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WHITE PAPER Application of CCPM (Critical Chain Project Management) to generate gains for industrial customers Shirish M. Kulkarni, Jayanti Das, and Ajay Deshpande (Presented at Project Management Leadership Conference, QAI‐ 2009) Version 1.1 July 2009
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W
HITE P
APER
Application of CCPM (Critical
Chain Project Management) to
generate gains for industrial
customers
Shirish M. Kulkarni, Jayanti Das, and Ajay
Deshpande
(Presented at Project Management Leadership Conference,
QAI‐ 2009)
Version 1.1July 2009
2
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Contents
Abstract............................................................................................................................... 4
1. Introduction.................................................................................................................. 4
2. Need for CCPM............................................................................................................. 5
3. CCPM Methodology ..................................................................................................... 5 3.1. Differences with Critical Path Method ............................................................................... 6 3.2. Buffer Management in CCPM............................................................................................. 6 3.3 Sources of wastages in project ........................................................................................... 7
4. CCPM Methodology as applied for Industrial Projects ................................................ 9 4.1. Five focusing steps of Theory of Constraint used to design the solution.......................... 9
4.2. Planning project using CCPM methodology ....................................................................... 9 4.3. CCPM Project Tracking ‐ Buffer Management.................................................................. 10 4.4. Key Project Parameters .................................................................................................... 10 4.5. Buffer Management ......................................................................................................... 11
4.6. Buffer Recovery Plan ........................................................................................................ 11 4.7. Strong Gate Control.......................................................................................................... 12
5. Application of CCPM to Software Services Projects................................................... 12 5.1. Why Change?.................................................................................................................... 12 5.2. Objective .......................................................................................................................... 13 5.3. What to change? .............................................................................................................. 13 5.4. Pre‐requisites for the Change........................................................................................... 14
6. Case Studies to the Industrial Customers .................................................................. 16 6.1. Gains for Industrial Customers: ........................................................................................ 17 6.2. Critical Success Factors..................................................................................................... 18
7. Key Learning ............................................................................................................... 19
8. About the Conference ................................................................................................ 20 PML 2009‐Project Management Leadership Conference 2009............................................... 20
9. Conclusion .................................................................................................................. 19
About the Author.............................................................................................................. 20
About Geometric .............................................................................................................. 21
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Abstract CCPM (Critical Chain Project Management) is a Project Management Methodology based on
Theory of Constraints (TOC). TOC is an overall management philosophy introduced by Dr. Eliyahu
M. Goldratt in his 1984 book titled ‘The Goal’, which is geared to help organizations continually
achieve their goal. The idea of CCPM was introduced in 1997 in his book, Critical Chain.
Application of CCPM has been credited with achieving projects 10% to 50% faster and/ or
cheaper than the traditional methods (i.e. CPM, PERT, Gantt, etc.) developed from 1910 to
1950's.
Geometric Ltd has been using CCPM methodology and has reaped the resulting benefits both
internally and externally. This paper summarizes the application of this methodology to the
software services projects for the industrial customers. The gains due to the application of this
methodology for both fixed cost and T&M (time and material) type of projects are passed on to
the customers in the form of value add or direct tangible benefits. The main aim is to be able to
deliver "more in same" or "more in less" to the demanding industrial customers and hence to
achieve the customer delight/ satisfaction. In the current business context of slowdown, the
customers are demanding more in less (or more in same) – CCPM aims at enabling this goal to
be achieved in a systematic manner.
1. Introduction
Project Management is becoming more and more challenging with the demanding industrials
customers. The current economic situation is forcing the service providers to go up the value
chain by continuously improving to deliver more and more value to the customers. The CCPM
methodology aims at addressing the basic problems in the areas of estimation, planning and
execution of the projects. The approach addresses the issues related with human behavior
systematically. The gains are achieved by removal of buffers and making them available at the
appropriate stages of project. The approach is to challenge the resources to continuously do
better by measuring them and tracking the project progress with the bigger picture. CCPM has
been used in Geometric for last 3 years and has been clearly shown to achieve the gains which
the customers are demanding. The gains are in the form of delivery ahead of time, delivery of
more features in the same time and improvement of quality of deliverables.
