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    • University of Iceland Department of Engineering Project Management II Teacher: Helgi Þór Ingason Project Management in Product Development - comparative study of Actavis, Marel and Össur – DRAFT 7 Spring 2005 Jón Bjarnason Margrét María Leifsdóttir Sigurlína Valgerður Ingvarsdóttir Staffan Einar Anderberg Vegar Lie Arndtsen Þorbjörg Sæmundsdóttir
    • Table of contents Introduction...............................................................................................................3 Definition of Project ..................................................................................................4 Projects and Project Management............................................................................4 Project Management in Product Developement.......................................................5 Background of the companies...................................................................................6 Actavis Group.........................................................................................................6 Össur.......................................................................................................................8 Marel......................................................................................................................11 Object of the study....................................................................................................13 The Study..................................................................................................................14 Actavis ......................................................................................................................14 Össur.........................................................................................................................18 Conclusions..............................................................................................................24 References................................................................................................................25 2
    • Introduction This study on project management in product development in three Icelandic companies was done by Jón Bjarnason, Margrét María Leifsdóttir, Sigurlína Valgerður Ingvarsdóttir and Þorbjörg Sæmundsdóttir, M. Sc. Students in Industrial Engineering at the University of Iceland, Staffan Einar Anderberg, M. Sc. student of Industrial Engineering at Chalmers University of Technology in Sweden and Vegar Lie Arndtsen, a M. Sc. student of Systems in Technology and Society at the University of Uppsala, Sweden. The study is a part of the project work required for the course Project Management II – Follow up, taught by Dr. Helgi Þór Ingason at the University of Iceland. The companies studied, Actavis, Marel and Össur were chosen for the study on the basis of their emphasis on product development. The group of students were primarily interested in which factors influence project management in product development and how this development benefits from project management methodology. To answer these questions project managers at Actavis and Össur and one of the director of product development at Marel were interviewed using the same list of questions and the answers compared. Conclusions drawn from this comparison are hoped to shed light on the status of project management practices in product development. 3
    • Definition of Project The Manhattan Project, the project of producing the atomic bomb is considered as the begin of the modern project management. The project was four years, it began 1942 and ended 1946, and it’s cost was around $1.8 billion. Since then the use of projects and project management has been adapted more and more. In the last decades, project management has increased significially both in companies and institutions. Companies have discovered to be able to compete in more complexed, transdisciplinary and even multilanguaged environment they must adapt the medhods of project management. Those methods suits better for what they need to accomplish in the current business environment, rather than traditional functional approaches. What is a “project” and what is included in project management methods? There exists various definitions of the term “project”, as an example of one rather broad is this one: Project is specific finite task to be accomplished The project management organization in the United States is the Project Management Institude (PMI). The PMI definition of “project” is: A temporary endeavor undertaken to create a unique product or service Projects and Project Management Since the Manhattan Project took place the growing of the use of project management was slow at first, but in the last years it has grown significially. For example the PMI was established 1969. The membership rose slowly in the beginning, an in the year1990 the members were 7.500. Since then the membership grew rapidily to 86.000 members in the year 2001. (Meredith & Mantel, 2003, p. 5) Verkefnastjórnunarfélag Íslands (VSF) - The Project Management Association of Iceland - was established 1984. Members of VSF are individuals, companies and institutions, and are now around 300. (VSF, 2005, homepage) A project is a unique activity were the final outcomes are well defined. It can be divided into subactivities that must be accomplished to achieve the project goals. The life cycles of projects normally start with a slow beginning. Then they raise upto a peak which afterwards they fall down untill the end. Objectives of projects vary from project to project but they have some in common, performance, time and cost. The final outcome, the time it takes and the cost are all parameters that needs to be controlled in majority of all projects. In the recent years there have been the tendency to include the expectations of the client as the fourth parameter. The benefits of using project management are many, companies experience shorter development times, lover costs, better control over projects, better quality and reliablility, better customer relations and also higher profits margine. The main drawback is however that adapting project management leads to greater organitizational complexity. 4
