2 PLC and Difference in RD Projects

8/10/2019 2 PLC and Difference in RD Projects

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PROJECT IN R&D ENVIRONMENTAND

- A LIFE CYCLE APPROACH -

A project is complete when it starts working for

you, rather than you working for it.
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What Is Most Likely to Happen ?


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August 11, 2013: The Hindu


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Cost of Poor R&D Management in Pharma

$ 899 MM/Each New Drug

Opportunity Costs

Failed Drugs

Marketing & Sales Costs The Patients are Still Waiting


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In other words


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Benefit of Good Management

Higher NPVs

More Products per $

Identify Losers Sooner

More Successful Projects Faster Reviews


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Projects of IndiaCombat Improved Ajeya Arjun Main Battle Tank Carrier Mortar Tracker Vehicle

Mine Protected Vehicle Stallion 7.5 / 5 ton MK -III Brahmos

Passive Night VisionGoggles 102A

Laser Range Finder TPD K1 for T-72

Brake Parachute forMIG-23

Kaveri Engine

LCA

Did these projects drive you crazy?


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What about DRDO Projects?

After 54 years of DRDOsestablishment, India stillimports 70 per cent of itsdefense equipmentrequirements.

On the Light Combat Aircraft

'Tejas' project, he (Defence

Minister) said the DRDO was

getting ready for the second

Initial Operational Clearance

(IOC) of the indigenous fighter but

"I am impatient for the Final

Operational Clearance (FOC).

5 February, Deccan Chronicle

Kaveri Engine for LCA is runninglate by 16 years and the costhas escalated by around 800 percent


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What about DRDO Projects?

I s t h i s

a C u s t

o m e r m a

n a g e m

e n t p r o b l e

m

o r

M a r k e

t i n g p r o b l

e m

o r

a n y t h i n g

e l s e

I t f G d P j t


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Importance for Good ProjectManagement Practices for DRDO


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The Indian Nuclear Industry Status and Prospect


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The Indian Nuclear Industry Status and Prospect(Nuclear Energy Futures Paper No. 9 December , 2009 by MV Ramana)



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Indias Dream of Reusable Launch Vehicle (RLV)


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India s Dream of Reusable Launch Vehicle (RLV)

Space Recovery Capsule

India's Space capsule Recovery Experiment [SRE].mp4


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IMPACT ON PROJECT MANAGE


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IMPACT ON PROJECT MANAGE

Wh P j d l d?


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Why Projects are delayed?

Uncertainty: Difficulty in planning

High Level of Complexity Multi Disciplinary resources Conflicts: Organisational structure External Stakeholders: Project

cross organizational boundaries

Management skills In projects nothing is routine Management by Exception is Management

Of everything

What is Managed in Project Management?


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What is Managed in Project Management?

STRUCTUREDSTRUCTURED

PROJECTPROJECTMANAGEMENTMANAGEMENT

METHODOLOGYMETHODOLOGY


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complex,

interdependent,

responsive to sudden research environment changes (e.g.,breakthroughs, new barriers, and collaboration changes), and

heavily reliant on expert judgment to maintain quality,relevance, and performance.

The technical excellence of R&D activities is largely assessedthrough peer review of projects and the use of review ofprograms by advisory committees (or other outside expertpanels).

Characteristics of an R&D Project

R&D Project Environment


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In R&D organization, the project customers may prioritize which

of the triple constraints are most critical to their efforts (i.e., scope specifications and capabilities; cost in various units ofresources; or schedule both interim milestones and completionof final deliverables).

Funding is fixed annually at the beginning of each fiscal year andcustomers require deliverables by a certain date.

R&D projects frequently are required to offer maximum scope

flexibility for a negotiated cost and schedule.

R&D Project Environment

I s t h i s d i f f

e r e n c e

b e c a u s e

o f l a c k

o f u n d e

r s t a n d i n g

t h e n a

t u r e o f P r

o j e c t

i . e . D e v e l

o p m e n t ( R &

D ) V s D

e p l o y m e

n t ( e x .

C o n s t r u

c t i o n )

Development Projects


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Development activities are conducted to acquire

and disseminate new knowledge of a theoretical orexperimental nature. It may have any of thefollowing feature:

Development Projects

End Goals Known(Milestone, deliverables)

Methods forachieving them

YES NO NO YES

NO NO

Deployment Projects


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Deployment projects are conducted on fixed scopeprojects using established knowledge . It may have anyof the following feature: Goals (e.g., scope, cost, and schedule baseline) are well known Methods (execution process) for achieving those goals are well

known Methods for quantitatively measuring progress against the

goals (e.g., unit rates, volumes of materials, and length ofinstalled materials) are well known.

Deployment Projects

Plan the work and work the plan. A p p r o a

c h f o r M

a n a g i n

g t h e P r o

j e c t s b e

s a m e

? ? ? ?

