Eliminating Limitations
The Theory of Constraints (TOC) is a wide ranging body of work from Dr. Eliyahu M. Goldratt, and provides breakthrough methods for making business decisions as well as managing execution. The underlying principle in all of TOC is that local optimization rules are what prevent an organization from realizing its full potential. The best way to understand TOC is to read Dr. Goldratt’s bestseller, The Goal.
TOC execution management methods include “drum-buffer-rope” for high volume operations, “demand-pull” for supply chains, and “critical chain” for projects.
Dr. Goldratt invented Critical Chain in 1990 for one of his clients, Standard Oil.. He introduced it to public in 1997 through his book, which was also called Critical Chain.
Harvard Business Review reviewed the book in March 1997 asking, “Eli Goldratt’s first novel, The Goal, shook up the factory floor. Will Critical Chain do the same for projects?” An answer was provided in 2003 by a Financial Times publication, The Definitive Guide to Project Management, which noted, “Rather than risk confusion this book has been written to reflect just one method: critical chain. Projects managed using the critical chain method have a far greater chance of delivering the required outputs on time and on budget than those managed any other way.”
The Critical Chain breakthrough is that it allows you to manage uncertainties and resource contentions with smaller “buffers”, and thus execute projects in less time with fewer resources. The method is based on three rules:
- Limit the number of projects in execution, even if it means keeping some resources idle. Concentrating resources on fewer projects at a time not only allows them to be executed faster, but also reveals overall capacity to undertake more projects.
- In execution, allow individual tasks to be late against the plans. That way people won’t have to hide safeties inside their estimates, and tasks will get executed faster because work won’t have to expand just to fill the time available (Parkinson’s Law).
- Provide uniform task priorities across all departments and levels of management. When everyone knows what to do and when, and is working on the same priorities, projects get done much faster.
