A Comprehensive Standard in Project Planning – Theory of Constraints
Project planning presents the first opportunity to identify and address bottlenecks and constraints. We have to be a little careful in using the term “constraints” in the construction and planning industry, because this is also a term of art in the world of scheduling. When creating a schedule, the scheduler or planner can set a time constraint on an activity. For instance, a SNE constraint requires that an activity can “Start No Earlier” than the date specified by the scheduler. Because of the algorithmic limitations of CPM, constraints must be used to hold a date later than the calculated early start date. While each of these constraints should be considered in light of a TOC project evaluation, they are only one small aspect of the application of TOC in construction projects.
Goldratt’s theory is comprehensive – it holds the overall project to a higher standard. In TOC, the ultimate measure of system effectiveness is throughput. What is throughput? It depends on the organization’s goals. For a manufacturing company, throughput is how efficiently product has been designed, produced, and sold and paid for, and at what cost. For a professional services firm, the equation is a little different, because in the world of professional services, the work cannot be produced and sold, but the consultants are inventory (a very costly asset when not productive, or, more cruelly, meat with an expiration date at the butcher counter).
Eliyahu M. Golratt – Theory of Constraints [TOC] Leads to a Revolution in Manufacturing
I’m a big fan of Eliyahu M. Goldratt, especially his Theory of Constraints (TOC) and his work on bottleneck management. Goldratt revolutionized the manufacturing world with a critical insight into the overall operation of the plant floor. Before Goldratt, local efficiency was the key metric used to measure performance on the shop floor.
Imagine that a factory had 10 workstations, each with a specific job in the manufacturing process. At one time, management believed that if each machine was running close to 100 percent of the time then the factory would be as efficient as possible. However, Goldratt figured out that the factory as a whole could only run as fast as its slowest machine. By running machines at disparate production rates to full capacity, the manufacturer was, in fact, just creating work in process (WIP) and jamming up the factory shop floor.
FIATECH 2013 Technology Conference & Showcase: The Visualization of Capital Planning
This conference was held by FIATECH, an innovation-driven nonprofit in the construction industry that promotes technologies that impact the industry. They are very well regarded around the world.
In the panel I spoke on, we focused on visualization in construction. I had the pleasure of leading a discussion on the visualization of capital planning.
The Visualization of Capital Planning
When I do public speaking engagements, I try to bring something new to the conversation. I like to challenge myself when I put together a talk to bring new knowledge or insights to the subject. One of the key insights on this topic is the difference between the graphical path method and the critical path method, including why the graphical path method allows portfolio planning in a way that the critical path method does not.