Technology Readiness Level (TRL)


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Technology Readiness Level (TRL)

Progressive Scope/ Baseline


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g p

Unlike fixed-scope deployment projects:

scope baseline for R&D projects may never be frozen early in the

project life cycle because there is insufficient information to do so. Artificially freezing the scope before the results of research are

known would inhibit the usefulness of the ro ects final result.

Deployment Vs Development Project Life Cycle


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Deployment Vs Development Project Life Cycle

I R&D P j t M h ld


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Establish parameters that frame the scope, schedule,and cost boundary conditions for the project (theproject plan)

Identify, in advance, research elements of the project Use design-of-research/experiments concepts to frame

the research

Establish overall scheduled review dates to assessprogress

Approve (incrementally) the project detailed scope asresults of research become known.

In R&D Project Managers should


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PROJECT LIFE CYCLE

Project Phases and the Project Life Cycle


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Project Phases and the Project Life Cycle

A project life cycle is a collection of project

phases that defines: What work will be performed in each phase.

What deliverables will be produced and when. Who is involved in each phase.

How management will control/approve work produced ineach phase.

A deliverable is a product or service producedor provided as part of a project.

Project Life Cycle Issues


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j yPROJECT SELECTION PROJECT PLANNING

Project Identification(Brainstorming, SWOT analysis,Project possibilities) Project appraisal

(Market, Technical,Financial, Economic

& Ecological Appraisal)

Multi-criteria decision

making for selection

Work breakdown structureBasic SchedulingTime/Cost tradeoffsResource loading

Resource LevelingLimited Resource AllocationSimulation

PROJECTCOMPLETION

PROJECTIMPLEMENTATION

Accounting Audit &Report writing Handing over project to user

Disbanding project team Disseminating learning's from project.

Project Monitoring and control(Earned value analysis) Redefining priorities

Typical Project Life Cycle


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yp j ye.g. A Good Student Project

0

100

Ti m e

P e r c e n

t C o m p

l e t i o n

Starts Slow

Gets Very Busy

Needs Tidying UpAt The End


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Project Life Cycle


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j y

FIGURE 1.1


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The Project Life Cycle


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Project Life Cycle


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ProjectProjectIdentificationIdentification

DefinitionDefinition

FormulationFormulationFeasibilityFeasibility

Project DesignProject Design

ProjectProject Appraisal Appraisal

SelectionSelectionNegotiationNegotiation Approval Approval

ProjectProject

Activation ActivationOrganisationOrganisationImplementationImplementation

SupervisionSupervisionMonitoringMonitoring

ControlControl

CompletionCompletionTerminationTermination

Post implementationPost implementation

EvaluationEvaluation

Follow upFollow up

Analysis Analysis

selection

Project Planning andImplementation Cycle

More on Project Life Cycle Phases


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In the early phases of a project life cycle: Resource needs are usually lowest. The level of uncertainty (risk) is highest.

Project stakeholders have the greatest opportunity to influence theproject.

In the middle phases of a project life cycle: The certainty of completing a project increases. More resources are needed.

In the final phase of a project life cycle:

The focus is on ensuring that project requirements were met. The sponsor approves completion of the project.

What uncertainties are encountered in


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project management?

Time required to complete a project Availability of key resources

Cost of resources

Timing of solutions to technological problems

Actions taken by competitors

Advantages of Using FormalP j M


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Project Management

Better control of financial, physical, and human resources.

Improved customer relations.

Shorter development times.

Lower costs.

Higher quality and increased reliability.

Higher profit margins. Improved productivity.

Better internal coordination. Higher worker morale (less stress).


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PROJECT IDENTIFICATION

Project Need Identification


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Receptive to new ideas: Internal/External source Vision of future growth

Long term objectives

SWOT analysis

Preliminary project analysis

Projects as an agent of Change


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State A

State B

AlternativeProjects(Paths)

Project Identification


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OBJECTIVE

BRAINSTORMING(SWOT, Emerging trends)External Internal

ALTERNATIVES

CANDIDATEPROJECT

SELECTION

Screenng Criteria

ObjectivesTo increase profits

To minimize threats of lossesTo become more competitiveTo provide help after a disaster To train people in a new areaTo reduce pollution in DelhiTo become a successful entrepreneur

SWOT


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SWOT


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STRENGTHS Experience and expertise

Financial position Capital raising capability Industrial contacts

Foreign collaborations

WEAKNESSES Newer unfamiliar technologies Inability to raise huge investments Lack of experience Lack of trained personnel

Inability to forecast market trends

OPPORTUNITIES

Emerging technologies New products with new markets New processes with better features Special financing schemes Government and other incentives

THREATS

Competitors Poor state of the economy Outdated technology Unprofessional management skills New products and services


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PROJECT SELECTION&

FORMULATION

Project Appraisal


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Market Appraisal Technical Appraisal Economic Appraisal Ecological Appraisal Financial Appraisal

A Feasibility Report considers all these

issues prior to project adoption.

