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Critical Chain
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Chapters 21-25Chapter Summaries & Analyses
Chapter 21 Summary
Brad Newbolt, the president of QEC, the company at which Richard’s student Charlie works, invites Richard to present at the YPO, the Young President’s Organization. QEC is implementing Richard’s methods through Charlie’s classwork, and Pullman, who is implementing the methods through Mark, Ruth, and Fred, is also a member of the YPO. Richard agrees and relays the information to B. J., who then arranges to go to the meeting. B. J. pressures Richard to emphasize the need for greater enrollment in the MBA program, noting that Richard should include suggestions about how much money companies can save by training their managers in these methods. Richard gives his presentation, forgetting to include B. J.’s suggestions, and the crowd is thrilled. Afterward, B. J. commands the group’s conversation toward supporting MBA programs, and she organizes a committee among the presidents to tailor the Executive MBA program to their specific needs. Richard walks with B. J. to her car, a Cadillac, and she expresses her approval of Richard’s methods and the improvements occurring in the business school.
Chapter 22 Summary
Jim and Charlene attend Richard’s class, but he is not sure what he will teach. He wants to avoid the issue of shared resources, and Ruth asks about shifting the critical path following a delay. If a noncritical path consumes its feeding buffer, then it becomes the new critical path as the longest path in terms of time. However, if the project manager changes the critical path each time this happens, Charlie notes, they will become unfocused and lose track of the full project. Charlie gives an example, noting that they have a single specialist that is needed for four different noncritical paths, which are parallel in his PERT chart. Because this resource is a new constraint, Richard uses the evaporating cloud method to realize that a new form of organization is needed. The class calls this method the Critical Chain.
The critical chain is the longest path of dependent steps in the project, meaning Charlie’s specialist is a constraint that the other paths need to subordinate to. By constructing a chain through and around the critical path, following the shared resource, they ensure that no two tasks are running parallel and demanding the shared resource at the same time. Feeding buffers, then, need to be used before the critical chain’s shared resource, rather than after, allowing for delays in getting the shared resource, rather than for delays in the use of the shared resource. Richard tells the class to apply the Critical Chain method to their projects, then find an answer for why the order of the tasks in the chain does not matter.
Chapter 23 Summary
B. J. meets with Page, Richard, Johnny, Jim, and Charlene to discuss their plan to provide demonstrable value to industry, following the committee with the YPO. The committee’s request for topics follows what is already taught in the Executive MBA program, but their complaints are of a lack of real-world knowledge and value. The professors note that they are making regular breakthroughs using Johnny’s knowledge of TOC from UniCo, and they emphasize how Richard’s teaching style of open discussion, combined with the use of actual examples from the students’ businesses, is actively driving real-world applications and results. The professors suggest offering a deal to companies, in which they would enroll their managers in the program, but they would not pay tuition until those students provide a real value to the company. Page is offended at the idea of offering deals, but B. J. likes the idea. She decides to meet with company representatives to gauge their values and desires, and she sends Page to do the same.
Johnny calls Don at UniCo, telling him that the entire business school is now using and improving on TOC. Don is specifically interested in the progress Richard is making in project management, and Don arranges to meet with B. J. to discuss reworking the curriculum to teach TOC at the undergraduate level. If B. J. agrees to change the curriculum, Don says he will commit to hiring top graduates from the business school at UniCo, which Johnny notes would give the university national acclaim.
Chapter 24 Summary
In Richard’s final class of the term, he asks Mark about the environment at Genemodem. Mark shares that he, Ruth, and Fred are now working to apply the Critical Chain method across all Genemodem’s projects. Their main issue was organizing resource contentions, specifically the demand for digital processing in every project. However, by subordinating all projects to the digital processing constraint, they planned out the digital processing department’s schedule, including a “bottleneck buffer” of two weeks, prioritizing projects with the earliest completion dates. They had to convince the project leaders of the plan, and they still need to be careful about other departments trying to claim that they are also constraints. If a resource starts to consume all its buffer times in multiple projects, the team will reorganize around that constraint, but not before. In some instances, the addition of a new restraint will modify the critical chain of individual projects, but the key is to focus on the buffer periods, which Fred says they monitor closely for emerging issues.