    • Project Management in Product Developement The process for developing a product is very often a unique process. In addition to the time and cost control requirements of it, the development of a product is very targetable for defining a project and the use of project management. Mainly because of this, project management has frequently been adapted in many companies in the which rely much on product development. For example the software companies have been the origin for significiant percent of growth in the field of project management the last one or two decades. Even though each product development project is unique, many companies rely on continuous product development. Though the individual projects aren’t repetitive they have lot in common specially inside each company. Because of that the need for structural approaches for product development, undouptly arises after running through few projects, both for overview and managing purposes. Characteristics of a well managed product development projects include: • Well defined project inputs including customer needs and product specifications • Well defined project outputs (deliverable documents) and steps to acieve it, including the responsibilities • Flexibility to be able to support multiple projects and tailor the product development project to it’s particular requirements • Templates for project output both to improve efficiency in creating the project outputs and also to improve consistency • Project controls in the form of stage-gate reviews and design reviews The major achievements accomplished by including the points above is not only because for the managing approach. But also the overview and overall understanding of all participants of both the general of developments projects but also individual projects themselfs. The steps to adapt organized control over the product development have of course great permanent effects on companies structures and one is certain, it is not for less complexity. Most often the modern product development requires knowledge and input from transdisciplinary groups inside the company. More to come……. 5
    • Background of the companies Actavis Group History The Actavis Group is a generic pharmaceutical company employing roughly 7000 people in over 25 countries around the world. United under the name Actavis since May 2004, the group is comprised of different companies acquired by the generic company Pharmaco. Founded in Iceland in 1956, Pharmaco started it’s strategic buying of companies in the generic field with the acquisition of Balkanpharma in Bulgaria in 1999 followed by the buying of Icelandic Delta in 2002 and Serbian Zdravlje in the same year. Fako in Turkey and recently Lotus in India followed suit according to the company policy of strategic acquisitions and investment in product development. A generic pharmaceutical is a drug, typically tablets, capsules or creams, which have the exact same properties as an originator’s product already on the market. The inventor of a drug enjoys patent protection for up to twenty years for his product. When this patent expires, generic versions of the drug can be marketed. The aim of Actavis is to be the first to market a generic drug when the product patent on the originator’s drug expires. Actavis markets its products under its own brand as well as selling to third parties who market the product under their own name. The development takes place at three sites, Iceland, Malta and Turkey. Until 2003 the focus was almost solely on the European market but now development is also aimed at the worlds biggest pharmaceutical market, the US. The workforce of the group consists mainly of pharmacists and chemists, but engineers, biologists, lawyers and other specialists also play and integral role as well as the production personnel. Complexities in the fields of development, excessive patent protection of pharmaceuticals in addition to a demanding regulatory environment necessitate a high degree of specialization for all employees. Project Management and Organizational structure at Actavis The organizational structure at Actavis is the hierarchical structure favoured by most companies. Should we also mention the organizational structures at Marel and Össur since the difference in structures probably has an impact on how the projects are managed? 6
    • Picture 1 – Organizational Chart for Actavis Group In picture 1 the organizational structure for the group is shown. A typical structure for one of the group’s companies is shown in picture 2. Board of Directors Managing Director Human Resources Quality Affairs Finance Purchasing Production Planning Quality Accounting Purchasing Hafnarfj r¶ur Production Control Scheduling Quality IT K—pavogur Assurance Quality Control Finance Reykjav’k Laboratory Laboratory Technical Sevices Department Production Documentation Picture 2 – Organizational Chart for Actavis hf., an Icelandic subsidiary Development projects at the development site in Iceland are either aimed at the EU market, the US market or both markets. Difference in regulatory and marketing demands, as well as difference in patents, makes it necessary to manage a product aimed for both markets as two separate projects. 7
