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Application of the Theory of Constraints for Project Management

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Application of the Theory of Constraints for Project Management Management and Production Engineering Review Volume 8 • Number 3 • September 2017 • pp. 87–95 DOI: 10.1515/mper-2017-0031 APPLICATION OF THE THEORY OF CONSTRAINTS FOR PROJECT MANAGEMENT Justyna Trojanowska, Ewa Dostatni Poznan University of Technology, Chair of Management and Production Engineering, Poland Corresponding author: Justyna Trojanowska Poznan University of Technology Chair of Management and Production Engineering Piotrowo 3, 60-965 Poznan, Poland phone: (+48) 61 647-59-91 e-mail: [email protected] Received: 22 August 2016 Abstract Accepted: 27 February 2017 The large variability of internal and external factors is a serious problem hampering pro- duction management. To meet the standards and at the same time ensure the viability of production it is necessary to quickly respond to problems that arise during production processes, and to adequately correct plans. Measures taken in the management of madeto- order production are frequently single and unique, and therefore resemble the features of project management. The paper discusses the project management method derived from the theory of constraints – CCPM. The paper describes an original algorithm for CCPM im- plementation and presents the results of success CCPM implementation in a company from the Wielkopolska region. The implementation of CCPM resulted in improved timeliness of order delivery, improved communication and standardization of processes related to order delivery. Keywords project management, theory of constraints, critical chain project management. Introduction Project management is a management method whose aim is to effectively reach the project objec- One of the main challenges facing SMEs in made tive within the specified time and a fixed budget [7]. to order manufacturing is having to combine their There are many methods supporting project man- regular operations with continuous development, im- agement described in the literature. The most com- provement and following new trends, regularly ap- monly used in practice include Gantt chart, Criti- pearing in the economic environment. The pace of cal Path Method (CPM) and Project Evaluation and change taking place in the economic system, the de- Review Technique (PERT). velopment of techniques and technologies, changes in A Gantt chart is a horizontal bar chart devel- the law and constantly changing customer require- oped as a production control tool in 1917 by Hen- ments mean that the failure to adapt causes obvi- ry L. Gantt, an American engineer and social scien- ous losses to SMEs. Global competition and market tist. Frequently used in project management, a Gantt demand for customized products and services, de- chart provides a graphical illustration of a sched- livered just in time, exert real stress on businesses ule that helps to plan, coordinate, and track specific [1, 2]. Additionally, nowadays companies establish activities in a project. CPM and PERT originated new manufacturing sites in different locations and in 1957 and 1958, respectively, with CPM examin- form strategic relationships with business partners ing the tradeoffs between project duration reduction in order to increase their responsiveness to market and increases in activity and project costs; and with changes and to share resources more effectively and PERT examining the uncertainty aspects of comple- efficiently [3, 4]. These factors make it even more dif- tion dates for development projects. CPM was origi- ficult to manage the project: deliver the customer’s nally developed for use with manufacturing plant re- order [5, 6]. builds by DuPont and PERT for use with the Polaris 87 Management and Production Engineering Review nuclear submarine program by the Special Project dication of the system component which hampers its Office of the Department of the Navy and the con- global performance. According to TOC the introduc- sulting firm Booz Allen Hamilton [8]. tion of changes must start from such a weak link, These methods, however, are not always justi- because improving other elements in the system and fiable and effective due to their reliance on cer- improvement of local efficiency will not affect the per- tain assumptions that become more questionable as formance of the system as a whole. Each system has projects become increasingly complex and demands at least one constraint [18], and its identification is for resources grow [9, 10]. necessary for proper management [19]. Goldratt introduced the concept of Critical Chain Project Management for Single Project to begin to address the problems associated with the more tra- ditional methods of PERT/CPM and Gantt charts. Goldratt published in 1997 the concept of CCPM in the book Critical Chain [11]. The paper describes an original algorithm, devel- oped based on in-depth analysis of the size of the time buffer, for CCPM implementation and presents case study which are the results of CCPM imple- mentation in a company from