This paper reviews Eliyahu M. Goldratt's 1997 business novel The Critical Chain, examining its core argument that traditional critical path project management should be replaced by a scheduling methodology centered on just-in-time starts, time buffers, and active risk management. The paper discusses the stages of critical chain planning—network building, risk identification, response development, and response control—and explains how buffer management protects project value under uncertainty. It also addresses the theory of constraints as the theoretical foundation of Goldratt's approach and contrasts the critical chain method with traditional cost accounting practices in multi-project environments.
Reference: Goldratt, Eliyahu M. The Critical Chain. New York: North River Press, 1997.
The Critical Chain by Eliyahu M. Goldratt is a business novel with a specific critical theoretical overview of how to minimize costs in project management. Unlike previous popular methodologies such as critical path management, the theory of critical chain management stresses a scheduling methodology of just-in-time starts rather than critical path as-soon-as-possible starts, so that risk can be identified, assessed, and dealt with at every possible juncture of a project. The eschewing of task due dates and the use of time buffers protect a project's potential and provide an effective way to monitor a project's progress as a means to an end.
What are the inventory buffers intrinsic to such a method of project management? The various kinds of buffers used to manage projects begin with the first aspect of planning in a critical chain environment: a process known as network building. This is followed by the buffered processes of risk avoidance and risk mitigation. These processes are designed with a view toward responsive scheduling after the initial identification of priorities in the first stage of the chain. Throughout the entire process of the critical chain, protecting the value of a project involves dealing with and coping with the uncertainty that is associated with its delivery. The critical chain stresses risk management, since risk is intrinsic to any project, rather than risk avoidance.
Common practices for estimating the duration of project activities, as well as the real reasons that cause project delays, include the initial identification and assessment of risks before they present themselves. This is followed by prospective response development, which can take the form of avoidance, mitigation, or acceptance, depending on the obstacles that are identified as likely to arise. Finally, there is the prospective guidance of response control in the event of risk and possible delays.
According to Goldratt, the role of project management in critical chain theory is to assist in turning uncertain events and efforts into certain outcomes and promises. Risk management in its various forms must therefore be present in the scope, schedule, spending, and general management of any given project. Careful management is necessary for successful project delivery and for maximizing the value of project-based efforts. Above all, managing uncertainty and risk by accepting that spending, scope, scheduling, and management in general may go awry is preferable to simply ignoring this possibility in today's volatile business climate.
"Limitations of conventional cost-based project control"
"Holistic theoretical basis of critical chain method"
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