This paper aims to discuss the CCPM methodology, its application to the software services
projects and specifically to the demanding industrial customers.
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2. Need for CCPM
In Project Management, we often hear from the Project Managers the following as their pain
points. This is common to all types of projects viz. engineering, construction, software
development or product development. Even though the projects are diversified, the complaints
are basically the same.
1. Usually original due dates are not met
2. There is significant re‐work
3. Too often resources are not available when needed (even when promised)
4. Delays in getting approvals
5. Necessary things are not available on time (specifications, designs, authorizations)
6. Too many customer changes
7. There are fights about priorities between projects
8. Actual work is significantly more than what was originally planned.
9. Projects are full of surprises
10. Projects commitments are always on 3 dimensions of time, content and budgets.
11. Dealing with each surprise puts pressure on one of the commitment
12. When we act upon to take care of one commitment, the others tend to get compromised
13. Bigger uncertainty ‐ bigger conflict
14. More commitments ‐ bigger conflict
3. CCPM Methodology
CCPM (Critical Chain Project Management) is a Project Management methodology based on
Theory of Constraints (TOC). It is aimed to deliver projects 10%‐50% faster compared to
traditional methodologies and achieves these improvements through a process of waste
reduction. The “Critical Chain” is defined as the longest chain with critical task considering the
resource contention. CCPM technique is used in the key phases of the project i.e. Project
Planning and Project Monitoring and Control.
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With traditional project management methods, 30% of the lost time and resources are typically
consumed by wasteful techniques such as bad multi‐tasking, student syndrome, in‐box delays,
and lack of prioritization. The phenomenons are explained in detail in the following sections.
3.1. Differences with Critical Path Method
The critical chain is the sequence of both precedence and resource dependent terminal
elements that prevents a project from being completed in a shorter time, given finite
resources. If resources are always available in unlimited quantities, then a project's critical
chain is identical to its critical path.
Following are the distinguishing features between CCPM and Critical Path Method.
1. The use of (often implicit) resource dependencies. Implicit means that they are not
included in the project network but have to be identified by looking at the resource
requirements.
2. Lack of search for an optimum solution. This means that a "good enough" solution is
enough because,
a. As far as is known, there is no analytical method of finding an absolute optimum
(i.e. having the overall shortest critical chain)
b. The inherent uncertainty in estimates is much greater than the difference
between the optimum and near‐optimum ("good enough" solutions)
3. The identification and insertion of buffers:
a. Project buffer
b. Feeding buffers
c. Resource buffers
4. Monitoring project progress and health by monitoring the consumption rate of the
buffers rather than individual task performance to schedule.
3.2. Buffer Management in CCPM
CCPM uses buffer management instead of earned value management to assess the
performance of a project. Some project managers feel that the earned value management
technique is misleading, because it does not distinguish progress on the project constraint
(i.e. on the critical chain) from progress on non‐constraints (i.e. on other paths). Event
chain methodology can be used to determine the size of project, feeding, and resource
buffers.
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3.3 Sources of wastages in project
There are four main reasons as to why the task safety is wasted. These are due to
Parkinson’s Law, Student’s Syndrome, De‐synchronization and Multitasking. Let us look at
the effects of each of these parameters
1. Student’s syndrome
2. Parkinson’s effect
3. De‐synchronization
4. Multitasking
3.3.1 Student’s syndrome: Start the latest in any activity and hence late detection of
uncertainty in the project
Effort
8 hr day
Time
Realistic Estimate (90%)
Once resources have provided a “safe” task deadline, they tend to plan their tasks
around this deadline and focus on trying to deliver against the same. Other
urgent work gets the attention rather than the task at hand whose due date is
out there somewhere. Remember, safety was put in not only to protect against
activities that needed urgent attention, but also uncertainties. By starting a task
later than originally planned, we have wasted the safety that we have provided
for in the task, considerably risking the task deadline. This is the effect of
Student’s syndrome
If a resource does manage to complete and deliver his task early of schedule
because uncertainty did not hit the task, he will receive kudos. Achieve this twice
in a row and it is likely that the resources will be suspected of over estimating the
task. In such a scenario, even if the resource finishes the task early, he does not
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report the early finish. In addition to this, we may still not be able to start the
next task due to a resource dependency working on some other task.
