Critical Chain: A Business Novel (5 page)

"Now let's consider another case. How much time will it take you to drive from the university to your house? Brian, would you volunteer?"

"About twenty-five minutes," he answers, not really knowing what I'm asking for.
"What do you mean by ‘about'?"
"About means about. Sometimes it may take thirty minutes, sometimes less. Depends on the traffic. Late at night, and with my radar detector on, I might do it in less than ten minutes. In rush hour on a bad day it might even take an hour." He starts to see what I mean, because he continues, "If I have a flat tire it would take more. If my friends persuade me to stop at a bar, it might take even longer."

"Precisely," I say, and draw the corresponding probability distribution. Five minutes has zero probability, twenty-five minutes has the highest, but even three hours has some non-zero probability.

"Mark, when you estimate the time it will take to do a step in a project, which one of these two probability distributions more closely resembles your situation?"

"The last one." Grinning, he adds, "Actually it is more like Brian, who loves to stop for a drink and talk for hours."

"The higher the uncertainty the longer the tail of the distribution," I remind them. "This is the median of the distribution," I draw the line on the graph. "It means that there is only a fifty percent chance of finishing at or before this time."

I wait for everyone to digest this fact before I turn back to Mark. "Mark, when Brian was asked to estimate, he gave an estimation that is close to the median. But when you or your people are asked to estimate the time required for a step in a project, what estimation do you usually give? Will you, please, come here and show it to us on Brian's probability distribution."

It takes him some time to reach the board. I hand him the chalk, and without hesitation he draws a vertical line, way to the right of the distribution curve.

"Why not the median?" I ask him.
"Because Murphy does exist," he laughs.
"It also exists for Brian."
"Come on," he says. "Only a suicidal, inexperienced person would choose the median."
"Makes sense," I comment. "It especially makes sense because in most environments there is little positive incentive, if any, to finish ahead of time, but there are plenty of explanations required when we are late. Under such conditions, I agree with Mark that almost nobody will choose an estimate they have a fifty percent chance of blowing. What probability will you feel comfortable with?"
"Minimum, eighty percent," comes the answer, "preferably ninety."
No arguments.
"Mark, now we understand why you put your time estimate way to the right of the probability distribution. It is somewhere around eighty or ninety percent."
"Sure."
Addressing the class, I declare, "The difference between the median of the probability distribution and the actual estimate is the safety we put in." And I pause to give them time to think it through.
I turn back to Mark. "So, in your time estimates, you do include safety to protect yourself against uncertainty, or in your words, Murphy?"
"I guess so."
"When we compare the time indicated by the median to the time you indicated as a reasonable estimate, it doesn't look like the safety you added is in the range of twenty percent." "Closer to two hundred percent," he admits.
"Look at the graph," I urge them. "Do you understand that the time estimate that gives us a fifty percent chance is much shorter than the time estimate that provides an eighty percent chance of completing a step before the estimated time? And don't forget, the bigger the uncertainty, the bigger the difference."
"So, two hundred percent safety and more is the norm, not the exception," Ruth says thoughtfully.
"Except for some over-zealous engineers, everybody makes estimates at the range of over eighty percent chance," I say.
"Which means that for each and every step of the project we factor in a lot of safety. Are you starting to realize," I ask the class, "the extent to which we do insert safety into our projects?"
They all nod, trying to digest it. Mark returns to his seat, still looking over his shoulder at the probability distribution displayed on the board. I wait until I'm convinced that Mark and the two unfortunate students he tripped over are okay, and start my summary.
"We concluded that the uncertainty existing in every project is the underlying main cause for most problems. Now we see that people are not blind to it and they do add a lot of safety in their planning. Do you agree that we must investigate, more deeply, this issue of safety?"
Full consensus.
"Good," I say. "So here is your homework assignment. Go back to the project you examined and pick, arbitrarily, at least three different steps from that project. For each of the steps you selected find out how the time estimate was arrived at. Don't just ask the project leader. Find out who gave him or her the estimate and interview the source."
Ted raises his hand in apparent discomfort.
"What's the matter, Ted?"
"It's not so simple."
"Why?"
Ted is still looking for words when Charlie answers, "Because, many times a step appearing on the chart of the project leader actually represents many tasks done by many different people."
"Several people are involved in generating the time estimate for even one step in the project," Brian elaborates.
"So you'll have to do some digging," I cynically say. "Some digging," Ted echoes. "What an understatement. It's a lot of work."
"And most of it is not documented anywhere," Brian continues to express his concerns. "I wonder if people will remember how they derived the original estimates."
"You'll have to do your best," I reply. "Remember, we just concluded that it's vital for us to gain a better understanding of this issue of the safety embedded in the planning of a project. I can tell you that very little exists in the literature about this topic. If we want to make any headway, we'll have to dig up the data ourselves. There is no other choice."
"It's a lot of work," Ted is vocal. "We can't do it for next session."
I try to argue, but there is little you can do against a unified class. It's a problem. I'll have to deviate from the sequence I had planned to follow. On second thought, it won't be too disruptive. I can devote the next session to the subject of PERT and critical path. We compromise, and agree that they will submit the assignment the session after next. At least they promise to do an in-depth job.

