Project management in a hospital: From chaos to success

At leading Hospital many projects were running at the same time. Projects that were necessary

to realize the ambitions of the hospital. The problem was that too many projects yielded too

little result too late. Hospital implemented Critical Chain Project Management,Lean & Six

Sigma (TLS) and cut the average lead time in half whilst doubling the number of completed

projects ...... with the same number of people! Now, TLS is an indispensable tool for innovation

at the hospital.

Background In 2005, it ran into financial trouble and had to restructure completely. Since then, Hospital has made

a strong come back. It grows faster than the market and is financially healthy again. So healthy, that it

confidently invested in a new hospital that it just moved into in spring 2011.

In early 2008, the recovery was in full swing and one of the problems that the management and its

employees ran into was the long lead times and poor delivery performance of many projects. A survey

by hospital staff led to a shocking conclusion: There were no less than one hundred eighty projects

running simultaneously, and a significant number of them had no clear project leader, sponsor, scope

definition, budget or due date. The Chief Innovation Officer of Hospital explains: "Projects, and a

lot of them, are inevitable for a hospital with our ambition level. But we had insufficient visibility and

control over project selection, progress and completion."

Following this sobering observation, the hospital’s board decided to invest in a project management

solution that not only had to create order in the projects, but would also raise its output. They chose

TLS because it had amply proven to improve both output and due date performance of projects

without increasing workload.

CCPM: Clear task priorities for outstanding project performance

Critical Chain Project Management (CCPM) was developed by Dr. Eli Goldratt, author of The Goal

and Critical Chain and founder of the Theory of Constraints (TOC). CCPM is the solution for project

organizations that have a low project performance in time, scope and budget.

CCPM uses the fact that project plans have more slack ("buffers") than project teams know or want to

admit: These buffers are their only means to achieve acceptable delivery performance. Or so they

think .....

During project planning, CCPM takes these buffers from the task estimates and insert them in a

project buffer at the end of the project. After all, it is not important for individual tasks to be

completed on time, as long as the overall project is finished on time.

Figure 1: CCPM: The project, instead of its tasks, is protected by a time buffer

During execution, tasks that need to be executed now are regularly updated in the CCPM

software by means of a remaining duration estimates: How many days till this task is

completed? This estimate is then used to calculate which task consumes most of the buffer.

Based on this ‘buffer consumption’ clear task priorities are calculated and depicted as green,

yellow or red tasks.

Figure 2: Colours give clear priorities within and between projects

These clear task priorities within and between projects not only end frequent discussions

about project priorities, but also result in a faster and more reliable completion of projects.

Typical CCPM implementations result in the following improvements:

• Due date performance ≥ 90%

• Lead time ≈ 30% shorter

• Productivity ≈ 30% higher

• Less stress and more focus in project teams and management

CCPM has been successfully applied on a large scale in industry, IT, pharma, infrastructure

& utilities.

Yet another project

In June 2008, yet another project commenced: "Implementation of CCPM”. But the goal of

this particular project was to significantly reduce the number of concurrently active projects

by the end of 2009, whilst assuring that 95% of the projects are finished on time, scope (what

you deliver) and budget. It was decided to focus the implementation on cross-departmental

projects which caused the bulk of the load and problems at project resources in Hospital.

To start with, the project team made an inventory of problems and discovered that they were

deep rooted and fundamental:

• Some of the projects had no plan

• Some of the projects had no clear project leader or sponsor

• Projects were launched, regardless of the availability of the required staff

• Management had insufficient understanding of problems and status of active projects

• Projects were often completed too late (if a due date was set at all)

• Project group meetings were sometimes ineffective

• Projects often went over budget (if there was a formal budget)

• Project staff were not always available when needed

• There was tension and debate on priorities within and between projects

This survey also revealed that Hospital first had to invest in basic elements of project

management, in order to be ready for the implementation of CCPM.

Basic elements of project management In a high performing project environment, every organization needs three things: structures,

processes and templates.