This delay propagates across tasks and its effect is clearly seen at an integration
point within the project. So in essence, time gained is not reported whereas time
lost propagates and affect the Project schedule.
3.3.2. Parkinson’s Effect: Work expands the time available for completion
1. Long initial mobilization time for resources, after getting the project
2. Most tasks meet the gates or miss them; rarely are they done ahead of time
3. Continue polishing the task (try more iterations), because the module leader
is busy in urgent features
4. Add more “whistles” to fascinate the user
5. “Let me take the challenge to do it on my own”
6. Follow up very closely with customer for feedback close to important gates
3.3.3. De‐synchronization
Delays accumulate, but gains do not. The delays do not get transferred to the
completion of the project.
3.3.4. Multitasking
Resource is not dedicated for a task till completion. Issues with the priority
handling for various tasks.
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One of the other large causes of project delay is due to multitasking. Multitasking
has 2 major negative impacts on project deadline
Consider three tasks. Without multitasking, Task 1 would be finished in 12 days,
Task 2 in 24 days and Task 3 in 36 days. With Multitasking, Task 1 will finish in 28
days, Task 2 in 32 days and Task 3 in 36 days. Hence there is a 16 day delay in task
1 and 8 day delay in delivering Task 2. Hence we will lose the advantage of
delivering projects early.
4. CCPM Methodology as applied for Industrial Projects
Following section describes the CCPM Methodology as customized to be applied to the industrial
projects in Geometric.
4.1. Five focusing steps of Theory of Constraint used to design the solution
1. Identify the system constraints
2. Decide on how to exploit the above constraints
3. Subordinate everything else to the above decisions
4. Elevate the system constraints
5. Check if constraint is broken
4.2. Planning project using CCPM methodology
1. Identify project goal
2. Develop project network
3. Identify critical chain
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4. Identify project buffer
5. Create the plan with critical chain and project buffer
4.3. CCPM Project Tracking ‐ Buffer Management
1. CCPM does bring out changes in project execution
2. The completion buffer and feeding buffers provide a robust mechanism to set the
priorities
3. The priorities are set according to the type and the percentage of buffer consumed
4. Daily tracking is a critical success factor for tracking of CCPM projects
4.4. Key Project Parameters
1. % Longest chain complete: This indicates the progress on the critical chain of the
project.
2. % Buffer penetration: This indicates the % of buffer consumed against the total
project buffer
3. Critical resources: The resource generating contention
a. Identify the most critical resource and ensure his activities are strongly WIP
controlled.
b. Mostly he is the tech lead and is encouraged to devote himself to design and
review activities only.
4. Stopped activities: These are the ones which, if on the critical chain are going to
result the buffer penetration. We must make sure to make resources available for
activities on critical chain.
5. Daily activity tracking with focus on
a. Effort Remaining
b. Resolution of Issues faced
c. Precise tasks assignment to individual
d. Visual Control with Status Flash
e. WIP control
f. Strong Change Management to ensure minimal addition of new tasks to the
commitment
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g. All decision are subjected to its impact on critical chain
4.5. Buffer Management
Following shows a snapshot of the buffer management chart used for tracking the project
progress. The percentage critical chain completion and the buffer penetration is tracked
on a daily basis. This gives a clear picture of the state of the project and the corrective
actions could be decided in the form of the buffer recovery plan. This provides the
management a dashboard for the progress of the project.
1. Daily morning project meeting for tracking
2. A project team needs to expedite only if it’s in the RED zone.
3. Objective should be to get back to YELLOW zone at the earliest.
4. Focus should be on the critical chain where we have the delay.
4.6. Buffer Recovery Plan
Buffer Recovery Plan should be updated when the project is in red or yellow zone.
1. If the project state is in green zone, it indicates that project is moving fast on the
longest chain. Therefore no specific action is required.
2. If the project state is in yellow (amber) zone, it indicates that the buffer penetration is
same or slightly more than the longest chain complete.
