Critical chain of goldratt

CRITICAL CHAIN

GOLDRATT

ANALYSED BY JAGADISH

jagadish has taken the gist of the book, analysed by jagadish and written notes on book,. it is in
sequence

1) The book is supposed to describe the lifetime of a product.. First sales are picking up, as a product is introduced into market, then they stabilize it, becomes a mature product and finally it fades out.

Ans) jagadish thinks that a product if mostly introduced into the market it should not be advertised at all.The new product has to spread through word of mouth . it is so because the new product may fail or succeed depending upon quality of product. A mature product has to have lot of advertising, so that product gets imprinted in consumers mind throughout its life span . it should be innovated with slightly on regular basis to differentiate itself from crowd of products.

2 it is mainly based in the shareholders expectations of future growth and future profits well founded expectations based on new impressive track record.. Our companies shares trade on wall street for 62 dollars and 48 cents, according to yesterday paper. this high price is not justified by companies assets or even companies profit

Ans) Amazing thing is that shareholders expect something of the shares they purchased called by us as speculators, but what happens to shareholders who stick to company loyally. These shareholders, who hold companies share for a long period, must be given some share of profits earned, compared to speculators. How much, is left to discretion of companies to themselves based on the profit earned by the respective companies.

3) Product life span is six months , development time is two years. when we have to launch the fruits of own development every six months means only one thing question is when are we going to miss

Ans) this problem is a tricky one, lifespan cannot be matched. with development time research and development takes a long time. Question is, when are we going to miss, who can state when would research and development strike the right key .

It is like an ant which does only one thing, keep storing the grains for rainy day, eat from its granary store, so company should also go on extensively for research and development, where 10% of profits earned have to be kept aside for Research and development, why 10% why not 20%, it is so because certain percentage has to be set aside for investing into existing products instead of spending entirely on research for new products, percentages are only numbers which are based upon intuition of the company ceo's and its board of members decision.

I , jagadish Prasad believe in 10% which is feasible and practicable. forget about launching, because even consumers don't know what new invention would take place in future. All inventions have come not because they were looking for it, it came like a flash to scientist while looking for other things in their mind and in research and development one should be like an ant (perseverance)

4 I do have some problem, can you elaborate I (new project leader) didn't start this project and person before me(old project leader who left) made some wild promises and that i (new project leader ) am afraid to state that project time may be unrealistic to new project leader. like expected performance of new maiden project and time It will take to deliver it (project)

Ans) it is always seen that when a new project leader is appointed in place of past project leader, the new project leader gets stuck up because of wild promises made by left project leader. The company must evaluate regarding the project status with the new project leader and take down his analysis and give project leader enough time say 1 week for new project leader to understand the problem faced in project he is going to undertake after analysis, project leader newly appointed, has to give status of project completion and time of completion where project has been left untouched.

This would give the board of directors as to what to expect from the new project leader in making the project a success.

5 can you define what you mean by a project

ans) i say in your work, have you ever come across a complex initiative that in order to manage it, people have to draw the picture of what they are supposed to do. Some block diagram of various steps that must be accomplished in order to achieve the objective, showing which steps should be done in sequence and which in parallel, the whole intention of a project is not to save money but to make money

6) everybody knows projects don't finish on time or on budget and if they do, it means they had to compromise on content

Ans) projects don't and can never be completed in time. it is because even after keeping a buffer
project, project may lapse in time. for example suppose project leader says he is going to complete the project in five weeks, actually what project leader has done is he has calculated in his mind about three weeks completion project and additional two weeks in case he encounters any project problems the best way to solve this problem, is project leader must state 3 weeks and start working on it.

He should listen to his intuition what happens to the project, because of this project would be completed fast plus buffers if kept should be kept at end of project, not in between the tasks. usually project leaders divide project into tasks and try to keep it i.e buffers in between, when you divide a project unconsciously project leaders take into aspect about team strengths and weaknesses of its team hence to complete project successfully take only 3 weeks on the basis of intuition and not 5 weeks .

it can be termed as stretching and pushing yourself a corner and coming out of it. a project leader says 3 weeks but he has to review his work every day to see to it that can be or is he able to complete within 3 weeks.

the best solution is review each day the best thing is under batch completion of the project in software the first team has to pass i.e project to later stage to second team, only after it gets fully satisfied with the project it has undertaken.

One thing is for sure, if project is given to second team after 1st team has completed its project, and suppose still problems do occur . the second team has to revert back its project back to 1st team now question arises as to 1st team, which would be doing another project after its completion because of its giving back the project to 2nd team,.

the first team has to stop what it is doing and complete its task and give it back to second team after errors have been rectified in the project . here situation arises that 1st team has some deadlines to meet for new project it has undertaken

jagadish thinks that out of 5 members in the first team. 2 members who were vital for completing the project must be got back to complete the task, not entire team should
their is another situation projects are also not been able to complete because of lack of budget. If .budget say is kept 1 crore people doesn't know whether it is sufficient or not, until project is out its fag end, nobody can say till its completion date

what is the solution monthly or weekly review has to be taken up of the projects that is remaining and projects which cost 25 to 30% of profits, earned by the company must be taken up by companies. This is for big companies who have taken up projects and been in to existence for 5 to 10 years and who know how to manage projects

what would happen to those companies which are new. They should have to take some percentage based on authorised capital. one may be thinking why authorised capital, why not issued capital it is because, in case of difficulty company issue more number of shares to public and can satisfy its loses. projects are run based on or should be run on authorized capital ..

