Critical Chain in Russia –

11 years experience

Vladimir Liberzon, PMP

spider@mail.cnt.ru
 Critical Path Definition
• The PMBOK Guide defines the Critical Path as
those activities with float less than or equal to a
specified value, often zero.
• Float is the amount of time that an activity may
be delayed from its early start without delaying
the project finish date.
• Early start is the earliest possible point in time at
which uncompleted portions of an activity (or the
project) can start, based on the network logic
and any schedule constraints.
 Critical Path Definition
• This definition corresponds with the Critical
Path interpretation in the Russian PM
software Spider Project that was
launched to the Russian market 11 years
ago.
• In this interpretation schedule constraints
include network logic, resource
constraints, financial constraints, supply
constraints, calendar constraints and
imposed dates.
 Resource Critical Path
& Critical Chain
• Thus defined the Critical Path (we call it
Resource Critical Path/RCP) is the
same as the Critical Chain but with
financial and supply constraints added to
the Critical Chain definition.

• RCP is the true critical path by the PMBOK

Guide definition and the common critical
path notion is that particular case when
project resources are unlimited.
Success Driven Project Management

• The project management methods and

tools that we use last 11 years have many
common features with the methods
suggested by the Critical Chain theory, but
there are also differences.
• In this presentation we will discuss the
proven PM methodology that have been
used in hundreds of Russian companies for
many years. We call it Success Driven
Project Management (SDPM).
Success Driven Project Management
• Proven methodology of project
planning, performance analysis and
project control.
• Integrates scope, time, cost, resource
and risk management.

• We will also discuss some notions, tools, and

methods of project planning and performance
analysis that are common in Russia and
necessary for SDPM understanding.
 Resource Constrained Scheduling
in Spider Project
• Resource constrained scheduling takes into
account not only resource constraints but also
financial and supply constraints.
• Resource constrained schedules are optimized
using sophisticated algorithms.
• The software simulates financing and supplies,
calculates cash and material flows.
• The next slide shows cumulative expenses, performance
cash flow (financing and spending during construction
phase) and project cash flow for a sample project.
Resource Constrained Scheduling
in Spider Project
• Financing and supplies simulation is very
important in commercial projects when project
goals include profit.
• Activity floats are calculated using
resource leveling not only on a forward
pass but also on a backward pass.
• These resource constrained floats show real
feasible time reserves for activities execution.
 Resource Critical Path
• Activities with the zero resource constrained
floats are called resource critical.
• Resource critical activities constitute
Resource Critical Path (RCP).
• RCP may consist of activities that are not
linked to each other.

• RCP is a true critical path by PMBOK Guide® definition.