    • As well as new product development, changes to existing products, such as addition of API (Active Pharmaceutical Ingredient, the active drug in the tablet or capsule) suppliers and line extensions (addition of strengths, such as 5 mg when 10 and 20 mg are currently on the market) are managed as projects in the development department. Five project managers, two for US projects and three for projects intended for the European market, manage around forty projects in various stages at any given moment. The development of a generic drug at Actavis can be described as follows: Project Idea Development Launch Preparation Product Launch Business Planning Decision on Business Project Approval Registration Production for Launch Planning Sale of Dossier Picture 3 – Project process at Actavis Group – development site in Iceland The diagram shows the stages of product development from concept to product launch. Development project managers manage the project from project approval until registration. More text on the development will be inserted here. Össur History Össur hf. was founded 1971, by Mr. Össur Kristinsson, a prosthetic maker, Sjálfsbjörg (the Icelandic Association of Handicapped Persons), S.I.B.S. (the Icelandic Association of Tuberculosis and Chest Patients), the Sponsoring Organization for the Handicapped and the Sponsoring Organization for the Mentally Handicapped. In the beginning the company served mainly as a prosthetics workshop for the domestic market. Over time this has changed, Össur hf. is now developing, manufacturing and selling components for prosthetics. The company started exporting 1986 and is now selling it is products worldwide. It has subsidiaries in four countries: USA, Canada, Netherlands and Sweden. Össur hf. was listed on the public stock market in Iceland in 1999, the total number of stockholders is now 3376. The average number of employees in the year 2004 was 568. Products Össur’s main product lines are in the field of prosthetics and orthotics. 8
    • “The principal products manufactured by the Company include liners, sockets, prosthetic feet, prosthetic knees, various components used for the manufacture of artificial limbs and ankle and knee braces.” (Össur financial statement, English version, 2004) A decision needs to be made on references and how they are handled. The company has developed and invested in a number of renowned brands, with different functionality in different locations over the world. Össur hf.’s newest product, “Rheo Knee”, is a bionic prosthetic for lower extremity amputees has received a lot of attention. It has been featured in both Time and Fortune Magazine1. Product development process at Össur. Structure of a project The product development process at Össur is thoroughly defined with a gate process system. It structures each project into a linear process that has to go through four phases. After each phase the project needs fulfill certain internal and external demand criteria for proceeding into the next phase. These demands are controlled at a gate meeting. In these meetings the decision board has the authority promote the project to the next phase, but is also has the authority to terminate the project. Decisio Approval of Business Finishing / Final Follow Phas Gat Phas Gat Phas Gat Phas Gat Phas Gat Start of a Feasib Design / Finishing / Product launch Build Testing / Post Market Picture 4 – the product development process at Össur hf. We need a better copy of this picture Phase and Gate one 1 Time magazine's "The Most Amazing Inventions of 2004" cover story -Time Magazine. November 29, 2004 Fontune Magazine's "25 Best Products of the Year" -Fortune Magazine. December 13, 2004 9
    • This is the phase where the ideas is created and put down on paper. The general purpose and function of the project is defined and it is presented at gate meeting one where a decision on more thoroughly planning should be made. Phase and Gate two Thorough plans concerning time and economy are made in this phase, in both the view of production and marketing. In this phase all the metric measurements are made to make the project comparable to the other projects in the company. When the project is ready for the second gate it has to be compared to other projects and the company strategy. Projects going through this gate have a high probability of completion. Phase and Gate three Phase three is where the physical development is starting and it is decided in which technical way solve the task. In this phase a lot of testing and control of the product is done. A marketing plan for the product should be ready when it passes through gate three. When this phase has ended, the design gets frozen so that it cannot be changed unless the gate three decisions are cancelled. Phase and Gate four In the fourth phase production takes over to fit the production equipment to the product. %What about marketing? % There is also a focus on internal knowledge building of the product in this phase. The gate four meeting is also known as the final audit where the final decision on if the product is going to be launched or not. Phase and Gate five The product-launch it self together with surveillance of the market reaction is called phase five. The final gate meeting or post mortem sums up the project and a control of the earlier defined metrical values is done. The experience gathered from this meeting are brought into new projects. Portfolio management The portfolio management at Össur is divided into two layers. The upper layer is managed by the %board of directors or eq.%. What type of project is the company going to do and the distribution between the types is also set. In the following decision-layer specific ideas are screened and compared with each other. The comparison is done through a system of metrics, grading different properties of the project ending up with a total score that is comparable with other potential projects. By having comparable projects the portfolio manager at the lower decision level choose the best project within each type category. This leaves the company with a portfolio that might not have the highest total score, due to many high score projects in one type category. However the portfolio is considered the best one that supports the long time strategy of the company. Human resource Management in the Product Development 10
