Project Management for Successful Product Innovation

Alan Webb

• Publisher: Taylor & Francis
• Year: 2017
• eBook ISBN: 9781351908443
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

This comprehensive book provides a complete guide to managing projects involving the development of new products. It aims to give the practising project manager an insight into the many processes that are involved in handling one of the most complex of industrial activities. The book is arranged in a logical sequence covering the development of project management, project management structures, aspects of planning, monitoring and control, economics and value management, design management, intellectual property issues and production start-up. Particular emphasis has been given to risk management which is recognized as both a difficult subject and also one of growing importance to today's project manager, especially in product innovation. A complete explanation is given of the latest and most relevant techniques together with guidance as to where and how they should be applied. Where software tools are available these are named and, in some cases, brief descriptions are included; in all cases contact details of the vendors are provided.

1 Projects and Project Management

Few will doubt that change is taking place within society at a faster rate than anything seen previously. The nineteenth century could be termed 'the age of coal' for coal provided a cheap and plentiful supply of energy; it opened up the world through railways and steamships and it brought energy into the home through electricity. Most of the twentieth century can be regarded as 'the age of oil'. Oil has made powered flight and personalised transport possible but it has also brought about mechanised warfare. Affordable and readily available energy to heat our homes, transport us wherever we wish to go and power our machines has transformed and enriched the lives of ordinary people over the last two centuries in a way that would have been hard to imagine at the start of the Industrial Revolution. At the start of the new millennium we stand at the dawn of a new era-'the age of information'. The changes it brings will be as revolutionary as any before. We are already seeing its effects in the home and the workplace and only the bravest will predict with any conviction what life will be like fifty years from now. Cheap energy has freed mankind from the limits of physique and the forces of the elements; information should free the mind and the imagination.

Behind all these changes lie the processes of inventive discovery and innovation; they set mankind apart as a species for they have allowed him to adapt the environment to suit himself unlike the animals that rely on evolution to adapt to changes in their world.

Inevitably there are prices to be paid: invention creates new opportunities but these can just as easily be directed towards the processes of destruction as they can towards enhancement. The environment has been improved for some but by practices that damage it for others. Stability in the workplace has been displaced by uncertainty as traditional industries are rapidly replaced by new ones that have no use for the old skills. The future abounds with uncertainties and opportunities in equal measure-each new invention brings about a change and each change also creates a further opportunity for those who are able to see it and respond to it.

Businesses must recognise this and continuously improve both the goods and services they offer. None can afford to be complacent and assume things will go on in the same old way for the world is changing too quickly; innovation and adaptation must become endemic to the culture. Innovation, by its nature, implies a step into the uncertain future and carries with it the risk that the result will not be what was hoped for; however, a failure to tackle the new and untried will ensure the eventual demise of any organisation. To stand still is to go backwards as there will always be rivals who are prepared to invest in innovation to ensure a better future.

Projects and managers

New product development is recognised by all industrial sectors as essential to business success but the pressure of competition is forcing companies to look at both their products and the way they undertake the development process. Contemporary products are no longer simple; in a growing number of instances they are 'systems' that draw together products and processes from different disciplines and this has brought about a new focus on the way that innovative development is handled. More companies are turning to the 'project'-based approach and it marks a departure from the traditional method by which companies have operated.

The term project has many definitions but 'project', in an industrial sense, has acquired a meaning of its own. To perform a project is to go from an existing 'state A' to a different 'state B'. However, to be a 'project' in our sense, two other ideas must be introduced: (1) that the result was expected and (2) that 'state B' is something new. 'Project' thus contains four ideas: change, novelty, the future and a result. The result is important, for a task to be a 'project' it must have a goal-something that is known at the start as being the reason for the project. The concept of a project also implies a start and an end; the end occurs when the desired result has been achieved. It can, of course, be argued that every industrial action has a goal; if it had not, nobody would do it, and in one sense all industry can be viewed as series of projects. However, the concepts of uniqueness and novelty-that is, something new where nothing went before further confines projects to one end of a spectrum of industrial activity that has well-known, repetitive, orderly processes at its other end.

Projects are located at the chaotic end of the spectrum where things are rarely repeated, the unexpected is to be expected and the only certainty is change. In such a situation, things have a tendency towards disorder unless they are constantly directed at the goal. Keeping things on course requires a leader-someone to plan, organise and control the task and to create order out of disorder. It is these properties that determine the concept of project management for it can be defined as the task of directing novel and unique undertakings; one who practises in that role is a project manager. Projects stand at the exciting end of the spectrum; the work is challenging and varied and it is not surprising that many are attracted to project management and see it as a career enhancement.

