Question

A: Provide a numerical example of how Earned Value Management may mislead us as to whether the project in on time and on budget.  Use the Critical Chain concepts if you want to help illustrate your answer.

B: What must management do to implement Critical Chain and how do they do it.  How must management focus change for Critical Chain to be successful compared to traditional project management?

Answer 1

A. Earned Value Management is a good tool for managing projects. But it may be misleading at times as explained below;

In the figure, the critical chain is BCDEF. Delays to this chain will result in the project being delayed.

Earned value is calculated as percentage of work completed multiplied by the budget at completion. This is a high-level figure which does not take into account which all activities are completed. Schedule is prepared based on the basis that critical chain activities are given prime importance while other activities are performed parallelly with the critical chain by managing and adjusting the floats. But, in a project, there will be times when we will have to work on activities which are out of critical chain, leaving the critical chain behind. In such scenarios, if you look at the earned value, it will show higher values of completion, but since the critical chain is left behind, time delay and consequently we can expect budget delays also to happen for that project.

B. Managements explicitly state the importance of critical chain to all of the project management team. The schedule (with highlighted critical chain) is prepared and is given to project management team for their review and approval. As the project progresses, schedule is updated and variances and tracked and regulated. If any changes are made to the critical chain, by means of addition or deletion of scope or by introduction of any new constraints, such changes shall be effectively documented through change management process. The information shall be relayed to all concerned stakeholders as well. By this, the project can be managed efficiently when compared to traditional project management.