Richard gets tenure, and he and Judith go to New York. Judith wants to buy a silver coffee service set for $6,000, and she explains that they should collect silver for a “Silver collection,” which can be donated or passed to their children when they die. Richard notes that they cannot have children, but Judith suggests hiring a surrogate mother, which they both agree is a good idea.
Chapter 25 Summary
Don meets with Charlene, Johnny, Jim, and Richard to discuss the implementation of their new methods in the Executive MBA program. He is satisfied with what they have, but he wants to know what they think about choosing investments. Often, businesses have multiple opportunities to invest, and the two common means of determining which choice to take are payback, or the time it will take for a return on the investment, or net-present-value, which is a calculation of the total investment value in current dollars. Don does not like either method, and Charlene suggests an improvement. She notes that both time and money are valuable constraints in the investment process, and she compares the issue to physics, in which summations of multiplications of variables are used to find a total solution. Using the example of rocks in a field, she notes that both the weight of each rock and the distance from each rock to the edge of the field are important in determining the total work to clear the field. In investing, these variables are time and money, creating a new measurement of time-money, which is money multiplied by the time of investment to resolve a total cost of investing. $2 invested over 10 days is 20 dollar-days, for example. Don is happy with her explanation, and he says he will work on implementing it into their investment decisions.
Chapters 21-25 Analysis
The final chapter section fully expands on the Critical Chain method, combining The Theory of Constraints and Its Application in Business with The Impact of Resource Management and Task Scheduling on Project Efficiency to explain how individual projects, and even multiple ongoing projects, can be managed effectively to avoid resource conflicts, overruns in budget, and delays in completion time. As Ruth, Mark, and Fred present their concerns about changing the critical path to meet the demands of delayed noncritical paths that threaten to delay the project, Richard uses the evaporating cloud technique to resolve the conflict between the seeming necessity to change the critical path and the fact that altering the critical path can do irreversible damage to focus. The conclusion is the Critical Chain method, which defines the constraint of a project as the longest series of dependent steps, meaning all the steps that share a common resource. Critically, the issue of ordering these tasks is arbitrary, and Richard comments that he does not read articles on such optimization anymore because “in each case the impact on the lead time of the project is less than even half the project buffer” (267). He notes that this estimate is not precise, but his point is that minutiae rarely make a significant impact on the final completion date, whereas broad organizational changes can have such impacts. Some of these organizational changes, like Brian’s admission that a software developer can complete the programming process and delay the documentation to move onto another programming task, returning to document later, allow the shared resources to be rescheduled around the critical chain with added buffers. As such, when considering multiple projects, Mark concludes: “All the buffers that we’ve talked about so far, project buffer, feeding buffers and resource buffers, are all protecting the individual project” (291), leading to the introduction of a “bottleneck buffer” across projects to protect the constraint, which is the shared resource. By identifying the biggest constraint within and across projects, then subordinating all other tasks to that constraint, applying TOC, they managed to form a critical chain that protects each project’s lead time by organizing and scheduling resources and people efficiently.
A key element in The Role of Leadership and Communication in Project Success comes in the crossover of Richard and Johnny’s method of persuading vendors into Jim’s suggestion for B. J. on increasing admissions. An important component of the novel is the use of persuasion by reworking a negotiation to include both sides, as Richard did with the coating vendor by considering his slim profit margin. With admissions, Jim suggests that “we offer that the companies pay for the education only after the student has used his knowledge to bring the company benefits of at least one hundred thousand dollars” (277). Page immediately takes issue with this tactic, noting how it does not ensure payment and tarnishes the university’s reputation, but his view only considers the desires of the university. For companies, paying an employee’s tuition is only worthwhile if that employee returns with a greater ability to serve the company, which can only be measured in material gains like money. By offering a penalty if the school fails to fulfill the promise of enriching the employees as students, they are considering the companies’ needs and reducing the risk of paying tuition. B. J., in turn, displays good leadership by listening to these perspectives and allowing them to modify her original plans. Though the freeze is still impacting tenure, for example, B. J. offers Richard tenure as a reward for the collaborative innovation in which he was a key player.
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