Originally Published MDDI May 2003
PRODUCT DEVELOPMENT INSIGHT
Translating an unmet market need into a product made on time and under budget requires precise operational execution. Project metrics can help.
by Richard Rosen
Battelle Memorial Institute
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Effective status reporting is an essential aspect of evaluating the performance of any business. Metrics that represent the health of businesses––such as key ratios defining profitability (margin/sales is one), reinvestment levels (R&D as a percentage of sales, for example), asset utilization, inventory turns, and sales backlog––are commonly reported.
Metrics can also be an important element in the management of product development programs, however. For the purposes of this discussion, metrics will refer to leading indicators that are predictive or representative of a project's ability to meet its intended goals.
More and more, success on today's competitive playing field is achieved by organizations that are capable of excellent execution of their product portfolio strategy. Defining the right product to meet an unmet market need is a key starting point and a characteristic of many great organizations. But translating that need into a product that is made on time and within acceptable budget constraints, then delivered into the market, requires attention to operational execution. Metrics are an essential information source for this process.
Rationale
There are some common elements among organizations that make effective use of project metrics in their decision-making and prioritization processes. The following guidelines can help a medical device company implement metrics or improve upon systems it already has in place.
The first step is to ask the question, Why metrics at all? “I already watch budget and schedule, have a comprehensive project plan, and have assigned competent people to carry it out,” a manager might think. “What else is there to do?”
Developing good metrics can provide a meaningful, real-time snapshot of project progress. Metrics are the leading indicators that provide an early warning system––ideally, in time to take corrective action to put a project back on track before a crisis occurs.
Consider metrics a weather report for the project. Project metrics can provide a “fair weather” forecast to let those involved know no difficulties are anticipated; the project is running smoothly. They are also an early warning system for project problems and should stimulate the all-important communications necessary to assess the impact of the situation, its cause, and the options for correcting the problems. This should bring the project back into accordance with the objective.
For an organization that manages multiple projects, standard project management metrics do two things: they provide a uniform language for senior-level managers to gauge the collective performance of a business unit, and they reallocate resources and priorities accordingly.
Designing the Appropriate Metrics
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| Table I. Standard project metrics (Click to enlarge). |
When thinking about the metrics that are best for an organization, the management team must start by determining what results are important to that organization's success. This is the basis for metrics design. For instance, if market introduction is the driver for a project, then oversight of project milestones is important. A sound project plan typically is broken down into a series of defined milestones that need to be accomplished to achieve success. One metric would take into account whether or not these milestones are being met in a timely manner.
Generally, metrics are designed to reflect progress in the areas of resource utilization (i.e., budget, people, and assets), schedule, technical achievements, performance milestones, and others. Each organization's leading indicators are unique, and it can take time to determine those that are meaningful, based on experience. Project metrics evolve as the organization evolves.
Over time, project metrics provide benchmarks that are useful in measuring progress. As metrics are used on more and more projects, a history develops. This information provides input to planning at both an organizational and a project level.
The Importance of Project Monitoring
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| Figure 1. A sample schedule in the form of a Gantt chart (Click to enlarge). |
Many businesses involved in medical product development use a set of standardized metrics to monitor every project. The project manager tracks the data and also reports them to the project's advisory board, if one exists (see the February 2003 issue of MD&DI, page 38, for an article on this topic).
An advisory board should consist of knowledgeable staff who are uninvolved with the project and are peers of the project team members. The board's roles are threefold: to provide an objective overview of project progress, to provide technical and programmatic advice to the project manager and team, and to improve the quality and consistency of product development programs across the organization. An advisory board typically includes senior staff, both programmatic and technical, who have the experience to review and interpret project metrics.
The progress of product development programs can be monitored using a so-called dashboard technique. The dashboard approach can offer quick, useful assessment, provided the system displays metrics relevant to the process at hand. This method of implementation also provides easy access to the important project metric tools at all levels of the organization. Table I provides an example of standard project metrics. Figures 1 and 2 show examples of how these metrics can be presented.
Avoiding the Common Pitfalls of Metrics
The data gathered to support the creation of metrics should be easy to capture. Ideally, the data-capture system should be a part of the project management process, not an end unto itself; that is, it should not be cumbersome, time-consuming, and costly. If additional effort is required to capture the supporting data, the project team may find that they are not being captured at all.
Metrics should not be thought of as a replacement for face-to-face communication. Rather, they should stimulate the all-important communication that is necessary to assess the impact of a situation, its cause, and the options to correct the problems. More often than not, this will bring the project back into accordance with its objective.
Finally, the metrics should be scaled to fit the project––for example, the metrics used to monitor progress of a new assembly plant are likely to be more comprehensive than those required for monitoring a minor design improvement for a simple product line extension.
Beware the Eternal Optimists
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| Figure 1. A sample schedule in the form of a Gantt chart (Click to enlarge). |
Project metrics are designed to reflect what is, not what should be, or what the team wants. There is often a reluctance to provide data that might reflect negatively on those involved in the project. The manager or recipient of the data should take care not to “shoot the messenger,” so to speak. Otherwise, project metrics will likely be manipulated before they are reported.
Conclusion
So who will benefit from careful metrics planning? A variety of stakeholders will, and that includes a lengthy list: the project manager for a specific new product development effort, the project team members, the company's finance manager, other resource managers who supply or will use the output from the development project, the general manager responsible for a portfolio of projects and products, and the investors in the company. Clearly, using project metrics is a win-win situation for all involved.
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