© 2009 international institute for learning, inc


2

ByHarold Kerzner, Ph.D.


DRUG DEVELOPMENT (LIFE CYCLE PHASES)

DISCOVERY(R & D)

DISCOVERY(R & D) DEVELOPMENTDEVELOPMENT COMMERCIAL-

IZATION

COMMERCIAL-IZATION


DRUG DEVELOPMENT (MANAGEMENT STYLE)

DISCOVERY(R & D)


IZATION

COMMERCIAL-IZATION

PROJECTMANAGEMENT

PROJECTMANAGEMENT

PROGRAMMANAGEMENT

PROGRAMMANAGEMENT

PRODUCTMANAGEMENT

PRODUCTMANAGEMENT


DRUG DEVELOPMENT (COST)

DISCOVERY(R & D)


IZATION

COMMERCIAL-IZATION

$850 MILLION$850 MILLION


DRUG DEVELOPMENT (TIMING)

DISCOVERY(R & D)


IZATION

COMMERCIAL-IZATION

3000 DAYS3000 DAYS


Commer-cialization

Commer-cialization

Solution/Prototyping

SolutionThroughAdoption

SolutionThroughInvention

DebuggingPrototype

& Scale-up

ProblemSolving

Experiment-ation &

Calculation

Idea Formulation& Evaluation

TechnicalFeasibility

Rough Design Concept & Evaluation

EconomicFeasibility

Modeling the Innovation Process

ProblemRecognition

RecognizeTechnical

Need

RecognizeMarketNeed

Current State of the Art


PenetrateNew Markets

Extend Existing Markets

Strengths, Weaknesses, Opportunities, Threats

The R&D Strategic Planning Process

Support for Present Products

Defensive R&D

PenetrateNew Markets

Extend Existing Markets

Environmental Analysis

Competitive Forces

R&D Goals, Objectives and Strategies

Integration into the Strategic Plan

Evaluation and Selection of R&D Projects

Feedback

Support for New Products

Offensive R&D


Project Selection Process

Environmental Situation

Competitive Situation

Resources & Capabilities

Analysis of Past

Performance

Project Definition

Opportunities & Threats

Strengths & Weaknesses

Specification of Present

Project

Project Objectives

Impact AnalysisImpact

Analysis

Identify Skills Needed

Develop Potential Benefits

Identify Skills Needed

Develop Potential Benefits

Risks

Cost / Schedule

Technical

Decisions

Accept The Project

Reject The Project


Differences in Strategic Importance

Project A

Project B

Project C

AvailabilityQualityProduct VarietyPrice Features

Marketing Least ImportantLeast Important

MediumImportanceMediumImportance

MostImportantMostImportant

MarketingImportance


Differences in Strategic Importance

Project A

Project B

Project C

Cost Reduction Quality

Rate of Changes

Hard Automation

Innovation/Technology

Manufacturing Least ImportantLeast Important

MediumImportanceMediumImportance

MostImportantMostImportant


0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Mortality of New Product Ideas

Cumulative Time

60

Screening

Number of Ideas

10

15

5

0

BusinessAnalysis

Development Test

Commercialization

One SuccessfulNew Product


Cumulative Expenditures and Time

Per

cent

of

Tot

al E

volu

tion

Exp

endi

ture

s (C

um

ula

tive

)(E

xpen

se I

tem

s P

lus

Cap

ital

Exp

endi

ture

s)

Cumulative Time

100%

90

80

70

60

50

40

30

20

10

00% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Screen BusinessAnalysis

Development Test Commercialize

TotalExpenditures

CapitalExpenditures

Expensed Items


14

Today’s View of Project Management

Project management has evolved into more of a business process rather than just a project management process.

Today we are managing our business by projects, and project management is being applied to both traditional and nontraditional projects.

Each project is seen as a collection of value scheduled for realization.