Of course 'projects' as defined by a task that leads to a single and not-to-be-repeated result, have been undertaken since the earliest times but the concept of 'project management' is a comparatively recent one. Although projects have been pursued for a long time without the need for the separate discipline of project management, it does not mean that the role was absent. The creation of the 'project' as a distinct activity within an organisation is a response to the changes that have come about in current industrial undertakings, in particular:

• increasing technical demands;
• increasing product complexity;
• increasing organisational complexity; and
• the inter-company and international nature of business.

The primary cause of these changes lies in the innovative process itself, for it has generated increasing levels of expectation in all aspects of life and particularly in our expectations of technology. This, in turn, has led to products with ever increasing technical demands. The fusion of different strands of technology has allowed the creation of products that have properties that were undreamed of a few decades ago. In the nineteenth century the steam locomotive was the highest level of transport technology but today we have to look at the jet airliner. Most mechanical engineers, assuming they have the requisite manufacturing skills, could design and make a rudimentary, steam engine that would generate enough power to haul a load. Few of those same engineers could design a jet engine that would run and, of those, much less could make an engine that generates any useful thrust. The jet engine is, however, only one of the systems that make up the complete aircraft for it is an amalgamation of mechanics, hydraulics, electronics, radar, computer hardware and software, bound together with such other disciplines as aerodynamics and control theory. Product sophistication is not the only factor in the increasing technical demands; in some cases the requirements for a successful product may be beyond that achievable with current techniques and much of the project will revolve around developing new heights of sophistication in technology.

Contemporary innovative projects are increasingly influenced by:

• The growing complexity of products and the evolution of 'systems'.
• A tendency to specify products that are highly optimised for their role at the outset.
• Competitive pressures which have brought cost to the forefront of product specification.

The advent of computer technology has brought with it a range of analytical techniques that has allowed the designer to explore increasingly complex concepts for products and take those concepts to the limits of their performance. The result is that specifications for new products may be highly optimised at the very start of the development process; there is, however, an inherent danger. In terms of functionality, products whose concepts are highly optimised are far less tolerant of minor deviations than those products of which less is expected. Should one small part of an optimised system fail to meet its specification it can have an effect on the overall system which is disproportionately large and curing it can have severe effects on project time and cost.

Competitive pressures, particularly from Third World producers, have forced the issues of quality and product cot to assume a greater significance than previously. Perhaps more than any other factor the post-Second World War influx of Japanese goods showed that high quality could be obtained at low cost. With the increasing system complexity and optimisation mentioned earlier and a continual rise in society's expectations from technology the challenge to engineers and managers is obvious.

An evolving discipline

Creating a new product and bringing it up to a standard where it can go into mainstream production and perform reliably for the user is one of the most difficult tasks that industry regularly tackles. Prior to the Second World War separate project offices dedicated to the task of managing the whole process of development from initial concept to entry into production were a comparative rarity. What did tend to exist in companies of some size was the 'experimental shop' where skilled craftsmen hand-built prototypes that were then put through a test programme before being approved for production. Often there was little in the way of overall co-ordination of this process and progress depended on the handing over of completed tasks from the design office to the experimental shop, then to the test engineers and finally to the works management. This approach reflected the functional organisation of most companies but the demands of war-time development and production threw the inefficiencies of this way of working into sharper focus with a few far-sighted individuals.

Clarence 'Kelly' Johnson was to become famous as one of the greatest of aircraft designers; planes such as the Lockheed P-38 Lightning, the U-2 and the SR-71 Blackbird stand as a testimony to his brilliance but he also left another legacy. The Lightning had proved to be a highly successful fighter and when the US Army Air Force needed a jet fighter for service in the Pacific, both innovative technology and development in an ultra-short timescale were essential: they turned to Lockheed. Johnson had long argued that the bureaucracy inherent in the functional structure of the company was inefficient and hampered rapid progress. What was needed was to bring all the facilities necessary for product development-design, manufacture and test-into one unit headed by an experienced engineer/manager and unhindered by organisational procedures. The Lockheed board were persuaded by his arguments and in 1943 he set up what was to become world famous as the 'Skunk Works'. In a period of a mere 143 days his organisation designed and built the prototype P-80 Shooting Star and rolled it out 37 days ahead of schedule. Development progressed and production built up rapidly, but unfortunately it was too late to see war service, being declared operational on the day Germany surrendered. At the end of this experience Johnson set down 14 operating rules for his projects and in them he clearly identified the role of the 'Programme Manager': an individual having complete responsibility and total control of the development process from start to finish. In this we can see that Johnson was the prototype for the many thousands of engineering project managers that were to follow. The success of his approach showed clearly in the way that highly innovative projects were completed quickly and at a fraction of the cost under the old regime.

In the Cold War climate of the 1950s the lessons of the Skunk Works did not go unnoticed by US Department of Defense civil servants who were entrusted with managing massively complex aerospace systems that required development in a short timescale. They demanded the appointment of industrial managers, who were not in themselves divisional managers, but who were charged with overall responsibility for delivering the project. These were among the first project managers and so began the alliance between project managers and the mainstream organisation; it was an uneasy alliance at that time and it remains so today.

