The Way it works:
- At the start of an encounter all players roll individual initiative (those that are not surprised). I roll one initiative for all the monsters together. Initiative is only rolled once.
- Each player that is lower in initiative than the monsters gets a red chip. Players with equal or better get a green one.
- Green players act first. Then the monsters. And then the red players.
- After the first round the surprised players roll initiative and get the appropriate chip.
- The fine thing is that in a group (green/monsters/red) the players or monsters can act in an order they like, so there is room for tactics (like one flanks first, then the other attacks). That's true for intelligent monsters too.
- A black chip trumps all and gets to go when they want, essentially this is for bosses or creatures with Legendary or Lair actions. I am sure a PC could get one is special cases but it should be very rare. Maybe by spending an inspiration chip.
- If someone delays he just exchanges a green or red for the other color.