    • The R&D department has a pool of human resources that can be used by all projects that are running. This pool contains both engineers and project managers. Engineers are delegated to one project at the time, but project managers can have more than one projects running simultaneously. The amount of resources to each project is distributed by %someone above%. Marel History Marel was founded in Reykjavík, Iceland, in 1983. They are suppliers of equipment and production solutions to the meat, poultry and fish processing industry. The company is one of the leading developers and manufacturers in its area of trade, which provides intelligent processing equipment and total production solutions manufacturing. Marel has been listed on the Icelandic Stock Exchange since 1992 and is owned by around 1,800 Shareholders. The the Marel Group is build up of 9 companies bearing the Marel name, the Danish-based Carnitech A/S, CP Food Machinery and Arbor Technologies of France. The group also has a network of agents and distributors in some 30 countries worldwide and sells its products to some 50 countries around the world each year. In 1997 the Group’s parent, Marel hf, became the first company in its field to receive ISO 9001 certification from the International Standards Organization for quality in product development, sales, manufacturing and after-sales services. Products Over the past 20 years the Marel Group has launched a wide variety of equipment designed for use in the fisheries, meat and poultry processing industries. The company designs and manufactures weighing and grading equipment, computer vision systems, intelligent portioning machines and total-solution processing systems. The portfolio of Marel products spans from general-purpose weighing and packing scales to more advanced automatic weighing solutions including flow scales, dynamic weighing units, intelligent batching systems and hopper scales. The solutions provided to the customer can be standardized or customized systems. Marel often work in close co-operation with their customer to develop solutions to their individual production problems. The solutions range from individual equipment to whole flow line solutions. In this manner new technology is continually being developed and new products born. Workforce Marel Group employees are highly educated and highly skilled and so form a multi-disciplinary team of graduates, tradesmen and craftsmen drawn from a wide field of skills and disciplines. 11
    • Ath hver er samsetning starfsmanna, menntun osfrv. Picture 5 – Marel’s agents and subsidiaries around the world 12
    • Object of the study Here we should have the research questions in detail and the arguments for choosing these questions. Why is this interesting and so on? 13
    • The Study Actavis Types of projects In the development department in Iceland Actavis has four different kinds of projects. These are new development projects, additions and changes to products that are already on the market and the addition of a second supplier of the active pharmaceutical ingredient to existing projects. The development projects are divided into two groups, development for Europe and development for the USA. These are different because of different regulations and different patent constraints. Development from start to finish for the European market will be the focus in this study, Sigurlína Ingvarsdóttir is a project manager working on such projects together with two other. There are two other project managers working on the US projects. Background on development There are close to a hundred people working in product development in Iceland. Project managers in product development are only working in the project development department. There are also cross company improvement projects that the project managers are working on, but they are not necessarily functioning as project managers in these projects. Scope of the projects The development project manager’s responsibility reaches from the approval of business plan until the products manufactured are proven comparable to the original product already on the market. The project manager then hands it over to the registration department which is responsible for filing the necessary documents to the relevant authorization for approval. People working in product development are mainly working in product development and not on other Actavis issues. A project manager has between ten and twenty projects of different sizes running at the same time. Around half of these are new development projects. The time between approval of the business plan to the filing of the registration dossier for the product is typically between 18 and 30 months, depending on the difficulty of the project. Other types of projects might take 6 to 12months to complete. The project team A typical project team for a new product development in comprised of members from the registration department, formulation development department, quality control department, analytical development department and a project manager. When the patent situation is particularly complicated a patent specialist is added to the team. 14