Structures: Projects are temporary endeavours to achieve something unique. So, even more

than with regular work, it is important to clearly identify roles and responsibilities.

Obviously, the project leader is critical because he is responsible for the delivery of the scope

(what you deliver), on time and within budget, but the sponsor also plays a key role. Each

project must have a sponsor which is decisive and accessible for the project leader. The

sponsor is often problem owner, provider of the necessary budget and the person who needs

to approve potential deviations from the plan. Appointing decisive and accessible sponsors

and assuring frequent and constructive consultation between project leader and sponsor was

an important first step to success at Hospital.

Processes: Since projects are unique, most develop, almost by definition, in a fairly

unpredictable way. For this reason, it is important that key processes are in place to deal with

these unforeseen developments. First, we established that projects are always in one of the

following 4 phases: idea, planning, implementation and evaluation. The transition between

each phase is a formal step that requires a decision by the client or the project board (see

below). In order to maintain progress in active projects, brief weekly project meetings and

monthly meetings with the sponsor proved critical to success.

Templates: Project management has become notorious for demanding extensive project plans

that proved quite useless during execution. Hence CCPM provides plans and reports that are

very concise and focused. Hospital in Rotterdam, introduced no fewer than six templates for

project ideas, project plans, project meeting notes, project status reporting, escalation, and

completion reports. At first, some of these templates received some skepticism, but now they

are all used extensively because they help project teams and sponsors to focus and save time.

Project Board Besides implementing structures, processes and templates a so called Project Board was set

up. The Project Board is a tightly structured meeting of the hospital’s board that included all

sponsors of the cross-departmental projects. The objective of the project board is threefold:

First, selection of valuable project ideas. Second, ensure effective intervention by sponsors in

struggling (so called “red”) projects, and finally evaluation of completed projects.

Figure 3: Transparancy about active projects and their status; green, yellow or red

A project selection was simplified by means of a 1 page potential sponsor before proposing it to the

Project Board. The Chairman of the Board then lead the discussion: "In no more than fifteen minutes,

we often have five or more project ideas to discuss. I ask only three questions: Who is excited about

this idea? What problem does it solve? And: What is the direction of the solution? Through question 1

and 2 we lost quite a few ideas, and normally only 1 or 2 get approved for planning, provided that at

least 2 projects were completed as well. Otherwise they must wait to prevent overloading of the

project resources. "

The advantage of this method is twofold. Firstly, management now is fully aware of, and committed

to, all ongoing cross-departmental projects. But more importantly: During the first phase of

implementation significantly less projects were started, thus reducing the work load on the scarce

project resources and allowing them to focus on finishing already running projects effectively.

Besides focusing on project selection, execution and evaluation the project board also monitors the

depletion of the project budget. In many organizations, projects need to be financed from

departmental budgets, often leading to heated discussions at the end of the year when the overall

budget appears to have been exceeded. To stop this once and for all, Hospital took a fraction of all

relevant operating budgets and inserted them into one central project budget, aimed at covering the

out of pocket expenses of all cross-departmental projects. Every month, the project board monitored

the real and expected exhaustion of this budget vs time using a simple report. This way the project

board could monitor the budget depletion per project, but more importantly found that the inevitable

budget overruns and under spends tend to offset one another provided they are financed for a single

source; the cross-departmental project budget.

Finally ..... In the fall of 2008, the situation in Hospital had significantly improved: All the projects had

clear project leaders, sponsors and consensus over time (due date), scope (what they will

deliver), budget (out of pocket expenses only) and goal (desired outcome). Because the

project board was quite reluctant to approve new projects and even some struggling projects

were stopped, the pressure on the project resources declined. It was time to introduce TLS to

further reduce lead times and increase completion.

