6The Thinking Processes have been utilized in numerous areas besides businesses, including areas such as personal situations (see Chapter 38), education (see Chapter 26), and prisons (see Chapter 27).

7The sessions are Operations, Finance and Measurements, Project Management and Engineering, Distribution and Supply Chain, Marketing, Achieving Buy-in and Sales, Managing People, and Strategy and Tactics.

8The red curve-green curve concept is discussed in detail in Session Eight Strategy and Tactics of the Goldratt Satellite Program.

9The S&T trees for each of the five environments (Make-to-Order (Reliable Rapid Response), Make-to-Availability (Consumer Goods), Projects, Retailer, Pay-per-Click) can be accessed and downloaded for viewing with the Harmony viewer at: http://www.goldrattresearchlabs.com/bin/Harmony_Viewer_ 0.9.13.5.exe 10Two of the series (Goldratt, 2008; 2009) have been completed to date.

1It should be noted that when a project is rescheduled because an activity is finished late, the start and finish of the remaining activities are pushed into the future, as is the project completion.

1The Project Management Institute was founded in 1969 and in the past 40 years has grown into the world's leading project management organization with nearly 500,000 members and credential holders in 180 + countries. http://www.pmi.org/AboutUs/Pages/default.aspx, accessed September 5, 2009.

2"The complexity class of decision problems that are intrinsically harder than those that can be solved by a nondeterministic Turing machine in polynomial time. When a decision version of a combinatorial optimization problem is proven to belong to the class of NP-complete problems, which includes well-known problems such as satisfiability, traveling salesman, the bin packing problem, etc., then the optimization version is NP-hard." (Algorithms and Theory of Computation Handbook, 1999, 1926.) That is, there is no way to identify an optimal solution that includes both a critical path and leveled resources. This fact, however, does not mean that a satisfactory solution cannot be found.

3If you are new to the field of project management, you might find it helpful to review the section in Chapter 2 on the "Development of a Project Network." That section discusses the use of concepts from the Theory of Constraints to surface potential obstacles to the successful completion of the project. Chapter 3 assumes that all the steps outlined in that section have been accomplished and all activities, including "assumed activities" have been identified.

4In traditional project management circles, these terms were developed after the introduction of CC buffers.

5These two terms, "path" and "chain," are used interchangeably.

6A matrix structure is one in which people report to more than one superior.

7Leveling of resources on a project is now a fairly common practice and such a schedule sometimes is referred to as a resource-constrained critical path schedule in traditional project management circles.

8Occasionally, a task consumes almost the full amount of task time allocated and the task time therefore should not be reduced (e.g. curing time, bake time, test time).

9The TOCICO Dictionary (Sullivan, et. al., 2007, 41) defines "resource buffer-A warning mechanism used in single project environments to ensure that resources working on a Critical Chain task are available when needed." ( TOCICO 2007, used by permission all rights reserved.) 10In terms of the TOC five-step process, acquiring additional resources (Step 7) corresponds to Step 4, "elevate."

11This method is a good rule of thumb or heuristic technique, when scheduling manually, but does not always identify the best Critical Chain.

12Because Resource 4 will proceed to Task F as soon as Task H is completed (following standard CC procedure), there is no need to be overly concerned with timely completion of the top path.

13Infrequently, a gap may occur on the Critical Chain due to the insertion of a feeding buffer that requires additional resource leveling. These gaps generally are ignored.

14In this simple example, both Task C and Task I are predecessors to Task J, so the choice of which one on which to focus is debatable. Thus, the situation described here is not typical and Resource 3 may elect to continue working on Task I until it is completed.

15CC Step 6 corresponds to Step 3, "subordinate," in the TOC 5-step process.

16In place of resource buffers, some organizations simply report upcoming CC tasks and path starts.

17CC software will find the best (shortest) schedule, but if scheduling is performed manually, a schedule that "works" is good enough.

18As noted in footnote 14, both Task I and Task C must be completed prior to the start of Task J and therefore a late completion on Task I might not trigger a move to Task C until Task I is finished.

19See Guideline XII in Chapter 2.

20This terminology is used in the TOCICO Dictionary and includes a reference to "drum resource" (Sullivan et al., 2007, 7).

21In the software industry, integration occurs where various new systems are aggregated and merged together or into older programs.