    • Number of projects currently ongoing Around 60 projects are running simultaneously in the Icelandic development department, roughly half are new product developments and around 15 projects were started last year. This is in the ballpark of what the company wants. Preparation, control and closure of projects The same methodology is used for all new projects. The signal to start the project work is an approved business plan from the project steering group, which consist of high level managers and others relevant to the issues at hand. This group has the authority to authorize and to kill projects. The product development department gets the business plan from the Actavis portfolio manager and a hand over meeting is held. In this meeting the project manager is informed of the timeframe, issues specific to this particular product and patent constrains. After the hand over the project manager contacts a patent specialist who prepares a draft patent report for the product. When the patent situation has been clarified, the search for a suitable active material for the product starts. The development project managers have a monthly meeting together with the managers of the product development departments and the formulation specialists. This is the development steering group meeting. It’s purpose is to assess the status of each project and to deal with issues regarding these. When the bioequivalence study, where the generic drug is proven to be comparable to the originator’s drug, is finalised with good results, the project is informally handed over to the registration department who then prepare the registration dossier. If additional work or information is needed from the formulation or analytical development departments the registration specialist contacts the project manager. Actavis does not have a post mortem for their projects. Product development costs make up around 7 percent of the total operating costs for the group. The cost of project management is quite small in relation to the project budgets. A normal development projects costs around ISK 100 - 150 million and the cost of project management is about 2 million. Education of project managers and team members The development department does not have certified project managers. Some of the project managers have studied project management on a university level and most have gone on courses in project management at institutions specializing in industry specific courses. The members of the project team are generally pharmacists. They do not have specific training for project group work, but have achieved skills through experience on the job. Responsibility of the project manager The project managers have the responsibility of ensuring that the daily work of the project is running smoothly. Financial decisions are done in cooperation with the project group and the head of the department. 15
    • Project management history Actavis started with project management in product development in 1999. The development projects were growing in number and someone was needed to focus on projects. Before then, development projects were fitted in between the daily production in the factory. There was no formal structure for project work and no one managing the development specifically. This led to a lot of mistakes. The first project manager, with extensive experience in pharmaceutical industry was hired to Actavis (then Delta) in 1999. In the beginning there were no project teams, only the project manager. After about two years project teams were introduced. The use of teams has been evolving. The decision to implement project management methodology at Actavis was a cognitive one. Schedules and budgets Schedules and plans are being used both on each single project and on the Icelandic part of the project portfolio. The schedules are rough, weeks, months and quarters of year are the most commonly used time units. The bottleneck in the product development is the pilot plant and by scheduling all projects together the project managers are aiming for better utiliztion of it. Budgets are mostly managed by departments. The cost per project is allocated in the business plan. The product development group is not very conscious about the budgets in their work. The project managers are however trying to ensure that they are within the budgeting parameters defined in the business plan. Structure of meetings Meetings are usually very structured with agendas for team meetings and minutes distributed to the team and others concerned with the meeting’s issues. Quality management and it’s effect on project management Quality management is not directly involved in the project management, but Actavis must follow the rules set by GMP (Good Manufacturing Practice), a quality system that has big effect on how the projects are handled especially in the later stages of development. Communication and software Communication is done with different amounts of formality, from informal coffee machine banter to formal email or report communication with many receivers. Actavis are using several computer software tools in their project work, for instance Microsoft Project, Microsoft Excel and Microsoft Outlook. Sigurlína especially emphasized the importance of the last one. Beside these managing tools the project managers uses Concorde XAL to check the status of the product 16
    • and the materials used, Newport Horizon to check patents status and active pharmaceutical ingredient suppliers along with other software. Infrastructure has changed since Delta. The setup is similar with department managers and project groups working cross departments. The decision making process has however changed and decision bodies such as the development steering group and the product selection group have been formed and developed. Allocation of resources It is the department manager for each department that allocates specialists to the different projects teams. Sigurlína is of the opinion that the main resource allocation problems lie in the capacity of the pilot plant and not in human resources. At the moment Actavis is not reviewing their projects formally. They are however focusing on the cost efficiency during the project work. A big emphasis is put on choosing right substances for the drugs. Experience has shown that choosing the