Project managers are now filling program and product management positions


15

Changes in Project Management

ROLE ANDRESPONSIBILITY

MONITOR AND CONTROL DURINGEXECUTION

PLANNING FOR PROJECTEXECUTION

STRATEGY DEVELOPMENT AND PROJECT SELECTIONINPUT

WHEN BROUGHTON BOARD

AFTER CONTRACT AWARD OR AT END OF INITIATION

DURING PROPOSALPREPARATION

DURING CONCEPT DEVELOPMENT AND INPUTIN THE BID/NO-BID DECISION

KNOWLEDGEREQUIREMENTS

TECHNICAL KNOWLEDGE (COMMAND OF TECHNOLOGY)

MOSTLY TECHNICAL BUT SOME BUSINESS KNOWLEDGE

MOSTLY BUSINESS BUT SOME TECHNICAL KNOWLEDGE (UNDERSTANDING OF TECHNOLOGY)

CUSTOMEREXPECTATIONS DELIVERABLES DELIVERABLES BUSINESS SOLUTIONS

DEFINITION OF SUCCESS

MEETING THE TRIPLE CONSTRAINT

MEETING THE TRIPLE CONSTRAINT

MULTIPLE SUCCESS CRITERIA (BOTH PROJECT AND BUSINESS SUCCESS)

HISTORICAL 1990’S TODAYVIEW (AND IN THE FUTURE)


16Defining Project, Program and Product Success

PROGRAMSUCCESS

PROJECT,PROGRAM AND PRODUCT

SUCCESSARE INTEGRATED

PROJECT SUCCESS

PAST VIEW PRESENT VIEW

UNCOUPLED COUPLED


Customer RFP Requirements

Contractors must have PMP®s

Contractors must have an EPM system, and it may have to be qualified or approved by the client

Contractors must capture best practices and share intellectual property with the client

Contractors must identify a reasonable maturity level in project management

17


18

Customer’sExpectations

Contractor’sExpectations

BusinessSolutions

Long Term Strategic

Partnerships

“Engagement” Expectations


Before and After Engagement Proj. Mgt.

BEFORE ENGAGEMENT

PROJECT MANAGEMENT

AFTER ENGAGEMENT PROJECT

MANAGEMENT

Continuous competitive bidding

Sole-source or single-source contracting (fewer suppliers to deal with)

Focus on near-term value of the deliverable

Focus on lifetime value of the deliverable

Contractor provides minimal support for client with their customers

Support client with their customer value analyses (CVA) and customer value measurements (CVM)

Utilize one inflexible, linear EPM system

Access to contractor’s many nonlinear systems

19


The Need for Business Solution Partners

Not all companies have the ability to manage complexity in new product development

Solution providers must learn while managing the project

Solution providers can bring years of history to the table

Solution providers have a greater understanding of cultural change and the ability to work within almost any culture

20


21

Two Types of Projects

Traditional Project:

Focus on the Triple Constraint

Nontraditional Project:

Focus on the Triple Constraint and Value


22

Percent of Projects Using Project Management

Current use of project management


23

TraditionalProjects

NontraditionalProjects

Fuzzy, Gray AreaProjects

Radical Breakthrough

High Technology Platforms

Maintenance and Enhancements

• Linear thinking

• Structured processes

• Within existing technology

• With existing resources

• Without changing the culture

• Nonlinear thinking

• Spontaneous

• Technology breakthrough needed

• Consultants and contractors required

• Cultural change highly probable

Elements of Complexity


24

The “Traditional” Project

Time duration of 6-18 months

The assumptions are not expected to change over the duration of the project

Technology is known and will not change over the duration of the project

People that start on the project will remain through to completion (the team and the sponsor)

The statement of work is reasonably well-defined

The target is stationary


25The “Nontraditional” (Complex) Project

Time duration can be over several years

The assumptions can and will change over the duration of the project

Technology will change over the duration of the project

People that approved the project (and are part of the governance) may not be there at completion

The statement of work is ill-defined and subject to numerous changes

The target may be moving


26

Why Traditional Project Mgt. Must Change

New projects have become: Highly complex and with greater

acceptance of risks that may not be fully understood during project approval

More uncertainty in the outcomes of the projects with no guarantee of value at the end

Pressed for speed-to-market irrespective of the risks


27


The statement of work (SOW) is: Not always well-defined especially on

long-term projects Based upon possibly flawed, irrational

or unrealistic assumptions Inconsiderate of unknown and rapidly

changing economic and environmental conditions

Based upon a stationary rather than moving target for final business value


28


The management cost and control systems (enterprise project management methodologies [EPM]) focus on: An ideal situation (as in the PMBOK®