Software can never be the aim of an improvement project, but, increasingly, it is becoming a

necessary precondition. CCPM software distinguishes itself from other project management

software in the sense that it is focused on execution rather than planning. After all, it is during

execution that the project almost inevitably starts to deviate from the plan and more often

than not, in traditional project management the plan is abandoned altogether. The solution is a

robust high level plan that doesn’t detail actions, but lists deliverables, intermediate

objectives necessary for achieving the project objective. Plans usually consist of no more than

ten to fifteen deliverables. During execution the responsible resource can add actions to the

deliverable that are deemed necessary to generate the desired outcome.

Project plans are not created by a person sitting at a computer. One of the key success factors

of this CCPM implementation is the so called planning session: After approval of the project

idea by the Project Board, the proposed project team gets together for a four hour meeting. In

a closely facilitated meeting they go through the key elements of the project plan template in

such a way, that the draft plan is filled in and ready to be sent to the sponsor for approval by

the end of the meeting. At Hospital projects are no longer started without such a planning

session. In very little time it generates a focused plan with maximum buy-in that contains all

elements the project team needs to execute the project successfully.

Once a project is in progress, frequent (weekly) short project team meetings are critical for

success. In the weekly meetings, the project leader updates the project real time in the CCPM

software, based on the input of the team members. Hospital has even invested in a number

of "CCPM-rooms" with computer and flatscreen TV’s on the wall where project teams can

meet and update their project.

What is unique about this? CCPM makes very clear which project deliverables need to be

worked on now and in what order of priority both and between projects. This leads to calm

and focus as well as a better flow of projects. Per active deliverable, the tasks are updated by

entering the estimated number of days until completion. CCPM is always forward looking:

Do not spend time on what has been done, but focus on what needs to be done to finish a

deliverable. And even more importantly, avoid blame if tasks were completed late. Accept

windfalls and setbacks as a fact of life in a project environment and focus continually on

corrective actions and decisions that lead to completion of the project on time, scope and

budget.

Through the CCPM implementation, Hospital learnt that project management is a vital but

often underestimated craft. For that reason, it secured the continuation and development of

CCPM knowledge in an in-house project office. The project office provides training courses

for project teams and leaders, facilitates planning sessions, prepares project board meetings

and gives (un)solicited assistance to projects that are in red.

Results: Doubling the output and halving the lead time

Between late 2008 and spring 2009, all the old projects were finished and new projects under

CCPM principles introduced. Due to its success, the management has decided to add a group

of existing projects related to the construction of the new hospital to the CCPM portfolio (see

the increase in the summer of 2009 in Figure 4 below). Nevertheless, the number of cross-

departmental projects that ran simultaneously in Hospital remained fairly stable with

approximately 30, versus over 40 at the start in mid 2008. This decrease is critical to the

focus of project resources and the flow of projects.

Figure 4: Number of concurrent cross-departmental projects declined from around 40 to under 30

despite growing the portfolio

The fact that Hospital could add a significant number of projects to its portfolio was due to

the fact that they finished much faster than before. Figure 5 shows that the average lead time

of cross-departmental projects has decreased from over 2 years in 2008 to approximately 10

months in 2009 and 2010. This is less than half the lead time!

Figure 5: Average lead time (in # of months) of cross-departmental projects was cut in less than half

This brings us to the last and most important achievement: In 2008, on average 1 cross-departmental

project was finished per month. The Chairman of the Board concludes: "By introducing project

management principles and TLS, the productivity of our project resources nearly tripled. Currently

we finish about 3 cross-departmental projects per month. Project management has become a core

competency of Hospital towards achieving our ambition; making Rotterdam the healthiest city in the

Netherlands."

Figure 6: Number of projects finished per month tripled (6-month rolling average)

Lessons for successful implementation

What is critical to achieving success?

1. Implement simple structures, processes and templates for all projects

2. Install a Project Board at board level to select projects and evaluate and monitor progress

3. Create a central budget for all out of pocket expenses and avoid planning and monitoring of internal

hours

4. CCPM project management is a craft: Use an experienced implementer and retain the knowledge

and skills in a project office

5. Accept windfalls and setbacks as a "fact of life” and keep project teams focused on completing

projects on time, scope and budget