3. Buffer Recovery Plan should be discussed in Buffer Management Meeting which will
be participated by the entire team.
% Buffer
Penetration
% Critical Chain Complete
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4. The team members should be encouraged to provide solutions to help recover the
buffer.
4.7. Strong Gate Control
1. A task is marked as complete in CCPM with effort remaining as 0, only after it passed
the quality gate check.
2. These ensure no pilling up of incomplete tasks and also reduce the rework effort.
5. Application of CCPM to Software Services Projects
The following defines the CCPM framework and how it’s applied for the Software Services
Projects.
5.1. Why Change?
The change required to address some of the challenges faced in executing industrial
customer projects. Following is the list of challenges
1. Industrial Customers are extremely demanding
2. Their strategies are currently aiming at improving margins by getting” more in same”
or even “more is less” – this translates as a challenge for the delivery organization to
“continuously improve” in each of the deliveries and phases of the project
3. They do not have mature understanding about the software development process
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4. Customers are not ready to sign‐off the intermediate artifacts which are baseline for
the software projects (e.g. elaborated requirements, design specifications, test plans
etc) – this brings in a huge ambiguity in the Industrial Projects, which gets translated
as “buffers” in the estimates
5. The specifications are not elaborated in details and get detailed out during the
execution of the project brining in surprises late in the project cycle
6. Original deadlines of the projects are generally not being met
7. There is significant amount of re‐work
8. Too often resources are not available when needed (even when promised)
9. Specifications, designs, authorizations were not provided from the start of the project
10. Too many customer changes during the execution of projects
11. There are fights about the priorities between tasks
5.2. Objective
1. Vision: Deliver the projects within the constraints of Quality, Time and Cost to the
expectation of the customer and build the operational consistency for continuity of
engagement
2. Tactical Goals:
a. Improve margins for each project ensuring the Quality, Cost and Schedule
parameters
b. Develop competencies to manage and execute projects within budget
c. Bring about consistency of effort expended in execution of projects.
5.3. What to change?
The change has to be brought into the current Project Execution Environment. Following
are the areas that the changes are inevitable
1. Estimation Process: If we look at the process of estimation, we arrive at the project
deadline date which is a deterministic deadline by linking together a set of dependent
task estimates which are probabilistic in nature. We then monitor the performance of
this task against the milestone or deadline
2. Nature of Estimation: Since task estimates are probabilistic in nature, they will
typically follow a normal distribution curve.
3. Uncertainty and Buffers in Estimation:
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a. Estimators give duration estimates that they believe have a high probability of
completing the work in, by adding safety time in their task estimates
b. The reason this is done is because of the need to compensate for uncertainty and
the fear that their estimates may get cut during a review process. In addition to
this there are other activities which are currently on the resource’s desk which
need urgent attention. So in effect all estimates provided have considerable
safety.
5.4. Pre‐requisites for the Change
1. Top Management buy‐in for the change in the Project Management Methodology
2. Training and competency building for the Project Managers, the leads and the team
3. Creating a win‐win vision for team‐members, leads, Project Managers, Senior
Management and the customers
4. Change in the thought process for the Project Management
a. From task based to the buffer based tracking
b. To track the overall project status, instead of individual milestone completion
c. Assigning work as soon as possible to the team members
d. Trying to keep project resources busy at all times
5. Customer buy‐in for the change in project management activities – specifically for the
customer managed projects
5.5. Implementing the Change:
1. Identify all the possible obstacles for the implementation ahead of time
2. Get the team charged up with the mission of implementing the change
3. Address all six layers of resistance in advance
LAYER 0. "We/I don't have a problem."
The is a clear resistance at the root ‐ there is no problem, so why to change?
LAYER 1. "You don't understand my/our problem(s)."
May be, we have the problem, but…
LAYER 2. "...we don't agree on the direction of the solution."
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"OK, you do understand my problem(s), but… “This is not a solution for me …
LAYER 3. "...your solution can't possibly produce the level of results you say it can."
Fine, this is one of the solutions for us, but it will not produce the desired results …
LAYER 4. "...your good solution is going to cause some bad things to happen."
This is a solution for our problem, but it will result into following other problems ….