Market Appraisal


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Aggregate future demand: Demand estimation

Market share

Current and future competition

Location and accessibility of consumers

Technological scenario /Obsolescence

Possible pricing options

Service mix and cost involved Concept, price, promotion and place

Post project support Level of Customisation

Extent of Capital/LabIntensity

Technical Appraisal


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Engineering aspects: Preliminary tests and studies

Choice of suitable production process

Choice of appropriate machines and equipment

Proper layout of plant and buildings

Realistic work schedules

Socially acceptable technology

Effluents and waste disposal

Locations: Availability of raw materials, power and other inputs

Economic Appraisal


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Social cost -benefit analysis

Direct economic benefits & costs in terms of shadow prices

Impact of project on distribution of income in society

Impact on level of savings and investments in society

Impacts on fulfillment of national goals: Self sufficiency,employment and social order


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Financial Appraisal


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Whether the project is financially viable ? Investment and phasing of the total cost

Means of financing

Projected profitability Breakeven point

Cash flows in the project

Investment worthwhile? Net present value

Internal rate of return

Benefit /Cost ratio of discounted cash flows Payback period

Discounted payback

Accounting Rate of Return (ARR)

Level of risk (as evidenced by the worst and best values of costs and revenues)

= ++

+=n

t t

t

t

pk

F

10 )1(

A projectof (NPV)ValuePresent Net

Non-discounted Cash Flow

Criteria

Discounted Cash Flow Criteria

Parameters for Selecting Projects


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Is it in line with the organization strategy

Case of multiple projects but limited resource:

There is usually not enough resources to implement all projects .

Does the firm has the skill and knowledge to complete the

project successfully?

Parameters for selecting projects include:

Focusing on broad organizational needs.

Performing net present value or other financial analyses.

Using a weighted scoring model.

Implementing a balanced scorecard.

Criteria for Screening Projects


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Investment Rate of return Risk Likely profit Payback

Similarity toexisting business

Expected life Flexibility

Environmentimpact

CompetitionFINANCIAL

&Numeric

NON-FINANCIAL&

Non-numeric


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Portfolio of Projects by Type


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FIGURE 2.2

Benefits of Project Portfolio Management


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Builds discipline into project selection process.

Links project selection to strategic metrics.

Prioritizes project proposals across a common set of criteria,

rather than on politics or emotion.

Allocates resources to projects that align with strategic direction.

Balances risk across all projects. Justifies killing projects that do not support organization strategy.

Improves communication and supports agreement on projectgoals.

EXHIBIT 2.2

A Portfolio Management System


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Selection Criteria

Multi-Weighted Scoring Models

Nonnumeric Selection Methods


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The Operating/Competitive Necessity:

There is a need for the project..

The Sacred Cow: There is a strong will to make the project

succeed

Numeric Selection Methods


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Financial Assessment Methods payback period discounted cash flow etc.

Scoring Methods

unweighted 0-1 factor method weighted factor scoring method

Weighted Scoring Model


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A weighted scoring model is a tool that provides a systematic

process for selecting projects based on many criteria. Steps in identifying a weighted scoring model:

1. Identify criteria important to the project selection process.

2. Assign weights (percentages) to each criterion so they add up to

100 percent.

3. Assign scores to each criterion for each project.

4. Multiply the scores by the weights to get the total weighted

scores.

The higher the weighted score, the better.

Weighted Scoring Model for Project Selection


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MORTALITY OF NEW PROJECT IDEAS


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We start with large number of ideas and finallyafter screening are left with very few projects.

One study indicated that out of 35 newideas only 1 made it to the final product

What uncertainties are encountered inproject management?


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Time required to complete a project Availability of key resources

Cost of resources

Timing of solutions to technological problems Actions taken by competitors


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Major

ProjectProposal

FIGURE 2.4A


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RiskAnalysis

FIGURE 2.4B


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Priority

Analysis

FIGURE 2.6


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ProjectSelection

Process

Project Selection Decision Process Step1: Proposal Submission


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Ensure the completeness of proposal

Step 2: Assignment of external reviewers (division managers)

Assign each proposal to one or more peer reviewers

Step 3: Peer review (external reviewers/division managers)

Division managers coordinate the process as coordinators

Validate the peer review results

Step 4: Aggregation of review results (division managers)

Recommend proposal list for panel evaluation

Step 5: Panel evaluation (department/division managers & experts)

Suggest a funded list

Step 6: Final decision (top management division managers)

Project/Portfolio Selection - Success Factors


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Centralized view/Overall analysis : have an inventory of current and

proposed significant projects

Financial analysis: ROI, NPV, Payback,

Risk analysis: complexity, technology risk, cash flow, organizationalchanges

Interdependencies among projects

Accountability and governance : top management involvement,business leaders accountable, using regular project portfolio reporting

Challenge of Project/Portfolio Selection


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Lack of knowledge to evaluate risks Lack of commitment of business leaders Lack of cross-functional communication

Lack of a clear company strategy Lack of appropriate way to measure

project/portfolio benefits Lack of knowledge of portfolio management

techniques

Why bad projects are hard to


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kill Belief The trap


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Thankyou

A project is complete when it starts workingfor you, rather than you working for it.
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2 PLC and Difference in RD Projects