Theory of Constraints Handbook - James Cox Iii [62]
Non-Contractual Performance Reports to Project Owners
If the organization is using only certain aspects of earned value, the use of CC concepts should not present a problem. Buffer Management can be used internally and earned value (EV) calculations can be used for external reporting. In a few cases, traditional project plans adhering to EVS criteria have been successfully managed using only the behavioral concepts required for CC (discussed later in the section “Causing the Change”).
Internal Control Schedule and Scope Reports to a Project Office or Similar Body
Legal requirements, such as the Sarbanes-Oxley Act of 2002 (SOX; Sarbanes and Oxley, 2002), have reinforced the need for more stringent internal reporting on projects that impact an organization’s financial reporting system—as do many, if not most, projects. External auditors of companies required to file financial information with the Securities and Exchange Commission now want detailed information on projects that affect the financial reporting process. In our experience, EV, which is largely based on the familiar standard cost system, is being used more frequently to satisfy these requirements. External auditors are familiar with EV; they may require some education to feel comfortable with CC metrics.
The completion of some projects might determine the life or death of the organization. Other projects have a profound influence on the company’s future success. If this is the case, stringent internal controls dictated by SOX (Sarbanes and Oxley, 2002) might apply. Even if a project currently is not required to meet the law’s financial operations internal control criteria, it might be required to do so in the future. EVS offers an internal control environment that will meet SOX internal control requirements. Of course, provided auditors have been educated in CC concepts, CCPM also supports SOX internal control requirements.
Causing the Change: Behavioral Issues, Management Tactics, and Implementation
To obtain maximum benefit from CCPM, it should be applied to all of an organization’s projects. However, as part of an implementation plan, it may be advisable to conduct a pilot project of one or two projects. While CC concepts may be intuitively obvious to many individuals, you should not underestimate the difficulty of smoothly introducing a new planning, scheduling, and control system.
First, top management must actively and continuously support a CC implementation. Top management must make sure that they, and all other managers, have been trained in the need for new behaviors.
Next, most workers have experienced more than one reorganization and usually many “improvement” programs that have not delivered promised outcomes. However, these are the people who must implement a new system; management cannot do it alone. The last topic in this section addresses the issue of change.
Managerial Actions to Support Critical Chain Project Management
The more employees who understand CC concepts, the easier a CC implementation will become. However, all managers should receive CC training and should agree with and support CC concepts. In addition, certain actions are required of top managers, resource managers, and PMs.
Top Management Responsibilities
To set the proper environment for change, top managers (CEOs and Executive VPs) will:
Outwardly and continuously support the implementation of CC concepts.
Help enforce the ban on unproductive multitasking.
Reinforce FIFO work rules.
Direct all performance evaluation, positive and negative, to the project team, not to individual project team members.
Resist any temptation to enter