Issued capital is only part of authorised and if it is run on issued capital, companies cannot take up huge projects where as chance of profit earning is huge, when projects are taken up on basis of authorised capital in case the budget surpasses the estimate authorised capital, more authorized capital should be taken to solve the problem. projects have to be taken based on profits it can earn for the company .

This is another way of looking why not combine both projects based on authorised + profit generation even if projects are taken simultaneously take only projects based on profits,

the others based on authorised capital. simultaneously 3 minimum and 5 maximum projects can be taken up why 3, because 2 (25%) and 1 on profits, why 5 maximum 4 (25%) authorised ,1 on profits and rest of profits are sent back based on research and development work and development of existing products it is for risk takers to go by 5 projects, jagadish states best always is 3 projects which are big or 5 small projects if company authorized capital is sufficient.

7) term payback : payback is time period from investing until we expect the fruits of our investment to cover the investment

eg suppose that you invest one hundred dollars and you get 50 dollar each year. assuming no
inflation, your payback period it is 2 years

8) which reasons, to the existing problem of product, should we consider the ones offered by top
mangers who See global picture, or should it be ones offered by lower level mangers who are much more familiar with actual details of company problems at the ground level

Ans) top management sets the vision, middle management implement the mission of company in
consultation with top management and lower level implement and put things into action . it is already known to the public that it is better to be in action i.e where problems arise.
only solution is reduce corporate structure.

CEO has to have direct contact with field officers or management trainees so strategy formulation of top management must be made in consultation with lower level. if organization is too large and CEO can't talk with entire force people, the lower level has to have or must voice their opinion through writing it in open channels of communication

eg orkut

9) where to put buffers (safety)

Ans) usually as per jagadish knowledge, in projects buffers are kept in between tasks. actually
jagadish thinks buffers usually have to be kept after the end of project eg if project leader says 3
weeks keep additional 1 week extra in case of emergency but never sit back attitude of 4 weeks
higher the uncertainty the longer the tail of distribution curve

10) Do you understand that the time estimate that gives company a fifty percent chance is much
shorter, than their time estimate that provide an 80% chance of completing a step before the estimated time and don't forget the bigger the uncertainty the bigger the difference

Ans) it is so because shorter the duration you keep for the project completion, the better the chances of completing your project on time. Always keep on mind it is intuition
. its your Best friend and remove buffers from your mind. Set. people and do give realistic estimates according to their worst past experience in their projects

11) the effect is clear, companies are so immersed in the mentality of saving money that they forget that whole intention of a project is not to save money but to make money

Ans) if suppose a company is of but mindset to protect money from being spent, the last result would be losses. if company go with intention to make money, they would spend time in making its products go for a long time, quality would aromatically improve in life of people and job satisfaction would be gained, and lastly company can make profits which is that company has come into existence to make money, profits and not to save money

12) what is critical path

critical path is defined as the longest chain of dependent steps longest in time of course. critical path determines the time it will take to finish the project that is being undertaken by the company . any delay on critical path will delay the completion of project that way project manager must focus on it.

13) late start and early start

project leader are always in a dilemma whether to start the project early or on late. usually project leaders would like to start projects early, it is so because of meeting deadlines set by the top management.

suppose a newly appointed team starts of project it had to start project on Wednesday but if it is free it starts out on Monday this helps team a safety of 2 days, early starts have lot of safety attached to it some projects start early, the other projects starts off late, coming to late start jagadish advises not to late start a project.

Usually projects late start only because previous projects are not able to be completed on time. hence to complete the projects, the new projects are late started. hence it is advisable by jagadish for companies to not to late start any project but to start off from day one of the project that is due to start on that day

eg suppose a team of 5 is doing a project on windows operating system and they think they have
completed the project of 1st phase and it is pushed off to 2nd stage and 1st team starts off with new assignment in windows. the second teams find a fault in windows operating system, they return it back instead of whiling away time of the project windows that has come back instead of 5 working in it, only 2 would be working on it the other 3 would be working on new assignment
here again a new development has taken place jagadish uses the term commandos in project.

these commandos are into middle management and they know the knowledge of entire stream of computer literacy (hardware+software ) they can fit anywhere in the organization what would be their role.

Their role is that of an all rounder that is why they are called commandos
these commandos talk to each of project leaders on regular basis. they would be working out solutions along with projects leaders and team players. if at all anywhere they (team players) are removed or resign in their place these commandos would be filling up

these commandos would be not more than 2 to 5 % of entire software project segment .Why 2 to 5 % ? these are all rounders hence they should be restricted to this percentage . they are fillers and if fillers are many, their would be lot of confusion in handling them. thus they should be limited in few numbers and these commandos not only work for their own companies but again, are sent to other companies to train themselves or to contribute train other employees of the companies they are sent

END of critical chain analysis