22Note that there may be multiple SRs, reducing required buffer sizes to decouple projects.

23Buffer recoveries occur in a similar manner when actual task duration requires less than its estimated (aggressive) duration.

24With available software, "fever charts" (Newbold, 2008, 112) track buffer consumption and automatically resize buffers throughout the life of a project. An example of such a chart is shown later in Fig. 3-11.

25For example, homes and businesses located outside of designated flood plains in Atlanta, GA suffered severe flooding in September 2009.

26There are few instances of budget amounts, once assigned, being returned to the organization.

27This general statement is not true for cost-plus contracts. With cost-plus contracts, the value of the project is actual costs incurred plus some margin, such as 20 percent of total costs. These contracts are becoming quite rare and typically involve research and development type projects where the project deliverable is so unique it is impossible to estimate the total cost to complete the project and achieve its objectives.

28Because estimation of both overhead costs and driver quantities is imperfect, the allocation rate used during a year (or whatever time until the rate is recomputed) most likely will be adjusted once actual costs and actual driver quantities are known. That means that overhead costs allocated to projects may be adjusted later, sometimes after a project has been completed.

29If there is uncertainty concerning the actual cost of materials, some amounts representing material cost variability may be added to a project's budget buffer, an account established for task duration variability.

30A budget buffer represents the budget associated with the safety time removed from individual tasks. The budget associated with the time placed in the project buffer is under the control of the PM while the budget amount associated with the time removed from individual tasks and not connected with the time placed in the project buffer is under the control of the PMO or similar body. However, the budget not under control of the PM can be accessed upon the PM's petition of the PMO.

31Recall that the buffer burn rate is "the rate is calculated as the ratio of the percent of penetration into the project buffer and the percent of completion of the Critical Chain. A buffer burn rate of 1.0 or less is good." Sullivan et al (2007, 6). ( TOCICO 2007, used by permission all rights reserved.) 32The Defense Contract Management Agency (2009) of the U. S. Department of Defense has been most active in establishing EVS implementation guidance and project progress metrics.

33For an extended approach to solidifying change, see Rob Newbold's Chapter 5, "Making Change Stick," in this volume.

34Similarly, Step 3 is the second layer and so forth until Step 6, which is the fifth layer of resistance.

1http://www.informs.org. (The Warner Robins Air Logistics Center [WRALC] of the U.S. Air Force won the prestigious Franz Edelman Award 2006 for "Streamlining Aircraft Repair and Overhaul at Warner Robins Air Logistics Center." Also known as the Super Bowl of Operations Research, it was awarded to WRALC for using Critical Chain to reduce the number of C-5 aircraft undergoing repair and overhaul in the depot from 12 to 7 in just 8 months. The replacement value for these aircraft is estimated at $2.37 billion.) 2www.tocico.org. (The Theory of Constraints International Certification Organization [TOCICO] recognized Boeing Integrated Defense Systems on June 7, 2009. Boeing was presented the North American Achievement Award for its demonstrated longevity in the successful use of Theory of Constraints (TOC) tools and significant contribution to the TOC community. This highly coveted award was handed to Mr. Charles Toups, Boeing Vice President.) 3Enterprise-level means the implementation was not restricted to a single project manager or a small project team, but involved multiple departments.

4Multitasking is shuttling between tasks without finishing either, and hurts the quality of work because people lose concentration.

5Buffers are unscheduled blocks of time.

6The TOCICO Dictionary (Sullivan et al., 2007, 67). defines buffer burn rate as "The rate at which the project buffer is being consumed in critical chain project management. The rate is calculated as the ratio of the percent of penetration into the project buffer and the percent of completion of the critical chain. A buffer burn rate of 1.0 or less is good. Usage: Some people calculate the burn rate of buffers other than the project buffer. When doing so, use the longest chain of work remaining which feeds into the buffer that is being analyzed. Illustration: If the project buffer is 40% penetrated and the critical chain is only 20% complete, the buffer burn rate is 40/20 = 2.0. The project manager has a warning that there is a problem, and if it continues, it will possibly jeopardize the project due date." ( TOCICO 2007, used by permission all rights reserved.) 7While managers are an obvious set of stakeholders, depending on the situation, buy-in of an organization's customers and key suppliers might also be needed.

8A computer-based learning program, available at www.toc-goldratt.com.