• Critical Chain is only one case of RCP (the Critical Chain
definition does not account for financial and supply
constraints).
 Resource Critical Path
• In the sample project below activities 2 and 4
require the same resource A.
• There is a need for resource leveling.
 Resource Critical Path
• Sample project schedule after leveling.
• Activities 3, 4 and 2 constitute RCP though
activity 2 does not depend on others.
Risk Simulation in Spider Project
• Deterministic, single, estimates produce
plans with a low probability of success.
• Risk simulation produces more reliable
results.
• Risk simulation may be based on Monte-
Carlo approach (impossible to use for large
projects) or based on 3 scenarios approach.
• Spider Project uses 3 scenarios approach.
 3 scenarios approach
• 3 estimates are made for:
– Resource usage or productivity rates
– Work scope & volume
– Activity duration (if estimated directly)
– Cost estimates
– Calendar/weather variation
– Identified risk events are estimated to
reflect their consequences, including risk
response plans in optimistic, most
probable and pessimistic project
scenarios.
 3 scenarios approach
• All three scenarios are calculated.
• The probability curves are rebuilt using the
three values obtained (for dates, costs, material
requirements).
• The desired probability of meeting project
(phase) finish dates, costs and resource
requirements determines desired finish dates for
the whole project and its phases, their desired
costs, and other project results (profit as an
example).
• These data form a basis for negotiating and
approval to proceed.
 Success Probability
• Usual goals:
– Complete project ASAP with minimum cost, & also
– Develop plan with guaranteed 100% success.
• But 100% reliable plan will not be competitive
today.
• A competitive, realistic plan must:
– Make success of project probable (something less
than 100% - depends on market competition)
– But still make it acceptable to project stakeholders
• Requires evaluation & negotiation of various
target success probabilities leading to well-
informed decision to proceed
 Success Probability
• Negotiations may establish new targets.
• Success probability is defined as the
probability of meeting approved targets -
dates, costs, quantities.
• Success probability is the best
indicator of current project status
during execution.
• The optimistic schedule is used for setting
task schedules for project implementers.
 Contingency Reserves
• Critical schedule is the backward (from the
target dates) resource constrained schedule
using most probable estimates.
• Contingency reserves or buffers - difference
between activity start times (and cost,
material requirements) in the optimistic and
critical schedules.
 Success Probability Trends
• Success probabilities are calculated
periodically & stored.
• Their trends are used to estimate project
performance.
• Negative (downward) success probability
trend indicates corrective action needed.
• Positive success probability trend indicates
performance is OK.
 Success Probability Trends
• Success probabilities change due to:
– Performance results
– Scope changes
– Cost changes
– Risk changes
– Resource changes
• Even if everything is fine with the project
performance but new risk events were identified
and included in the pessimistic project scenario,
success probability trends may show that
corrective action is necessary.
 Motivation
by success probability trends
• Project managers are encouraged to solve
uncertainties ASAP
– This can increase success probabilities even
with activity finish delays & cost overruns
• Postponing problem activities leads to
negative trends in success probabilities
• This attribute of success probability trends
is especially useful in new product
development project management
 Example
• The next slide shows success probability
trends for another sample project.
• The trends show that this sample project
will meet budget requirements (100%
probability of meeting baseline and target
cost) but will be late.
 Example
•
 SDPM & Earned Value
• SDPM success probability trends reflect
performance results plus network
dependencies & project risks and may
be used as a perfect project
performance management tool.
• Earned Value Analysis reflects only
performance results.
• EVA approach is not totally integrated.
• EVA problems are illustrated in the
following slides for the sample project
 Sample Project
• Our sample project consists of 3 activities.
• Activities 1 and 3 need the same resource.
• Sample project baseline schedule is shown below:
 Sample Project
• Cost of Activity 3 is $100, cost of activities 1
and 2 are $10.
• If activity 3 was performed first (in spite of
the baseline schedule) then after the first
week the SPI will be 10 or 1000%
• But on-schedule completion will be
impossible!
 Earned Value problems
• This example shows that Earned Value
Analysis results do not produce reliable
information about project performance.
• EV does not pay attention to the network
logic and successful performance on non-
critical activities could hide the serious
problems in the critical path.
• EV does not consider project resources.
• EV will not notice if project risk
estimations were changed.
 Project Performance Baseline
• And at last one critical question:
• What is project baseline?
 Project Performance Baseline
• Project performance baseline should include
contingency reserves.
• These reserves should be applied to the
whole schedule.
• Critical Chain theory called these reserves
Project Buffers.
• A schedule that includes these reserves and
defines start and finish dates and costs of
every activity does not exist.
 Project Performance Baseline
• There are several performance management
baselines used at different management levels:
• Project Team Baseline (does not include
reserves),
• Project Management Baseline (includes
contingency reserves),
• Management Baseline (include contingency
and management reserves),
• Executive baseline (include contingency and
management reserves and planned profit).
 SDPM Project Performance
Measurement
• In SDPM project performance is measured
against a set of target dates and costs
defined for the project phases.
• At any time you will be able to see current
probabilities of meeting target dates and
costs and their trends.
• These trends will help you to estimate if the
project (phase) performance will meet
project team, project management,
management and/or executive targets.
SDPM and Critical Chain - common
• You may notice that SDPM and Critical Chain
approaches have a lot in common.
• Resource Critical Path is the same as Critical
Chain.
• Critical Chain project buffer may be regarded as
an analogue of SDPM contingency time reserve,
• Feeding buffers are similar to resource
constrained floats.
• Both the SDPM and Critical Chain approaches
recommend to use the optimistic estimates for
setting the tasks for project implementers.
SDPM and Critical Chain - different
• We cannot agree with the Critical Chain
theory’s assumption that one should always
avoid multitasking.
• The assumption that only one project drum
(in our terminology - critical) resource exists
is also dubious. Our experience shows that
critical resources are different at different
phases of the project lifecycle.
SDPM and Critical Chain - different
• Usually there are many sub-critical activities
belonging to the different network paths
and even the minor delays in the execution
of sub-critical activities can lead to changes
in the RCP.
• This comes into conflict with the Critical
Chain theory’s assumption that the Critical
Chain never changes during the project
execution.
SDPM and Critical Chain - different

• Critical Chain theory is more qualitative

than quantitative.
• Time & cost reserve usage evaluation:
– SDPM: Success probability trends
show if reserves expended faster or
slower than planned;
• More effective than:
– CC: Qualitative judgment whether
buffers were properly utilized.
 Integrated project performance
information
• For effective project management, truly
integrated information is required:
– Scope, Schedule, Resources, Cost, Risk.
• This information is presented in success
probability trends.
• Identifying the resource critical path and
calculating success probability trends help to
produce more successful project
performance.
 Experience
• Over past 11 years SDPM was successfully
applied to hundreds of projects in
•Aerospace •Metallurgy
•Banking •Oil & Gas
•Defense •Ship Building
•Engineering & •Software Development
Construction •Telecommunications
•Manufacturing •Others
 THANK YOU!

• We would appreciate your comments

on this presentation and look forward
to further feedback and exchange.

• Contact E-mail: spider@mail.cnt.ru

• Web: www.spiderproject.ru