the Wielkopolska re- gion. Theory of constraints Fig. 1. Process of ongoing improvement. Source: Own study based on [17]. The assumptions of the TOC, as introduced by an Israeli physicist Dr. Moshe Eliyahu Goldratt, were The second step consists in the exploitation of the first published in the 1984 book The Goal: Excellence constraint: the change agent should obtain as much In Manufacturing which offered comprehensive solu- capability as possible from the constraining compo- tions for production management. Theory of Con- nent. Each lost minute caused by the fact that the straints focuses on system improvement which is de- constraint is not working is a loss which cannot be fined as a series of independent processes [12, 13]. recovered. Therefore, in this step the change agent Application of the principles of TOC in practice re- should take the necessary action to ensure uninter- quires a holistic view of the entire production sys- rupted work of the constraint, in order to achieve tem [14]. One of the three principles of TOC is con- maximum capability of the system constraint. centration [15], i.e. focus on the most important is- The third step involves subordination of every- sues. It means that all processes and positions should thing else to the decision that was made, i.e. the be supervised, although the non-critical may enjoy adjustment of the pace of work of other system ele- a certain autonomy. Most attention should be given ments to the pace of work of the constraint. Other- to tasks that are crucial from the point of view of the wise, when other system elements will produce faster system as a whole. The main aim of every company or produce more, the cost of production will grow, is to increase the profit. According to this point of among others by the increase in work-in-progress in- view, constraints are the main obstacles in achiev- ventory. ing the aims of companies. In other words, anything Steps 2 and 3 are very important in the TOC, that gets in the way of gaining more profit is con- because they contribute to the structuring of the sidered a constraint [11]. The identification of the system. There are still many other ways to increase constraint is the basis for improving the production throughput and improve the system. In the fourth system. According to TOC the system consists of step, described as increasing the productivity of the five steps. The steps are sequential and instruct con- constraint, TOC allows for investments which will centration of efforts on the system component that contribute to improving the efficiency of the entire is capable of producing the most positive impact on system by strengthening the constraint. If the con- the system [16]. straint is overcome, which should happen as a result The process of ongoing improvement in TOC is of the continuous improvement of performance as a shown in Fig. 1. result of step 4, it is necessary to find another compo- The first step in the process of continuous im- nent which restricts the capability of the production provement involves the identification and precise in- system. 88 Volume 8 • Number 3 • September 2017 Management and Production Engineering Review Appropriate identification of constraints offers feed into or merge with critical chain tasks. With many opportunities for business improvement and it a properly sized feeding buffer inserted, the critical positively affects the performance indicators. Note chain task that relies inputs from that non-critical that TOC was designed as a tool for managing con- chain has an improved chance of being able to start straints, and it is not synonymous with continuous as soon as it predecessor critical task is complete [26]. liquidation. At the appropriate moment, it is neces- Appropriate sizing of the buffers and proper man- sary to purposefully leave the constraint in the com- agement thereof is key to effective project manage- pany, and then, through proper management thereof, ment. In the traditional approach to project man- control the bottleneck of the production system. agement safety margins are added to each project activity. There are three mechanisms of estimating CCPM the size of the safety margins [27]: • a reference to negative experiences of the past, • A method of project management called Critical adding a separate safety margin at every level of Chain Project Management (CCPM) was developed management, • on the foundations of TOC. Critical Chain means protection against standard margin shortening by that all the co-dependent tasks must take the longest the superior by a certain percentage, by always path to complete, taking into account the constraints adding such amount of time. of system elements [20]. CCPM consists in planning, Analysis of the literature proves that various scheduling and maintaining the critical chain during authors have a slightly different approach to the the project in order to maximize the working time method of time buffer sizing. of the bottleneck, and to efficiently determine inven- Goldratt [11] suggested a method for sizing the tories for the fundamental steps of the project [21].
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