
budget. While this
does not necessarily
guarantee that the
project will fail, it does
make it more difficult
to succeed. This is also
called cost overrun or
budget overrun.

Time Overruns:
Time overruns occur
when projects or
tasks within a
project is not
completed by the
time the project plan
specifies. This can
occur when materials
to complete a project
are back ordered and
work cannot be
completed until the
materials arrive.

Bell Curved:"Bell
Curve" is the popular
name for Normal
Distribution (also
called Gaussian
distribution). It is
often called the bell
curve because the
graph of its
probability density
resembles a bell. It
can be used to
measure anything.

PERT and Gantt

techniques
PERT is a statistical

tool, used in project

management, that is
designed to analyze
and represent the
tasks involved in
completing a given
Project, especially the
time needed to
complete each task,
and to identify the
minimum time needed
to complete the total
Project.

Critical Path
is defined as
the longest
chain of
dependent
steps (longest
in time) and it
determines the
time it will take
to finish the
Project.Any
delay on the

Gantt Charts
unlike PERT
Diagrams, involve
decisions,the
decision of the
planner when to
start each
path.Somebody
of them chose the
late start for
picking the
vendors while the
other one has

THEORY OF
CONSTRAINTs( TOC )

At first,it was related

to production
scheduling. Then it
became a banner to
attack product cost
methods,then
marketing. Lately ,it
seems TOC is more
connected with methods
to remove friction
between people.

THEORY OF CONSTRAINTS( TOC )

TOC is a blend of three

different breakthroughs :
First one,as we all
suspected,is that TOC is
actually a new
management philosophy
like ,TQM,JIT,Reenginnering,the learning
organization.. Second
one;is the research
methods it introduces.
Third one, the one TOC is
known for the most,its
broad spectrum of robust
applications.

Identify the systems

constraints as
physical,like a
bottleneck,type of
resource that does not
have enough capacity to
meet the demand.In that
case, strengthening the
weakest link will mean to
help the bottleneck to
do more.There are two
different ways to
strenghten a bottleneck.
One is simply add more
capacity,by hiring more
people or buying more
machines

Triggering the

student
syndrome in
the resource
assigned to the
task - they have
more than
enough time to
do the task,
therefore they
start the task

The Evaporating Cloud

is suited to finding a
solution to conflict
between two parties
or two points of view.
The method requires
the participants to
find 'win-win'
solutions because it
emphasizes that both
parties are trying to
reach the same
ultimate goal.

W-W
When you win
and the other
person wins,
instead of one
winning and
the other
losing, then
everybody is
happy and the
relationship
gets stronger

BUFFERS

The identification and insertion of

buffers:

project buffer
feeding buffers
resource buffers

PROJECT BUFFER

It is inserted at the end of the

project network between the last
task and the completion date.

PROJECT BUFFER

Any delays on the longest chain

of dependant tasks will
consume some of the buffer but
will leave the completion date
unchanged and so protect the
project.

The project buffer is typically

recommended to be half the
size of the safety time taken
out, resulting in a project that

FEEDING BUFFERS

The safety time on the end of

the critical chain is called the
project buffer.

FEEDING BUFFERS

Delays on paths of tasks feeding into the

longest chain can impact the project by
delaying a subsequent task on the Critical
Chain.

To protect against this, feeding buffers are

inserted between the last task on a feeding
path and the Critical Chain. The feeding
buffer is typically recommended to be half
the size of the safety time taken out of the
feeding path.

RESOURCE BUFFERS

Resource buffers can be set alongside of the

Critical Chain to ensure that the appropriate
people and skills are available to work on the
Critical Chain tasks as soon as needed.

The safety time should be large enough to

insure the resource has at least a 50% chance
of finishing the specific tasks on time.This
safety time is called a resource buffer.

VENDOR MANAGEMENT

The abstractions of project

management are instantiated by
having portions of the project
supplied by other firms. That is,
the simple metrics of "minimize
cost," and "deliver by this date"
may be implicit for internal
teams, but they have to be
explicit for vendors, and there is
less opportunity for fine tuning,

VENDOR MANAGEMENT

The importance of schedule, and ways to

improve it, can be explored by negotiating
tradeoffs between it and cost.

What cost incentives for early

delivery will they respond to?

What cost penalties for late delivery

will they accept? More
importantly,what penalties should we
be seeking to imposeto capture our
own opportunity
costs
and
the big
Small delays
can
create
expenses
of a schedule
slip?
impacts
on profitability,
improvements in delivery schedule
will often be worth a premium. But
focus this effort where it matters in the critical path, and the critical