This arrangement might just have stayed a quirk of US business practice had it not been for the advent of two things in the late 1950s: high-speed computing and the process of network analysis. Drawing networks seemed to offer a completely accurate and dispassionate way of describing a project; with the aid of a computer it could be analysed for its properties including, and most importantly, die overall project duration and the path to get to the end. While not actually difficult or highly complex, drawing and analysing networks is not an intuitive process; it has to be learned and understood. So the profession was born from two things: first, the actual appointment of people with a new set of responsibilities to be in charge of 'projects', and second, a technique known only to the initiated that would, it was claimed, give them a new and precise level of control. All this fitted in very well with the new concept of 'scientific management' which, in truth, was the first great confidence trick, but in the hopeful climate of the early 1960s everyone was happy to be taken in.

Perts and Rubber Baselines

In fact, there is nothing 'scientific' about scientific management if you take 'scientific' to mean making use of controlled experiments to prove theories. In practice it could hardly have been less scientific, but it did involve a lot of calculations with reams of output and that was what mattered if you wanted to be credible as a project manager. Things took on a grander aspect with the advent of the Time-Cost-Performance triangle. Project managers, armed with their computers and systems, were expected to deliver simultaneously on all three fronts and some individuals (usually consultants from PM software companies) actively promoted the idea that they could do just that. This was a bold challenge as many previous projects had failed on one, two or all three counts. In truth, project managers were poorly equipped for this challenge as the network plan is a one-dimensional (Time) representation of the project and an incomplete one at that. Its problems were recognised from the start, for when the US Navy devised PERT, it was known that accurate estimating, which is the keystone of all successful planning, is never easy and, in the case of very novel projects, is virtually impossible. So PERT embodied a threeestimate method that allowed for variability in durations. It wasn't long before theoretical and practical objections were raised to the PERT concept and by the early 1970s it was effectively dead.

PERT embodied the important idea of variability in durations and allowed for it in the planning, but what it could not do was allow for variability in the plan itself, even where it was known that variability could and would exist. This in turn led to the next great confidence trick – 'success-based planning'. This let the project manager off the hook as the plan now contained only those activities that spring from success at every stage; what happened if you had a failure was simply not included and often never considered. The rub came for the project sponsor who was continuously asked to provide the extra cash and wait a bit longer every time a failure occurred.

It wasn't long before Cost got tied into the project control cycle, the first real attempt at this being a US Department of Defense system called PERT/Cost. Even more complex and difficult to handle than PERT alone, it was rejected outright by industry. However, the US Department of Defense was sensitive to the fact that the failure of PERT and PERT/Cost left them exposed to criticism in Congress and so instigated the first successful attempt at a twodimensional planning and control system. This resulted, at the end of the 1960s, in the earned value or cost–performance measurement (C/SCSC, C-Spec.) approach. The cost dimension was now an integral feature of the plan and it brought into prominence the concept of the work breakdown structure as the key feature for cost reporting. However, earned value relies on the idea of a fixed 'baseline' plan from which all deviations are measured; the problem came when the baseline was also a success-based plan – a fact which, with clever presentation, could be concealed from the sponsor. Once failures and deviations from plan began, the baseline broke down and the earned value calculations became difficult or suspect. Astute project managers started to adapt their plans to events as they happened but this led to the 'rubber baseline' whose principal effect was to make the relationship between contractor and customer even more strained.

Outside Influences

Meanwhile project performance remained out on a limb – contained within the project triangle but excluded from the planning and control system. But it was to be issues of Performance and its effect on the world at large that were to transform the concept of project management for many large and high-profile companies. The late 1960s saw the rise of public opinion as a significant force in the destiny of major projects; the cancellation of the US Supersonic Transport Aircraft programme, despite the existence of the rival European Concorde, was the first time in history that public disquiet over environmental issues was to halt a significant advance in technology. More examples were to follow with the placing of London's third airport and the opposition to the Trans-Alaska Pipeline, which was only reversed when there was an oil crisis in 1973. It was no longer possible to see projects in the context of the inward looking Time–Cost–Performance triangle; it was just as necessary to manage the world outside the project to include everyone having a stake in the project – the sponsors, the users and the bystanders.

Some projects were, of course, completed successfully, but despite the preponderance of software and a wealth of 'project management techniques' the failures and disappointments continued in much the same way as before with such well-publici...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• List of figures
• List of tables
• Preface
• 1. Projects and project management
• 2. Innovation and the creation of new products
• 3. Organising the project
• 4. Planning for success
• 5. Success by design
• 6. The cost and value of products
• 7. Managing the materials
• 8. Progress, performance and control
• 9. Implementing the production programme
• 10. The economics of projects
• 11. Analysing the risks
• 12. Managing the risks
• 13. Some commercial aspects
• Appendix: Software products and vendors
• Bibliography
• Index