IIM RAIPUR

Theory of Constraints
approach to Project
Management
Operations Management

Ankit Kalra
Theory of Constraints Approach to Project Management

The Theory of Constraints is a set of holistic processes and insights, all based on a systems

approach that simplifies the improving and managing of complex organizations by focusing on

the few physical and logical constraining leverage points. Furthermore, it provides a tool set to

build and implement the holistic rules that synchronize the parts to achieve an order of

magnitude improvement in the performance of the system as a whole.

The crucial insight of the Theory of Constraints is that only a few constraints in a business

control the results of the entire organization. Theory of Constraints tools identify these

constraints, and focus the entire organization on simple, effective solutions to problems that

seemed insurmountably complex and unsolvable.

The Theory of Constraints is a proven method that can be used by existing personnel to increase

throughput, reliability, and quality while decreasing inventory, WIP, late deliveries, and

overtime. Successful organizations also adopt the Theory of Constraints to help make tactical &

strategic decisions for continuous improvement. The Theory of Constraints is not just a tool to

manage bottlenecks. In fact, the scope of tools and breadth of application of Theory of

Constraints is substantial.

Theory of Constraints Applications

After more than 25 years of development, the Theory of Constraints has several distinct

applications or tools:

The Five Focusing Steps of Ongoing Improvement

2. Decide how to exploit the system’s constraint

3. Subordinate everything else to the prior decisions

4. Elevate the system’s constraint

5. If, in the prior steps, the constraint has been broken, go back to step one.

Theory of Constraints makes it possible for companies to improve their operations far faster and

to greater heights than any other approach in the market today.  A myriad of factors drives the

need for companies to take dramatic steps to improve their operations:

 Global competition that is driving down prices and lead times

 Need to develop more new products, faster to keep pace in the market

 Growing sales volumes that strain capacity and jeopardize service levels

 Escalating material and labor costs that trim margins

 Ever increasing shareholder expectations for profit and sales growth

TOC offers a way forward for manufacturing and project operations coping with these and other

market forces. To be successful more and more companies have recognized that they must "do

more with less."

Manufacturing Operations- Applying TOC typically results in increasing on-time deliveries to

near 100%, and to reducing manufacturing lead times by 20-50%. Results are typically evident

within weeks of beginning.

engineered-to-order products achieve similar results with output increasing between 25% and

100%, on-time completions moving to 95+%, and lead times collapsing by 20% to 40%.

IDENTIFYING “WHAT TO CHANGE?”

In order to make significant and lasting improvements in the way projects are managed, an

organization effectively address the underlying root causes that lead to problems. The dominant

root cause in organizations performing multiple projects with shared resources is the unavoidable

conflict about when to begin new project work. In almost every organization, there are continual

internal and external pressures to address important new opportunities. At the same time,

managers recognize that beginning new work too soon may divert needed resources from

ongoing project work, compromising their ability to meet existing commitments. Unfortunately,

with imperfect knowledge of the true status of current project work, ongoing pressures to

increase the organization’s output, and a belief that delaying a project’s start will only serve to

delay it’s finish, managers all too frequently make decisions that overload the organization.

THE SOLUTION FOR THE MAIN ROOTS

and coping mechanisms. The solution includes 1) a robust planning process, 2) a more effective

scheduling process, 3) a methodology for introducing work that actually leads to increased

capacity, 4) execution processes that provide excellent project control, visibility and decision

support, and 5) work behaviors that are more conducive to good project performance.

TOC Project Management: Project Planning

Project planning begins with a combined meeting of project stakeholders to gain complete clarity

on the intended objectives, deliverables, and success criteria of the project. This gets everyone on

the same page at the earliest possible moment, identifies areas where more definition may be

required, and typically prevents mid-project surprises and rework.

TOC Project Management: Project Scheduling

Upon completion of the network building process, the resulting network is used to determine the

project schedule with a process commonly called Critical Chain Scheduling. A Project Buffer,

located between the end of the Critical Chain and the project’s commitment date, protects the

project from the effects of execution variability along the Critical Chain. Feeding Buffers,

located every place a non-Critical Chain task feeds a Critical Chain task, protect the Critical

Chain from execution variability along the paths that feed it.

TOC Project Management: Synchronized Project Work Introduction

It turns out that just the act of introducing project work that exceeds the organization’s capacity

will, in itself, lead to further capacity reductions because of increased bad-multitasking. Instead,

TOC Project Management pre-selects a more heavily loaded resource to serve as a gate for work
release. New project work will be scheduled to begin in an interval of time where its need for

that resource can be accommodated.

TOC Project Management: Project Control and Impact Visibility

Project Control is accomplished though Buffer Management, which is a process of managing the

aggregated safety that was placed between the final task of the Critical Chain and the project

completion date. Delays along the Critical Chain consume Project Buffer time. Early finishes

add to the Project Buffer.

TOC Project Management: Appropriate Work Behaviors

As discussed earlier, the coping mechanisms that managers put in place to deal with the variable

nature of project work accomplish the exact opposite of what was intended – safety is placed

everywhere and then wasted by the behaviors that people must adopt to protect themselves.

TOC Project Management: Summary of Benefits

The network building process results in up-front agreement of all major stakeholders regarding

important project objectives and deliverables; early identification of the key interdependencies

that will dominate the project; clear task completion criteria; realistic resource needs; and a much

more complete understanding of the project to be undertaken. The project scheduling process

yields a feasible, immunized schedule centered on a Critical Chain of work that will dominate

the project throughout execution – a shorter, better protected schedule that is able to absorb many

known and unknown risks.