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Contents
1. Executive Summary .................................................................. 4
1.1. Introduction ............................................................................................................ 4
1.2. The situation .......................................................................................................... 4
1.3. Implications ............................................................................................................ 4
1.4. The Opportunity - Critical Chain Project Management .......................................... 4
1.5. Benefits .................................................................................................................. 4
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8. Appendix .................................................................................. 21
8.1. White Paper: Taming uncertainty in the multi-project environment: The Critical
Chain difference................................................................................................... 21
8.2. Bibliography of CCPM Publications ..................................................................... 22
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1. Executive Summary
1.1. Introduction
The Public Accounts and Estimates Committee (PAEC) of the Parliament of Victoria
published a Terms of Reference relating to an Inquiry into Effective Decision Making for the
Successful Delivery of Significant Infrastructure Projects. This document is a submission to
the PAEC in response to the Terms of Reference. Ensemble Partners is a management
consultancy with offices in Australia and Singapore, and specialises in management of large
and complex projects.
1.3. Implications
In a public sector context, poor project performance will conflict with the public interest, due
to excessive expenditure and degraded return on investment, late completion, compromised
scope, adverse publicity and reputation damage. There is also evidence that the morale and
job satisfaction degrades when people work on under-performing projects.
1.5. Benefits
CCPM implementation across broad and diverse industry sectors has generated evidence
of a level of effectiveness in the range of 20%-30% improvement over conventional
approaches to project management, with regard to timeliness of performance, cost, earlier
realisation of business performance and conformance to specification. Such benefits have
also been realised widely in public sector infrastructure projects.
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Late completion
Compromised scope
Large projects of all types that run over budget and are delivered passed their due date with
compromised scope have adverse implications for the investors and stakeholder groups.
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protect the critical chain from negative variation along the non-critical chains, or feeding
chains.
3.1.2. Why is CCPM different?
The Critical Chain method is unique in the way in which it treats and measures variability
within a project and across projects, so that the effects of that variability are minimised,
performance is optimised and reliability is improved. Critical Chain Project Management:
plans and schedules work in a way to minimise the negative impacts of variation on
the project plan;
coordinates the efforts of all parties to deliver the projects critical tasks in a timely
manner;
Critical Chain is designed to mitigate the behaviours that hinder the successful completion
of projects. Critical Chain helps management determine where to focus so that the entire
project is completed on time.
Projects are often structured (managerially) around functional silos, meaning an inherent
conflict arises between functional and project managers over the use of finite resources
(often skilled people or expensive capital equipment) which are in high demand. The
functional manager is trying to optimise his or her profit or cost centre while at the same
time the project managers are pushing for adherence to their schedules. CCPM
coordinates and synchronises decision making for the benefit of the project as a whole, with
special emphasis in overcoming conflicts between business and the project.
Marketing Architects
Celsa Group
TECNOBIT
USAirForce, C130ProductionLine
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Many of the behavioural dynamics that exist within projects are common across projects in a
range of industries and of a variety of magnitudes. By effectively managing these dynamics
CCPM improves project performance irrespective of the project environment or industry.
3.2.2. Case Study: Japans Ministry of Land, Infrastructure and Transportation (MLIT)
adoption of Critical Chain Project Management for infrastructure projects
Japans Infrastructure challenge is unique. For a relatively small country, it is impacted
disproportionately by natural disasters. Although Japan has some unique infrastructure
project challenges, the generic construction challenges were alltoo common:
The Japanese Ministry of Land, Infrastructure and Transportation (MLIT) has embraced
Critical Chain Project Management since 2004. Why?