LAYER 5. "...there are some significant obstacles that prevent the implementation."
OK – it might result into good things, but following are possible blocking issues for he
implementation
LAYER 6. Unverbalized fear.
All that is fine, but I am afraid that “something” will go wrong
4. Implement the changes in the phased manner and keep a check on the measures for
being sure to monitor the feedback
5.6. Measuring the success of the Change:
1. Identify Measures and Metrics as indicators for the success of the change
2. Monitor the metrics on a continuous basis
3. Encourage the team to create visual controls for the metrics for being open about the
current state of the team
4. Apply immediate corrective action for the measure going outside the control
boundaries defined
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6. Case Studies to the Industrial Customers
Case ‐Accelerated Integration Solution Development
• The Problem• Product OEM required to demonstrate the use of their PLM products’ integration with CAD product
a Korean auto major• The Auto major sent a set of 26 usecases for delivery to Geometric• Initial rough estimates were given at 6 months of elapsed time• Detailed estimates made after Geometric’s visit to client indicated greater effort required• Customer timelines were fixed @ 4months
• The Solution• Use CCPM to compress timelines• Take on as fixed bid and deliver productively in 4 months
• Benefits• Scoped Project delivered ahead of schedule and within budget despite complexities• 6% additional revenue due to ability to accommodate Change Request in the same timeframe• Productivity gain of time shared with Product partner• Customer confidence in delivery facilitated product license sale and repeat business
Case - Accelerated Furniture software Customization
• The Need
• Customize the Furniture software for leading furniture manufacturer• Complete development of BOM (Bill of material)• Customized printing functionality• Linking with ERP system
• The Solution
• Reduced Work In progress ( WIP ) and hence reduced Multitasking• Active Task Management• Defined Feature Completion Criteria
• Benefits
• Eliminated waste resulted in more time for Integration Testing leading to High Product Quality• No additional efforts close to release.• Delivered 30% more Product functionality • 20% reduction in Time Schedules• 11% savings in cost
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Case : Accelerated Development of Feature Rich Product
• The Need• Apparel Vertical Product Development for Leading Software PLM Product OEM• Geometric Developed a Solution with a Joint Go To Market Strategy with the OEM for Deployment of the
Solution at Customer Site
• The Solution• Reduced Work In progress ( WIP ) and hence reduced Multitasking• Active Task Management
• Benefits• Greater effort spent on Integration Testing resulting in High Product Quality• No additional efforts close to release• We delivered 17% more Product functionality • There was a 12% reduction in Time Schedules
6.1. Gains for Industrial Customers:
All the above factors contributed a better CSI for the industrial customers and hence the
continuity of the business for the same. One of the customers has signed a contract for the
whole FY10 ahead in time. The other customer was always insisting on small duration fixed
cost project, has got convinced to get into a quarterly contract with Geometric. Another
customer has been consistently demanding a reducing TCO and Geometric could meet this
expectation by showing the productivity improvements of 20% and predictability in the
engagement.
Following chart shows the gains achieved for one of the project
Without CCPM With CCPM Features Planned [A] 28 26 Bugs [B] 345 540 Other Enhancements [C] 4 15 Total Work [D] = [A*5+B+C] 489 685 Planned Effort in Person Months [E]
76 86
Productivity [D/E] 6.43 7.96 Productivity Improvement 24%
The main achievements through CCPM are marked in the following areas
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1. Productivity: Better throughput for the AMS engagement More features delivered to
the customer in the same time frame
2. Quality: For the same amount of work to be delivered, testing and stabilization phase
gets more time which can improve the quality
3. Schedule: Projects delivered early
4. Operational Predictability: Early warnings, Corrections and confidence in
downstream operations
5. CSI (Customer Satisfaction Index): Is a direct measure for the feedback about the
deliverables. Geometric has a standardized template to receive the CSI for each of the
project during various phases of the project. Covers all the aspects by which customer
can express their opinion about the ongoing or closed project. The CSI for the
engagement
6.2. Critical Success Factors
1. Need for in‐depth knowledge about the TOC concepts at the Project Manager level
2. Need for the thorough knowledge about CCPM execution methodology
3. Buy‐in from the Top Management and from the project teams
4. Effective use of the internal champions from Delivery/Production teams to drive
execution. This ensures scalability of implementation
5. Upfront definition of gains measures (define the measure to calculate the gains)
6. Mapping of the Team’s goals to the Individual’s KRAs (Key Result Areas)
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7. Key Learning
1. CCPM is a powerful methodology for projects with well defined scope and detailed
specification. It’s Implementation is easy for fixed price projects.