9An instructional video by Dr. Eli Goldratt, available at www.toc-goldratt.com.

10Process of ongoing improvement.

11Also known as the process for overcoming the five layers of resistance.

12Maintenance of low WIP is accomplished through Pipeline Planning and Control, which will be discussed later in Step 5.

13Unlike in high volume production, where the Drum-Buffer-Rope (DBR) solution of TOC applies and the drum is a specific resource, in projects the drum is typically a phase.

14A project plan is different from a work breakdown structure (WBS). A project plan is about identifying tasks and precedence relationships among those tasks, whereas a WBS is about subdividing the project into work packages. A task in a project plan can require multiple work packages and vice versa. A project plan is useful for establishing timelines, whereas a WBS might be useful for estimating the total effort.

15In repetitive environments, these project plans can be stored as templates for future reference.

16It is also known as the 50 percent buffer guideline because buffers are 50 percent of the sum of task times.

17Also known as the student syndrome; that is, postponing studies until the night before exams.

18www.realization.com/projectflow/lessons_learned.

19Sometimes, especially in small organizations, it is not possible to carve out pilots.

20CPI, Cost Performance Index = Budgeted Cost of Work Performed Actual Cost of Work Performed.

21SPI, Schedule Performance Index = Budgeted Cost of Work Performed Budgeted Cost of Work Scheduled.

1The Cycle of Results and CORE are trademarks of ProChain Solutions, Inc. These marks are used with permission.

2Also called the "relay racer" or "roadrunner" work ethic (Sullivan et al., 2007, 41).

3Jeannie Duck calls this "the change monster," saying that one needs great determination to see change efforts through to the point where the needed changes have become the standard way of doing things (Duck, 2001, Part 5).

4This includes several Fortune 200 companies across dozens of business units. Some results for Fortune 200 companies are described in Newbold (2008, 5). The logic is described in the following pages.

5There are many references on Current Reality Trees; see, for example, Scheinkopf (2000, Chapter 8).

6We have seen cases where pockets of Critical Chain use persist in large organizations. Typically, a few enthusiasts are able to derive enough benefits and win enough converts to offset the overall lack of momentum. This is a frustrating road to travel because the benefits are so clearly less than what is possible.

7See again Hobbs and Aubry (2006), discussed previously.

8Cialdini (1993, Chapter 3) notes that expressions of support make people more likely to actually give it later on.

9For more discussion of measurements, see Newbold (2008, Chapter 12).

10This is the standard Six Sigma improvement process, for which there are many references.

11See Covey (1989, 306).

12This TOC concept is mentioned in Sullivan et al. (2007, 30). Also, look under buy-in. A comparison of CORE with the Layers of Resistance may be of special value for TOC practitioners because true "buy-in" requires trust, which requires feedback. However, be warned that there are many incarnations of the Layers of Resistance.

13This is the combat operations process developed by John Boyd of the U.S. Air Force. For an excellent description, see Richards (2004).

14See Scheinkopf (2000) and Dettmer (2007).

15See Goldratt et al., (2002).

16For a more complete discussion, see Newbold (2008, 172).

17Table 5-4 contains the Solution Selling steps for dealing with "latent opportunities," in which the customer is not actively looking for a solution. For the full process, see Eades (2004, 3841).

18PDCA is also known as the Deming cycle or the Shewhart cycle. See Deming (1982, 8889).

19For an in-depth discussion of Critical Chain pilots, see Newbold (2008, Chapter 17).

20For one of the earliest discussions on the five focusing steps, see Goldratt (1990, Chapter 1). The associated loops are shown clearly in Newbold (1998, 150).

21See, for example, http://billiondollarsolution.com/blog/?p=70, accessed July 12, 2009.

22See Lewin's 1947 paper "Frontiers in Group Dynamics" as reprinted in Lewin (1997, 330).

23For much more on this subject see Kotter (1996; 2008).

2Creating significant change in a traditional body of knowledge is known as a paradigm shift and generally encounters significant resistance. TOC is just such a change and attacks the very foundation of traditional business knowledge and practice. Goldratt (2003b) describes his struggle to improve production.

3A registered trademark of Scheduling Technologies Group Limited, Hounslow, UK.