Mark, Ruth and Fred are sitting in their tiny office, reading each other's reports. Mark is the first one to finish. He waits patiently for the others. He speaks only after Fred puts his papers on the table. "What do you think?"

"It seems," Ruth slowly says, "that what we have found supports what we've learned in class. People do give their ‘realistic estimates' according to their worst, past experience."

"That's what it looks like," Mark agrees. "Except for one over-confident individual. In all other cases, I would say that people tend to give estimates that cover their butts. Maybe Dr. Silver is right, maybe there is a lot of safety. And if so . . ."

"Wait," Fred interrupts him. "That is the impression we got by talking to the engineers."
"And even more so to the purchasing department," Mark must add. "Do you really believe that it takes seven weeks to get a lousy connector?"
"I agree. But I think that you are overlooking something." Fred runs his fingers through his thick black hair.
They wait for him to continue.
"In some of our cases, the work is already completed. And you know what? The original estimates were not far off. Out of the four I checked, in one case the work was reported complete ahead of time. In two it was on time, and in one it was way off. In any case, I didn't see this ‘two hundred percent plus' safety."
"Maybe time estimates are a self-fulfilling prophesy?" Ruth speculates.
"What do you mean?" Mark is puzzled.
"Remember what we learned in production?" Ruth asks.
"Ruth," Mark answers desperately, "since we got this lousy assignment we've learned so many things about so many subjects. Can you be a bit more specific?"
"We saw the same phenomenon in production."
Sighing, Mark begs, "Be much more specific."
"Remember that tall, material manager, the one with the beard?"
"Steve? The creep you had a crush on? Of course I remember. How can we forget?" Fred teases her.
"I didn't have a crush on him. Besides, he is married." She turns back to the subject. "Steve told us that his plant got too many complaints about late deliveries; they had lousy due-date performance. So they started to promise their clients three weeks delivery time instead of two. That gave him the ability to release the work a week earlier."
"And nothing changed," Mark recalls. "They continued to suffer from the same lousy due-date performance."
"They said the work would take two weeks, it took two weeks plus. They added more safety time, and said that it would take three weeks, it took three weeks plus. A self-fulfilling prophecy," Ruth summarizes.
"Yes, but that's because production is different," Fred argues. "In production, most of the time parts spend in the plant they are waiting in queues in front of machines, or waiting for another part in front of assembly. Most of the lead time is not actual production, it's in wait and queue. That's not the case in projects."
"And if Dr. Silver is right, and each step in a project contains so much safety? What then? Then in projects also most of the lead time is wait and queue."
"Ruth. Fred. Calm down. Let's think."
Another half an hour of stormy debate doesn't lead them to any conclusions.
"Can we conclude," Mark tries to put an end to it, "that it looks promising but we don't have enough to turn it into any practical line of action?"
"No," says Fred. "I don't think that our findings confirm that there is a lot of safety."
Before the debate starts again from scratch, Mark suggests a compromise, "Let's gather much more data."
Ruth doesn't agree. "What's the point," she says. "We don't have to assemble more data, it will not help us figure out why we have a self-fulfilling prophesy. We have to think."
"Fine," Mark smiles. "You'll think, we'll assemble more data."
"If in some mysterious way your data proves that there is not so much safety, I'll never forgive you," she warns them.
"Why is it so important to you to be right?" Fred asks. "Just because I teased you about Steve?"
"Forget Steve, I have a much better reason. There must be a lot of safety or we don't stand a chance of reaching the pot of gold. Ten thousand shares. I want them."
"Me, too." Fred smiles. "But I'll bet on our ‘around the clock' idea to eventually lead us there."
"Forget it. With the inflated egos of our engineers, it will never work."
"Maybe we'll find a way," Fred says, but even he doesn't seem to have much hope.
"Dr. Silver's safety is much more promising." Ruth stands firm.
Mark doesn't take sides. "Should we report to Isaac Levy that maybe another avenue is starting to open up?" he asks.
"Too early," is Ruth's opinion.
"Much too early." Fred is firm.

When Chris is shown in, B.J. is behind her desk. He puts her memo in front of her and sits down, not saying a word.