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I am about to start using Critical Chain for a new project. I've been reading about everything that has to be done and have all required data.

Now I want to create my buffer penetration chart but I am not able to find out how to define the Yellow Zone. In some places I've read that it could be just removed but I'd really like to have it.

So, is there a Best Practice on how to define this zone of the chart?

Zsolt
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iberbeu
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2 Answers2

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Don't go with a by-the-book definition, think things through and come up with something based on your situation. Your definition of the yellow zone is going to depend on a number of factors, you should talk these through with your project sponsor and key stakeholders so that you have a consensus on what "yellow" means:

  • What is your organizational tolerance for schedule slippage? If your organization generally has a low tolerance for this you will bias your definition of "Yellow" in a different way compared to an organization where other parameters (e.g. budget) are more vital.
  • How important is your project given your organization's other priorities? Your sponsors and management can only worry about so many problems at once without getting overloaded. Having a low priority project go "Yellow" after more buffer penetration than a high priority project can help alleviate this.
  • What weight does your project assign to schedule adherence? Some projects are more than willing to sacrifice schedule to achieve end-product quality, or to ensure budgetary compliance, or to stay within scope.
Doug B
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    +1. Risk appetite varies. You need to answer this question for you and your organization, for THIS project at THIS time. – David Espina May 08 '13 at 20:01
  • Ok, the yellow zone has to be defined for each single case. Anyway, given that I know all aspects you listed, how can I translated them in values that can be represented on the graph? – iberbeu May 13 '13 at 17:12
  • Why would you use a graph? All it does is imply there is a quantitative definition for something that is utterly qualitative. A colored box at the start of your report with the words "Project is in Green/Yellow/Red" will do what you want. – Doug B May 13 '13 at 20:06
  • You mean the three zones doesn't need to be quantitatively defined? – iberbeu May 30 '13 at 14:10
  • In my opinion it is not value added. Better to give yourself and your sponsor leeway in definitions. Example: Define Yellow as being >= 10% overbudget. Your project is 9.9% overbudget, why would you not define it as being Yellow? – Doug B May 30 '13 at 16:33
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To quote Dr. Goldratt's article "Standing on the Shoulders of Giants", as well as him mentioning this multiple times elsewhere in his videos:

... is an environment with high variability. The lesson that Shewhart brought to manufacturing from Physics, and Deming made known worldwide, is that trying to be more accurate than the noise (in our case, trying to use sophisticated algorithms that consider every possible parameter in an environment of high variability) does not improve things but makes them worse -- the results will most certainly not be an improvement but a deterioration in due-date performance.

Then he goes on to explain the concept of "buffer-management" that is quite simple and answers the question fully.

If less than one third of the time buffer has passed the priority color is green, if more than one-third but less than two-thirds the priority color is yellow, if more than two thirds the color is red, if the due date has passed the color is black. Blacks have higher priority than reds, etc.

And when Critical Chain Multi-projects are concerned, then this pearl of wisdom applies as well:

If two batches have the same color, to try and decide which one should be worked on first is an excellent example of trying to be more accurate than the noise.

Bottom line, take the full buffer length and separate into three. First is green, second yellow, third red. Any project that passed the red zone is considered black.

Priorities for management attention on what is important go the other way - black highest priority, then red, then yellow. Green is not a priority, as everything is going on as it should.

Evgeny
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