Critical Chain by Eliyahu Goldratt

by Paul Simister on June 20, 2011

I was reading Critical Chain when the author, Dr Eliyahu Goldratt died.

Critical Chain by Eli Goldratt

Critical Chain book cover

The Theory of Constraints guru focuses his attention on project management in Critical Chain after looking at constraints in the production process in The Goal and in the marketing strategy in It’s Not Luck.

Review of Critical Chain by Eliyahu Goldratt

Again it is written as a business novel, this times from the perspective of an assistant professor at a small university whose job is at risk because MBA courses are not delivering the practical skills needed by business. I think Goldratt was making an interesting point there.The hero is offered a chance to teach on course on the executive MBA program and it’s one he doesn’t know much about so he has to learn as he goes and clashes with traditional project management ideas.

I enjoyed reading Critical Chain and I’d rate it as better than It’s Not Luck (much less confusing) but not as compelling as the classic, The Goal.

Project Management Performance Criteria

Projects are measured on three criteria:

  • Time
  • Quality
  • Budget

And as a general rule, projects are delivered late, not up to the original standard and over budget.

Through a combination of projects being difficult to manage and poor project management techniques, the economic impact on the expected return on investment is poor. Projects cost you more, give you back less and what you do get is much later than expected.

Eli Goldratt is pushing against an open door – there’s huge demand for a new way to manage projects that delivers on the original promises and commitments… and according to Goldratt, that means managing the critical chain.

The Critical Chain Is Not Another Name For The Critical Path

If you’ve done any project management, you’ll know of the critical path – the longest sequence of dependent activities which must be done for the project to be completed. The critical chain takes the critical path and also assumes that one resource will be the constraint or bottleneck and activities by this resource are likely to be delayed.

Slack Time Is Built Into Task Estimates

He makes some interesting points about why project performance is so bad  – with slack built into the time estimates because we don’t go for an expected 50% success but 90% success and then miss it because of the student syndrome which causes us to delaying starting things we think we’ve got time on.

The way around this is to take away the spare time from the individual project tasks and instead have a time buffer on the project and a buffer on individual critical activities.

I like the idea and certainly agree that it does happen. Many people will give themselves extra time to complete a task and still miss it.

But I’ve also known people chronically underestimate the time it takes people to do a task when working on it full time and I’ve even done it myself. In fact I regularly do it in my own daily time planning. I schedule a task – like writing a blog – thinking it will take 30 minutes on it and an hour later, I’m still writing.

Of course few people will admit to padding out their time estimates but probably will confess to a high degree of confidence in getting the task done before their estimate. Unfortunately few tasks get finished early because there’s always a little extra you can do to make it better. Using the ideas of the normal distribution curve, you can prove the logic that time must be padded away from the median 50% likely time.

Project Management – Where The Rubber Meets The Road

I’m interested in project planning because it’s where the rubber meets the road in strategy and as a coach, I don’t even have the authority of a project manager to make things happen.

I really liked the emphasis on the cost of project time overruns because there’s a temptation to scrimp and save on the resources because keeping within budget seems more important than hitting the project deadlines.  The cost is much more visible than the missed revenue and profit streams that come from the project but may be tiny in comparison.

Let’s imagine you’re developing a new product with a 6 month lifetime in a series of high tech upgrades – think PCS or mobile phones. getting to the market on time means a successful launch, being a few months late could mean a competitor has already got established with the same or similar features and benefits.

My Overall Assessment Of Critical Chain

I had a few aha moments as I was reading it and wished that I’d known about some of the ideas when I was managing large projects. Critical Chain will challenge the way you traditionally think about and plan projects.

My one concern is that the book is fiction so it’s easy to have a story of project chaos without critical chain thinking, and peaceful sanity using the ideas of the critical chain.

If you’re involved in managing or sponsoring projects in your business or as a consultant, I recommend you read Critical Chain by Eliyahu Goldratt.

It may not change everything you do but I’m sure it will influence some of the things you do. That’s a great achievement for a book.

Have You Read Critical Chain By Eli Goldratt?

If you’ve read Critical Chain, I’m very interested to know what you think about it?

Is it old wine in a new bottle as some people say or did it give you new ideas about how to manage a project to meet the budget, schedule and quality objectives?

Paul Simister is a business strategy coach who helps small business owners to profit from differentiating their businesses, by being distinctive in the eyes of their customers and standing out in a crowded marketplace…. in other words, by building a business to be proud of.

You too can move past your profit tipping point (free report) by answering the seven big questions of business success (mp3).

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