(1) The Japanese Ministry of Land, Infrastructure and Transportation (MLIT) is the largest
Ministry in Japan and commissions some 20-30,000 public works projects per year;
(2) In 2004, Mr. Koyishi Okudaira (Director General of MLIT) was introduced to Critical
Chain Project Management techniques;
(3) After being successfully tested and then used in over 4,000 public works projects in
2008, the Japanese government recommended, That Critical Chain be used on all projects
henceforth. Project completion times were reduced by 20%-30% over conventional project
management techniques;
(4) Today the use of Critical Chain Project Management Methodology forms part of the
selection criteria when government awards a contract;
(5) Over half of all local prefecture governments are now also using CCPM for many of their
non-construction projects.
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Project portfolio evaluation framework: provides visibility on which projects will contribute
the most value towards maximising public interests based on the resource investment.
Providing a means to evaluate where the constraints of infrastructure projects lie and
provides a mechanism to focus management attention on the critical aspects that have
the most impact on timeliness of delivery.
Decision Making
Helps to provide visibility into project status and provides an evidence base for making
and justifying decisions.
Oversight
Provides portfolio level information about which project plans are on-track and which ones
need attention.
Provides accurate project milestone and end-date forecasts based on real-time progress
information.
Provides scenario planning, giving managers the power to understand the impact on the
projects end-date by applying different resource and scheduling scenarios.
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Why? After successfully using CCPM on over 4,000 public works projects completion times
were reduced by a reported average of 20-30% over conventional project management
techniques. The Japanese MLIT has recognised in order to meaningfully engage with
private sector in infrastructure development, there needs to be an integration of thinking in
terms of how to collaborate in project execution. Whilst the Japanese government cannot
mandate to the private sector which project management techniques they must use, bidders
proposing to use CCPM over conventional techniques are given a degree of preference
because of the effectiveness of the techniques in providing the public-private partnership
with a reliable source of decision making data in execution.
The proof of the Japanese MLITs commitment to CCPM has been their pledge to the
private sector to respond to all their requests within 24 hours if those inputs will impact the
Critical Chain of any particular project. That is, the sequence of tasks having a direct
bearing on the end date of the project.
If these skills and competencies are normative in Japan, and they have experienced such
uplift in productivity, Ensemble Partners recommends the Victorian government consider
investigating CCPM as an innovation in project management and introduce the principles of
these innovations into the assessment process of bidders.
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To identify the office-holders of managerial roles within the public sector who
would benefit from possessing requisite skills and capabilities relating to
infrastructure project management, evaluation, and oversight.
Assess the training needs of managers, and target skill and knowledge
development.
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5. Concluding remarks
Ensemble Partners thank the Parliament of Victoria and the Public Accounts and Estimates
Committee for providing us with the opportunity to offer this submission. Representatives of
Ensemble Partners will make themselves available to meet with members of PAEC as
requested, and attend hearings as required.
Critical Chain Project Management represents a complimentary addition to the Project
Management Body of Knowledge. CCPM was developed with the goal of improving the
performance of projects to the benefit of industry and government. Over the fifteen years since
its introduction CCPM has built a solid cadre of support in the project management community
internationally. Australian adoption of CCPM is still in its infancy, yet the adoption by one of our
most successful companies to manage their largest global IT project shows the local community
is open to ideas that complement the status quo.
The successful and timely completion of a large infrastructure project requires management to
understand the project as one interrelated system. The outcomes of such projects are a product
of the interplay of a myriad of factors; variables and variation that must be managed. An
approach to managing large projects must be geared to influencing and guiding synchronisation
and coordination of the constituent components. CCPM provides a focussing mechanism that
dampens the impact of external factors and internal sources of variability to deliver more projects
on time, under budget, to specification, more often.
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operation. Stephen is currently guiding a constraints based analysis and design exercise
with Australias largest bank.
7.1.4. Geoff Markley
Geoff brings a passion for successful project management which combined with extensive
Enterprise Architecture expertise provides for unique insights into ensuring successful
business outcomes for business projects. Geoff brings over 17 years of Project
Management and Enterprise Architecture expertise working in a global IT services
organisation across industries as varied as manufacturing, telecommunications, banking
and government. Geoff has worked with clients of all sizes across Australia, Asia Pacific and
globally.