Guide) Theories rather than the understanding of

the work flow Inflexible processes Periodically reporting time at completion

and cost at completion but not value (or benefits) at completion

Project continuation rather than cancelling projects with limited or no value


29

MANAGINGTRADITIONAL

PROJECTS

MANAGINGNONTRADITIONAL

PROJECT

Single person sponsorship Governance by committee

Possibly a single stakeholder

Multiple stakeholders

Project decision-making Both project and business decision-making

Inflexible project management methodology

Flexible or “fluid” project management methodology

Periodic reporting Real time reporting

Success is defined by the triple constraint

Success is defined by the triple constraint and business value

KPI are derived from earned value measurement (EVM)

Unique value-driven KPI can exist on every project

Traditional Versus Nontraditional Projects


30

The Need for “Value” as a Driver

Factors promoting value-driven project management include: Identifying the value of business

opportunities that do not yet exist Identifying better ways of selecting projects

with the greatest potential value Identifying better ways of measuring the

value of projects once they begin and/or end Making better decisions in turbulent and

highly dynamic markets Measuring value has become a competitive

necessity Implementing customer-value programs


31

The benefits of “Value” as a Driver

Value-driven project management leads to: Better decision-making especially when

considering non-financial (intangible) benefits Better analysis of options especially when

considering scope changes and tradeoffs Better alignment of projects to corporate

objectives during business case development Easier to get stakeholder consensus on value than

on just the triple constraint Better persuasive and defendable justification for

funding during portfolio project selection activities

Typical project portfolios can expect an increase of 30% or higher in total portfolio value, but can be industry-specific


32

Postulate #1

It doesn’t matter if you execute a project extremely well or extremely poorly if you are working on the wrong project.


33

Postulate #2

Being on time and on budget is not necessarily success.


34

Postulate #3

Completing a project within the triple constraint does not guarantee that the necessary business value will be there at project completion.


35

Postulate #4

Having mature project management practices, including an enterprise project management methodology, does not guarantee that business value will be there at project completion.


36

Postulate #5

Price is what you pay. Value is what you get.

Warren Buffett


37

Postulate #6

Business value is what your customer perceives as worth paying for.


38

Postulate #7

Success is when business value is achieved.


39

Following a project plan to conclusion is not always success if business-related changes were necessary but never implemented.

Postulate #8


40

The Changing Definition of Success

Success is simply the triple constraint

Customer satisfaction must also be considered

There are other (secondary) factors to be considered

Success must have a business component

The constraints must be prioritized

There are multiple definitions of success (each customer/stakeholder can have a different definition)

There are categories of success, and value is now part of the success criteria

(2004)

(2008)


41

Redefining The Triple ConstraintSuccess Criteria

Co

st

Time

Quality

(or Scope)


42

Secondary Success Factors

Secondary Factors: Customer Reference Follow-on Work Financial Success Technical Superiority Strategic Alignment Regulatory Agency Relationships Health and Safety Environmental Protection Corporate Reputation Employee Alignment Ethical Conduct (Sarbannes-Oxley Law)


43

Disney’s Prioritization of Constraints

• Safety• Aesthetic Value• Quality

• Time• Cost• Scope


44

Success

Success is not necessarily achieved by completing the project within the triple constraint. Success is when the planned business value is achieved within the imposed constraints and assumptions and the customer receives the desired value.


45

New Developments in Project Management

New Success Criteria

Key Performance Indicators

Dashboard Design

Governance

Measurement


46

Defining Value at Initiation

How do we define value in the early life cycle phases of a project when value may be just a perception?


47

A New Job Responsibility

Part of the project manager’s new role is to understand what are the key metrics (KPI) that need to be identified and managed for the project to be viewed as a success by all of the stakeholders.


48

A New Job Responsibility

Defining project-specific metrics and key performance indicators are necessities in order to get stakeholder agreement.


49

Selecting The Right KPI

Not everything that counts can be counted.

Not everything that can be counted counts.