4 E.M. Goldratt used by permission, all rights reserved.

5Some researchers combine protective and excess capacity into what they call idle capacity. This is capacity that when operations are running smoothly, the resource is idle. For the manager, the problem with idle capacity is how much is protective and how much can be trimmed?

6In TOC, starvation is measured only at the constraint and exists when the constraint is idle caused by lack of material. In contrast, blocking occurs when the constraint doesn't have space to offload finished units and therefore must sit idle until space is freed up.

7Over the years, Goldratt and others used computer animated simulators to teach the concepts of DBR scheduling and Buffer Management in V, A, and T environments. The early versions of the teaching simulators were DOS based; a newer Windows-based version is provided in Goldratt (2003).

8Material protecting the constraint in this situation is technically raw material and not considered WIP until released to the line.

9Most implementations today recognize two other regions: a Black Region that indentifies orders that should have been completed and are now late, and a White Region that identifies orders that should not have been released but were released early.

10Goldratt (2009) provides an insightful comparison of Henry Ford's assembly line, Dr. Ohno's Toyota Production System and his Drum-Buffer-Rope system.

1The APICS Dictionary (Blackstone, 2007, 86) defines nervousness as "The characteristic in an MRP system when minor changes in higher level (e.g., level 0 or 1) records or the master production schedule cause significant timing or quantity changes in lower level (e.g., level 5 or 6) schedules and orders." ( APICS 2008, used by permission, all rights reserved.) Copyright by Mokshagundam (Shri) Srikanth.

2Senge (1990, 71) defines detail complexity as "the sort of complexity where there are many variables" and dynamic complexity as "situations where cause and effect are subtle, and where the effects over time of interventions are not obvious."

3TPS uses a two-card kanban system. The APICS Dictionary (Blackstone, 2008, 142) defines this as "(a) kanban system where a move card and production card are employed. The move card authorizes the movement of a specific number of parts from a source to a point of use. The move card is attached to the standard container of parts during movement to the point of use of the parts. The production card authorizes the production of a given number of parts for use or replenishment." ( APICS 2008, used by permission, all rights reserved.) 4 TOCICO 2007, used by permission all rights reserved.

5For a discussion of these measures, see Chapter 13 of this Handbook.

6In TOC, consumer products are managed with MTA, a pull supply chain system, where traditional supply chains use a make-to-stock (MTS) system (min-max or reorder point/economic order quantity). See Chapters 10, 11, and 12 of this Handbook.

7The TOCICO Dictionary (Sullivan et al., 2007, 48) defines time buffer as "Protection against uncertainty that takes the form of time." TOCICO 2007, used by permission, all rights reserved.

8In TOC terminology in the TOCICO Dictionary (Sullivan et al. 2007, 13) each is called a control point, which is defined as "(a) key point in the flow of work through an operations environment that, if not managed properly, has a high probability of decreasing due date performance. Control points include gating operations, convergent points, divergent points, constraints, and shipping points. Usage: In TOC operations management, sequencing schedules at the control points to match the drum schedule and/or shipping schedule increases the probability of on-time performance." ( TOCICO 2007, used by permission, all rights reserved.) 9TOCICO 2007, used by permission, all rights reserved.

10 E. M. Goldratt used by permission, all rights reserved. The example is taken from Goldratt (2003). This work comes with a CD, which has this as well as other examples for readers to develop their own production schedules and see the results through simulation.

11This is called a "free product" as no additional direct labor expense is required to produce it.

12The APICS Dictionary (Blackstone, 2007, 108) uses a similar term: product structure-"the sequence of operations that components follow during their manufacture into a product. A typical product structure would show raw material converted into fabricated components, components put together to make subassemblies, subassemblies going into assemblies, and so forth." ( APICS 2008, used by permission, all rights reserved.) 13The TOCICO Dictionary (Sullivan et al., 2007, 15) defines cost-world paradigm as "The view that a system consists of a series of independent components and the cost of the system is equal to the summation of the cost of all the sub systems. This view focuses on reducing costs and judges actions/decisions by their local impact. Cost allocation is commonly used to quantify local impact." ( TOCICO 2007, used by permission all rights reserved.) 1See Chapter 10 of this Handbook.

Copyright 2010 by Eli Schragenheim.

2For the interested reader, see the nine OPT rules in Goldratt and Fox (1986, 179).

3 E. M. Goldratt used by permission, all rights reserved.