cheapest substance is not always the most cost effective way. The amount of projects running simultaneously makes it hard to get an overview of all of them. The on time accomplishment is not so good. A survey done last year showed that there is a big risk that projects is running late. This number have been getting better the last year. Future development of project management at Actavis Actavis is at the moment looking at the gate stage process similar to the system used at Össur. The opinion is that it is a optimal model for the project work in the organisation. The ability to get a better overview of how projects are proceeding is one of the main reasons for the planned change. Another strong driving force is that Actavis want a formalized procedure for deciding which projects to keep and which to kill. At the moment projects that have started seem to keep on until they are finished, they almost impossible to kill. Regulations effects pretty much everything in the Pharmacy industry, so project managers need to be aware of regulations etc. Effects of external factors: Mergers have not affected the project management at the Hf part of Actavis, but the methodology used in Iceland is being implemented at the foreign sites of Malta and Turkey. The end user (patient) does not directly effect the project work. The sales department put pressure on the project manager. They also question decisions made by the project manager, but do not affect how the project work is done. The main complaint from the sales department are due to time. They feel that results from product development arrive too late. Opinions on project management 17
    • The development project managers for EU projects at Actavis feel that they have a good basic structure in their project work process. They do however see the need of going up to a “next level”, for instance with the implementation of the gate process. The main general goals for project management set by upper management are: Projects are delivered on time to the set cost. There is a written policy for the project work, but is not considered specifically in any self assessment of the company. Product selection process It is the portfolio manager who is the main initiator of new projects. He has the job of picking out candidates for new projects by looking at drugs where the basic product patent expires a set number of years into the future. He also prepares the business plan for project candidates and presents it to project steering group. Some ideas of projects also come from sales and product development. Around 80 percent of ideas come from the portfolio manager and marketing have basically the rest. The amount of ideas from product development is small. For the idea to be turned into a project it needs to go through a financial study followed by a business plan. The business plan is either accepted or rejected at the project steering group meeting. The head of development at Actavis Group then decides which development site is doing the project. Then the development site manager delegates the project to a project manager, considering which project manger has the time to lead it. Project management guidelines Actavis is not using any specific textbook or model for their project management. They pick literature in form of books and articles from different locations. They also get newsletters and information on recent research from the Icelandic Project Management Association (IPMA), which Actavis is a member of. The IPMA also arranges conferences and courses that Actavis project managers attend. Össur Background on development In the product development department of Össur there are a total of around fourty people working. This includes the development of new products and corrective actions as well the marketing and quality aspects of these products. There are five or six project managers and out of these three or four of them are working full time as project managers. However, the project managers do not work only in product development since there are also cross-departmental projects. The Reseach and Development department has two sub-departments, an engineering department and a project office. The people in the engineering department work mainly on pure development project and corrective actions but 18
    • also help out in production. The project office on the other hand handles project management and allocation of resources. Around half of the work of the people in these departments is on product development. Scope of the projects Normally a development project at Össur has a lifecycle of about a year. There are exceptions where projects have taken a lot longer, this is mainly where the new product icludes a lot of new technology that has to be developed. Corrective actions on the other hand do not necessarily take very long, depending on their nature, but usually around six months. This does not iclude the follow-up phase which is called gate 5 where sales, returned products etc. are reviewed. The project team People are chosen for work on projects based on their knowledge and experience. The core groups for projects are normally composed of two to three people who then call in specialists as needed. In this way the project groups inflate and deflate depending on the stage which they are at. Number of projects currently ongoing Projects at Össur are generally defined as something that has a defined beginning and a defined end. The projects are of all sizes as the project management process is used to keep track of what is being done and to manage documentation. All projects have a project manager however small it is. Every year some five to ten projects are started in Össur. Last year nine big projects finished were finished and currently there are around five large development projects ongoing in the company and about thirty corrective