The Path to Effective Multi-Project Management

Situation of Multi-Project Management

The situation of multi-project management is similar in many organizations:

• The number of projects is increasing steadily.
• The available resources, both material and human, remain limited.
• It is challenging to find qualified and experienced junior staff.
• The current shortage of skilled workers exacerbates this situation.
• Certain skills and experiences are limited to a few employees and are not easily transferable.

In project practice, this often leads to “distribution battles”: individual projects and stakeholders compete for scarce resources, resulting in the consumption of additional resources. While management may prioritize plans and projects, the final prioritization is often influenced by the project staff. Divisional interests and personal preferences of the project staff can lead to a different prioritization than what is operationally and strategically aimed for by the management. This lack of organization-wide alignment can hinder the meaningful coordination and implementation of projects, leaving it to day-to-day activities.

Further resources are being “wasted” due to this unnecessary and uneconomical competition, resulting in no additional value creation—a situation that must be avoided!

It is one of the management’s tasks to resolve this conflict in a sustainable way.

Various approaches are being pursued to address this in corporate practice:

1. Establishment of organization-wide (central) resource management.
2. Implementation of organizational solutions and/or tools such as project management software: While this approach aims to eliminate the “resource bottleneck,” if carried out in isolation, it may not be a satisfactory solution.
3. Critical Chain Project Management (CCPM) – the application of the Theory of Constraints (TOC) to project management. Eliyahu M. Goldratt, an Israeli physicist, developed the Theory of Constraints (TOC).

Theory of Constraints & Critical Chain Project Management

Situation of Project Work

A projection from the year 2004 assumes losses in the German economy due to ineffective and inefficient projects, estimated at 150 billion Euros per year, with every 3rd project ultimately failing. More current figures are not available as of July 2013.

In many organizations, the project management situation can be described as follows:

• Projects frequently exceed the planned budget and fail to meet the scheduled completion date.
• The quality of project deliverables is not satisfactory.
• The resulting difficulties lead to the wastage of additional resources.
• Customers are dissatisfied because their requirements have either not been implemented or have been inadequately addressed.
• Experienced and competent employees find themselves working on several projects simultaneously (harmful multitasking).
• Project staff are under enormous pressure due to the workload of managing several projects in addition to their regular line work.

Significance of Effort Estimates

(Effort) estimates are also a central topic in CCPM; the following properties are attributed to them:

• An estimate is always prone to error; the more precise the attempted estimate, the greater the deviation from the planned value.
• Estimates are always a function of the relative probability of occurrence of a value.
• Estimates are never underestimated but usually exceeded because:
  • If it is known that a buffer is available, work is started later (student syndrome).
  • The maximum available time is always used (Parkinson’s law).
  • What can go wrong goes wrong (Murphy’s Law).

Especially in the combination of causes lies the challenge!

Conclusion:

The multi-project resource management practiced in many organizations hinders or inhibits project progress. Changes in resource management in multi-project environments are the starting point for noticeable performance improvements in the project business.

Resource Management and Multitasking

Since resource managers are usually measured by the success of their projects, they tend to schedule employees to work on multiple projects simultaneously. At the same time, they put pressure on their employees to prioritize the scheduled projects over their other tasks. This initiates a self-reinforcing process known as harmful multitasking.

Furthermore, employees involved in projects are often over-scheduled: they receive more assignments than they can complete within the planned time frame.

Applying the Theory of Constraints to Project Management

The cause-and-effect principle, which serves as the basis in the natural sciences (systems theory), also underlies the Theory of Constraints (ToC).

Constraints, understood as the “bottleneck” or “the weakest link in the chain,” are one of the factors that limit the performance of a system.

ToC addresses the core cause under the premise: Changes to the bottleneck factor will have the greatest impact on the entire enterprise.

Root Cause Identification

TOC postulates that an organization’s difficulties can be traced back to one or very few core causes. Thus, to resolve these problems in a sustainable manner, the actual root causes must be identified and addressed. The bottleneck must be identified and eliminated! TOC starts at the core cause – resource scarcity!

Assumptions:

• The majority of resources have to be idle from time to time; otherwise, they generate unnecessary or excessive “work in progress.”
• There exists only one resource that hinders or limits the performance of the whole system most strongly (TOC: bottleneck); it is aimed to use this resource to 100%. If this resource fails, the system comes to a standstill!

CCPM assumes:

• Harmful multitasking is to be avoided by limiting the amount of work and aligning the projects to the bottleneck (the resource).
• The individual task buffers are aggregated at the end of the project.

An example of harmful multitasking: An employee is scheduled to take on tasks in three different projects in the coming weeks. The originally created schedule called for sequential processing:

Now, the three projects are facing a critical deadline situation. Consequently, the project managers urgently request the scheduled employees to fulfill their planned tasks. As a result, the employee feels compelled to start work for all projects and then switch between the tasks that have been started. Although this may “satisfy” the respective project management, overall more resources are consumed than with sequential processing due to the now more frequent set-up times: harmful multitasking.

harmful multitasking – multiple switching between projects

The difference between time points t1 and t2 symbolizes harmful multitasking. Goldratt’s analyses have shown that in project practice, it is more common for a project worker to interrupt a project task multiple times than to complete it without interruption. The simplified graph above “obscures” the fact that probably all three projects cannot meet their original time frames! The setup times significantly increase the overall effort. Additionally, the “WiP” (Work in Progress) also increases (significantly more work was started than was actually necessary!).

A vicious circle

Furthermore, harmful multitasking results in other negative effects, e.g.

• The project cannot be finished on time, resulting in further follow-up costs (loss of sales due to delayed market launch, customers migrating, …).
• The projects will exceed their budget due to higher resource consumption, thus becoming more expensive than planned.
• Due to the significantly increased WiP, the financial requirements increase.
• Contractual penalties may become due.

a vicious circle – a self-reinforcing system leads to collapse

It becomes clear that a vicious circle is created by harmful multitasking! This vicious circle initiates even more effects: the project leaders are under pressure and will involve the management. The load, therefore, also increases at the management level, as it receives additional tasks (making decisions) from the operational “daily business” in addition to its management tasks.

Conclusion: Local efficiencies are dominant factors in the organization and must not be used to manage the organization.

t becomes clear that a vicious circle is created by harmful multitasking! This vicious circle initiates even more effects: the project leaders are under pressure and will involve the management. The load, therefore, also increases at the management level because, in addition to their management tasks, they receive further tasks (making decisions) from the operational “day-to-day business.”

Conclusion: Local efficiencies are dominant factors in the organization and must not be solely used to manage the organization.

On the other hand, there are good reasons to control organizations by means of local efficiencies: e.g., waste of resources should be avoided. In this case, local efficiencies must be used as a control variable; a dilemma?!

The solution

This is where TOC helps: a paradigm of TOC states “there are no conflicts in reality”; meaning: a dilemma is not inherent in the system but self-made!

TOC focuses on the bottleneck in the system: this is the resource that should be utilized at 100%, as it most affects the performance of the overall system. A change in the bottleneck resource automatically results in a change in the performance of the overall system, unless another resource has become the bottleneck.

As a result, TOC suggests the following 5 steps:

1. Identify the bottleneck
2. Decide how to use the bottleneck optimally
3. Everything else is subordinated to this decision
4. Expand the bottleneck
5. If the bottleneck has been moved, start again from 1.

The practical procedure for resource or multi-project management is derived from these steps.