2. For Time & Material projects, the value has to be brought out by running the projects with
defined scope and duration. This has been established effectively in the industrial projects
handled in Geometric.
3. Active task management and buffer tracking are the key success factors. They provide early
warning signals about the project.
4. The involvement of the customer in the whole implementation and hence the regular
demos is an important aspect for the customer to realize the benefits of the approach
tangibly.
5. The buffer trend‐line acts as powerful motivator and visual control to seek help or
management intervention
6. CCPM methodology works fine if there are no changes in the plan during the project
execution and milestones dates are clearly defined.
Conclusion Geometric has customized CCPM methodology for handling the software services projects for
the industrial customers and built tools for automating the process of planning and tracking. The
gains generated were appreciated by the industrial customers. Geometric benefitted internally
due to the competency and capability generated. Geometric has been able to leverage the CCPM
methodology for Project Management of the software services projects for industrial customers.
Customer Delight has been the key focus area for Geometric and CCPM has proven to be a
definitive approach to achieve the same in a structured manner.
Operational Excellence is a basic tenet of the management strategy for Geometric. CCPM is able
to build the foundation for the Project Management for achieving the same. CCPM helps reduce
the TCO for the customer resulting into continuing business. The Business Excellence is measured
in the parameters like top‐line and bottom‐line. CCPM is geared to ensure the growth in the top‐
line by the continuation and increase in the revenue and growth in the bottom‐line with the
improvement in the margins.
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About the Authors Shirish M. Kulkarni is working as Director ‐ Growth Accounts in Geometric and is heading the
Growth Initiatives, Markets and Deliveries in key Accounts. He has about 19 years of industry
experience. He has been driving various process and business improvement initiatives.
Innovation and Process Improvement are his areas of interest. E‐mail:
Jayanti Das is working as the Processes and Productivity expert in Geometric and has 10 years of
experience. She is driving the CCPM initiatives to achieve improvements across projects in
Geometric. She has keen interest in the TOC and is a certified TOC expert. E‐mail:
Ajay Deshpande is working as a Delivery Manager for one of the strategic accounts for Geometric.
He has industry experience of about 12 years and is instrumental in the growth of the account
from it’s inception. Ajay has delivered value to the customer using the CCPM methodology for
various projects. Ajay has a keen interest in the operational excellence and is leading some
specific competency improvement initiatives. E‐mail: [email protected]
About the Conference
PML 2009‐Project Management Leadership Conference 2009
The 5th Annual International Project Management Leadership Conference [PML 2009] is a unique
forum for exchanging, learning and accelerating implementation of best practices in the domain
of Project Management.
The conference is built on the theme of ‘Role of Project/Program Management in achieving
Operational and Business Excellence’. PML 2009 aims to highlight the extent to which Project
Management processes and practices can improve the Top line and Bottom line in organizations
and enhance Organizational Competence, especially during the current economic situations.
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About Geometric Geometric is a specialist in the domain of engineering solutions, services and technologies. Its
portfolio of Global Engineering services and Digital Technology solutions for Product Lifecycle
Management (PLM) enables companies to formulate, implement, and execute global engineering
and manufacturing strategies aimed at achieving greater efficiencies in the product realization
lifecycle.
Headquartered in Mumbai, India, Geometric was incorporated in 1994 and is listed on the
Bombay and National Stock Exchanges. The company recorded consolidated revenues of Rupees
5.98 billion (US Dollars 129.47 million) for the year ended March 2009. It employs close to 3000
people across 10 global delivery locations in the US, France, Romania, India, and China.
Geometric is assessed at SEI CMMI Level 5 for its software services and ISO 9001:2000 certified
for engineering operations. For further details, please visit www.geometricglobal.com.
