Critical Chain and Risk Management
-- Protecting Project Value from Uncertainty (Part 7)
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7. THE THEORY OF CONSTRAINTS
-- MORE THAN CRITICAL CHAIN PROJECT MANAGEMENT
Hopefully, this paper has, at this point, made a case for the TOC approach to project management -- Critical Chain Scheduling, Buffer Management, and Synchronized Multi-Project Management -- as a coherent approach to project management that supports the basic processes associated with risk management for the protection of project value. But TOC is more than this approach to project management. It is a holistic philosophy of systemic managment with core premises and analytical tools. Actually, the project management solution was derived by applying a set of logical thinking tools -- tools that reflect the hard science origins of this management philosophy -- to the problems commonly faced in the realm of project management (Goldratt, 1994).
Some of the TOC Thinking Processes are also applicable in stand-alone situations and should be in the toolkit of a project/risk manager. The first is the Negative Branch Reservation (NBR), a tool that helps to define the concern about a risk in a way that lays out its source in the current situation and the logical cause-and-effect steps that will lead to it. The second is known in various circles as the Evaporating Cloud or Conflict Diagram and is a graphical description of a dilemma or conflict used to raise assumptions about the situation that have within them the potential for a solution.
NBRs and Risk Identification/Assessment/Response Development
If you define a problem (a risk) well, you probably have it half solved.
There is a lot of truth in that old saw, and it applies to the value of risk identification directly. An identified risk cannot only be the expression of fear of a particular outcome. For identification of a risk to be useful in its assessment and in developing action to deal with it, it needs to include sufficient clarity against which appropriate thought can be applied.
Risk and related issues can benefit from the NBR and the Cloud for developing this clarity. If the risk is related to a concern, a reservation, or seems to be expressed with Yes, but
the question may still remain as to if or how that risk may actually occur. The NBR will lay out the path from the starting situation to the concern with as fine a sense of logical cause and effect as is needed to understand it and deal with it. Built with repeated links of if-then-because, the NBR clarifies how the risk will come to pass. This is particularly useful for dealing with questions of technical risk when there is a question of sufficiency of the solution or of undesirable side effects.
If one thinks of the NBR as a negative branch on the cause-and-effect logic tree leading to the desired objectives of a project, then trimming that branch is the path to its avoidance or mitigation. Every logical if-then-because connection along the way has a range of assumptions associated with it. The process for trimming NBRs is one of continuing to ask why certain links must occur, identifying previously unverbalized assumptions that can then be questioned and replaced by new actions, which will then break the logical link. If the cause-and-effect chain leading to the risk is broken, the risk will not occur, at least through that path.
Evaporating Clouds and Risk Identification/Assessment/Response Development
The second need for clarity arises when a situation seems to put one between a rock and a hard place. In a case such as this, there are usually certain necessary conditions associated with the objective of the project, which lead to a dilemma or a conflict between the courses of action perceived to support the two conditions. The Evaporating Cloud utilizes necessity logic -- in order to, we must
-- to define the necessary conditions (the needs) of the objective and the perceived requirements to make them happen. Once clearly verbalized, the conflict or dilemma can be confirmed as an issue that requires solution.
Once clearly identified and understood, the process to evaporate the dilemma follows a similar path to that of trimming the negative branch, inasmuch as it provides a context for raising and invalidating unverbalized assumptions. Between each in order to, we must connection of the cloud, the insertion of because
statements is the common approach to bringing these assumptions to the surface.
At some point, certain assumptions become suspect, and then provide a way out of the dilemma as they suggest possible other ways of satisfying the real necessary conditions. The real risk is not the conflict that freezes action, but the unverbalized assumption that perpetuates that conflict (Patrick, 2001).
This article is an expanded version of one originally presented at the national Project Management Institute Symposium (Nashville, November, 2001). It is presented here in linked sections for ease of reading on the web. This version has been accepted for the 2002 World Project Management Week conference (Hong Kong, March, 2002). For off-line reading and sharing, the full article can be downloaded in Adobe Acrobat (pdf) format at ccrisk.pdf or in Microsoft Word format at ccrisk.doc.
-- MANAGING UNCERTAIN EVENTS FOR CERTAIN PROMISES
2. PROJECT PLANNING
-- DEPENDENCIES AND DURATIONS
3. PROJECT SCHEDULING
-- INTEGRATIONS, VARIATION, AND RATIONAL PROMISES
4. RESOURCE BEHAVIORS
-- MINIMIZING THE EFFECT OF PARKINSONS LAW
5. SYNCHRONIZATION OF THE PIPELINE
-- MINIMIZING RISK OF CROSS-PROJECT IMPACTS
6. PROJECT AND RISK RESPONSE CONTROL
-- CLARITY OF PRIORITIES AND CORRECTIVE ACTION
7. THE THEORY OF CONSTRAINTS
-- MORE THAN CRITICAL CHAIN PROJECT MANAGEMENT
8. SUMMARY -- A FORWARD-LOOKING APPROACH TO FUTURE RISKS
|An undefined problem has an infinite number of solutions. - Robert A. Humphrey
Discuss Critical Chain - An email-based discussion group
Frequently Asked Questions about Critical Chain-based project Management
Top 10 Sources of Project Failure -- A list you probably won't see on Letterman.
Check Out the Following Links for More About the TOC Approach to Project Management:
Getting Out From Between Parkinson's Rock and Murphy's Hard Place -- This first link will bring up a paper based on a poster presentation originally given at the 1998 New Jersey PMI Chapter's annual symposium, honored with a "best of the show" award by attendees, and later turned into an article published in PMI's PM Network magazine.
Program Management -- Turning Many Projects into Few Priorities with TOC -- This link will lead to a paper on the key attributes of a TOC Multi-Project Management environment. (Most projects are performed by resources shared with other projects. It can be deadly to ignore the resulting interactions, no matter how well you manage single projects.) This paper was originally presented at PMI's Global Symposium in Philadelphia in October of 1999 and is included in the proceedings of that conference. Audio tapes of the presentation are also available from PMI.
Project Portfolio Management - The First Cut is the Kindest Cut - One of the common problems faced by project-oriented organizations is having too many projects relative to their capacity. Therefore, one of the first things that needs to be done is to determine what can be done is to determine what should be done . . . and what should not be done . . .
Consumption of Effort and Conservation of Energy for Project Success -- This link will lead to an essay on the necessity for managing protective capacity in multi-project environments to get the most organizational throughput from the efforts of project resources.
Critical Chain Basics
A Critical Chain Schedule
The Sooner You Start, The Later You Finish
Multitasking Multiplies Lead Time