50

Defining Value Metrics (KPI)

PAST VIEW PRESENT VIEW

Metrics are fixed for the duration of the

project

Metrics can change over the duration of

the project

(Metric-Driven ProjectManagement)


Uses for a KPI

Selecting the right KPI will: Allow for better decision-making Improve results Help identify problem areas faster Improve customer-contractor

relations

51


Complexities with Identifying KPI

It may be difficult to get customer and stakeholder agreement on the KPI

Must determine if the KPI data is in the system or needs to be collected

Must determine the cost, complexity and timing for obtaining the data

May have to consider the risks of information system changes and/or obsolescence that can impact KPI data collection over the life of the project

52


53

The Need for Changing Metrics

Metrics can change, from project to project, at each life cycle phase and over time because of: The way the company defines value internally The way the customer and contractor jointly

define success and value at project initiation The way the customer and contractor come to an

agreement at project initiation as to what metrics should be used on a given project

New or updated versions of tracking software Improvements to the enterprise project

management methodology and accompanying PMIS

Changes in the enterprise environmental factors Changes in the assumptions


54




Dashboard Design

Governance

Measurement


55

Dashboard Design


56

Dashboards Versus Scorecards

FACTOR DASHBOARDS

SCORECARDS

Performance Operational issues

Strategic issues

WBS level for measurement

Work package level

Summary level

Frequency of update

Real time data Periodic data

Target audience

Working levels Executive levels


Dashboard Design and Layout

Factors that must be considered include: Colors Positioning Brightness Orientation Saturation Size Texture Shape

57


Dashboard Design and Layout

Some rules exist for dashboard design and layout: Rules for selecting the right artwork Rules for artwork placement Rules for color selection Rules for accuracy of information

58


Examples of Rules

Must select the correct metaphor (i.e. gauges cannot show trends; pretty artwork can distract users from critical information)

There must be a speed of perception (i.e. upper left corner more critical than lower right corner)

Visualization (i.e. easy to read and understand)

Aesthetics (i.e. pleasing to the eye)

59


60




Dashboard Design

Governance

Measurement


61

When to Assess Value

We must establish a time frame for how long we are willing to wait to measure the value or benefits from a project. This is particularly important if the actual value cannot be identified until some time after the project has been completed.


62




Dashboard Design

Governance

Measurement


KPI for Added Value Decision-Making

Cost of Obtaining

Added Value

Low

High

Low High

Percentage Increase in Value

RISK BOUNDARYUnacceptable Risk

Acceptable Risk

63


Cost versus Value

Paradise

Cemetery

Cost of Obtaining The Value

Low HighLow

High

Imp

act

of

Th

e V

alu

e

Sustained Competitive Advantage

Su

sta

ined

Com

peti

tive

Ad

van

tag

eRegion of

Competitiveness

Danger Zone

64


65

Failures

Projects

Time

SuccessesSuccesses

MATURITYMATURITY EXCELLENCEEXCELLENCE

2 YEARS2 YEARS 5 YEARS5 YEARS


Customer RFP Requirements

Contractors must have PMP®s

Contractors must have an EPM system, and it may have to be qualified or approved by the client

Contractors must capture best practices and share intellectual property with the client

Contractors must identify a reasonable maturity level in project management

66


67Best Practices Questions

DEFINITION VALIDATION

IMPLEMENTATION

PUBLICATION

UTILIZATION

MANAGEMENT

REVALIDATION

DISCOVERY

CLASSIFICATION


68

Question #1

What is the definition of a best practice in project management?

(Past view vs. present view)

DEFINITION


69

Question #2

How do we discover best practices? Where should we look first? Who is responsible for the discovery?

DISCOVERY


70

Question #3

How do we validate that something actually is a best practice? Who should perform the validation?

VALIDATION


71

Question #4

Are there levels or categories of best practices? If so, who is ultimately responsible for determining the levels?

CLASSIFICATION


72

Question #5

Who has the responsibility for the ultimate management/ administration of the best practice once it is identified?

MANAGEMENT


73

Question #6

Who has the responsibility for revalidation of current best practices? How is this accomplished and how often?

REVALIDATION


74

Question #7

How are best practices commonly used by companies once they are validated and/or revalidated?

UTILIZATION UTILIZATION


75

Question #8

What techniques are available by which best practices can be effectively communicated to the employees within a company?

PUBLICATION


76

Question #9

How do we get employees to use a best practice? How do we validate that it is used properly?

IMPLEMENTATION


77

Conclusion

© 2009 international institute for learning, inc

Documents

project slide

international institute

important slide

strategic importance

art slide

days slide

successful new product

new markets