Geoff has consulted and developed business transformation solutions for a global
automotive company, global telecommunications organisation, governmental departments
and financial institutions. These assignments have encompassed the full complexity of
those environments to architect and implement successful projects for business
transformation. In these roles, Geoff managed large diverse virtual teams. His senior
management expertise and extensive experience working with senior executives, gives
Geoff unique insights into our client's needs in delivering and exceeding their expectations.
Geoff has a Masters degree in International Business and graduate degrees in Electrical
Engineering, Computer Science and Economics from The University of Melbourne.
7.1.5. Steven Balderstone
Steven is a management consultant with over eight years experience within Accenture and
Ernst & Young in Australia. Steven has specialisations in analytical modelling and
operations management. He managed a large operational business for the National
Australia Bank for several years, gaining considerable change management experience.
Steven has a solid background in the Theory of Constraints having co-authored the book
The World of the Theory of Constraints, which was published as part of the American
Production and Inventory Control Societys (APICS) series on constraint management in
1999. He has also co-authored numerous academic articles on TOC, published in
international journals. He has applied TOC techniques within manufacturing organisations,
completed a Masters Thesis on the application of TOC, chaired an international conference
and received an award from the International Federation of Accountants for his work on
TOC. He has a TOC accreditation from the Goldratt Institute. Steven has a Bachelor of
Commerce and Administration degree and Master of Management Studies degree from
Victoria University of Wellington, New Zealand. Steven is a former lecturer in Operations
Management and Decision Sciences at VUW.
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The contents of this document are subject to copyright and may not be reproduced or utilised in any way whatsoever without the written consent of
Ensemble Partners Pty Ltd. ABN 27 091 919 961
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7.2. References
The following references are provided should you wish to obtain an independent view of
Ensembles work:
Company
Division(s)
Type of Business
Contact
Phone
BHP Billiton
1SAP
ERP Implementation
Stephen Casey
Program Manager
BHP Billiton
Mining
Lloyd Jones
Program Director
+61 8 93204176
Thiess
Degremont
Joint Venture
Victoria
Desalination
Plant
Infrastructure
Greg Locke
+61 3 95162440
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Ensemble Partners Pty Ltd. ABN 27 091 919 961
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8. Appendix
8.1. White Paper: Taming uncertainty in the multi-project environment: The
Critical Chain difference
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Ensemble Partners Pty Ltd. ABN 27 091 919 961
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Books
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Publishing Corporation.
Newbold, Robert C. 1998. Project Management in the Fast Lane.The APICS Series on
Constraint Management. Boca Raton, FA: St Lucia Press.
Leach, Larry: Critical Chain Project Management
Scherer, Andreas. Be Fast or Be Gone. 2011. Prochain Solutions Inc. Lake Ridge VA.
Journal Articles
Rivera, F and Duran, A. Critical clouds and critical sets in resource-constrained projects.
International Journal of Project Management 22(6), 489-497. 2004.
Gregory, Alan and Kearney Gillian.Restriction Buster. Project 16(10), 20-22. 2004.
Raz, T. Barnes R. Dvir D. A Critical Look at Critical Chain Project Management.Project
Management Journal 34(4), 2432. 2003.
Gupta, S.My Project Epiphany. Project management optimizes a software company's new
product development strategy. PM Network 17(11), 20-21. 2003.
Leach, L. Schedule and cost buffer sizing: how to account for the bias between project
performance and your model. Project Management Journal 34(2), 34-47. 2003.
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Sood, S. Taming Uncertainty: Critical-chain buffer management helps minimize risk in the
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The contents of this document are subject to copyright and may not be reproduced or utilised in any way whatsoever without the written consent of
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17/01/2012
Piney CK. Critical path or critical chain -combining the best of both. PM Network
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The contents of this document are subject to copyright and may not be reproduced or utilised in any way whatsoever without the written consent of
Ensemble Partners Pty Ltd. ABN 27 091 919 961
17/01/2012