actions. Preparation, control and closure of projects Projects in Össur are controlled using the Gate process and Process and the company´s system in lotus notes, GoPro. (theory about the gate process??) A project´s feasability is reviewed at the first gate and if it fulfills the set up demands it is taken further into the second phase. Information about the project is then gathered throghout the second phase and at the second gate, which is mainly about financial issues, the feasability is overviewed once again. The second gate is where many projects are cancelled or put on hold and as much as 30% of the projects never make it hrough gate 2. Six to eight months after a product is launched, a Post-mortem is performed in order to evaluate the projects regarding production, design and market estimations. A Post-mortem is also done at Gate 4, when the project is launched in order to review how the estimations and project plans were set up to get information and market values for the next project. Education of project managers and team members Össur have no certified Project Managers and training in Project Management is basically done by learning through practising within the company’s Projects framework. A common educational background in the company is an engineering or chemistry degree (include MO´s thoughts about PM??) This is reflected in the compositions of the project teams where there is ususally a technical drawings 19
    • person, a chemist and an engineer is included. For example in the silicone- industry a mechanical engineer is needed to draw the mouldings, an industrial engineer to select the right textile for the product and also an electrical engineer with background in the AMC with programming knowledge. Training of the employees is mainly performed through conferences and by drafting personell with the desired knowledge. The selection of a Project Manager is based on the knowledge of the product line. It is possible for a Project Manager to reject a project and should do so if he/she has not the recources to run the project to full satisfaction. Team members to a project are drafted according to experience and availability. Össur runs a skill matrix which is updated once or twice a year and is used by the Project Office to adjust and delegate recources. The Project Manager is not considered as an expert in the certain development area, only an expert in managing projects. Responsibility of the project manager In general each project manager has one to two big projects or two to three smaller projects at any one time. A lot of effort is made to limit the number of projects that each project manager has. A project manager has rather much authority (or is it mainly responsibility, how much can they actuallt influence the costs??) concerning money spent between the gates. At the gates the costs are overseen in order to see how the money are spent or as Magnús Oddsson puts it; “Between gates I would say that the project managers have the authority to do pretty much damage if they want to”. Utmost it is the Project Office that has the last word regarding projects in general, since it is here where the recources are decided. The Project Office is reviewing the reciurces on a regular basis, at least every fortnight, in order to keep the projects on track at all time since the time between gates can in some projects be counted in years. Project management history Össur has been using Project Management at least since 1992 and the introduction of a more strict quality system was the initiator for using Project Management. The company adapted the ISO 9000 standards rather early an according to fulfill these standards it had to use a more regulated and controlled working process. In the beginning Össur's process in Product Development was mainly based on pioneer work, where the creativity was in focus or at least the driving force. There was not a systematic way of handling innovation and development and this led to a high working load. The evolution of Project Management The quality system reflects the way the company workat the time, not the way it should work, where Project Management is one branch of the quality system. The last three to five years Össur has evolved into a more market oriented company, where the market needs are the initiator of new Product Development projects. Before it was more of inventing products based on a certain technology. These products where then exposed to the market. The market oriented view differs from the innovation method in that it generates more information, as return on investments and the number of product items before a project is started. The company of today is more of a factory as it benefits from products invented from a rather long time ago. Market research is performed by the sales 20
    • department abroad, via customer visits and salesmen. A Product Manager can spend up to 40% of the time on market research. The market is also analyzed using a specifically developed software. The products are sold via salesmen throughout the world, that are making customer visits. Recently a retail net in USA via workshops has been established. Össur sells its products via the prostetis and not directky to the end users. Now trying to reach the end user via their website in order to educate the users. The number of projects a team member can have is ususally three, and this is based on experience. The evolution of Project Management is based on the expansion of the company, when it became more diffucult to have an overview of the work in the company, an overview and a more structured way of handling Product Development was needed and the Project Office was established to take care of those matters. When the company expanded from a small scale comapany to a major on the market, the overview of the Product Development was rather limited, with R&D all over the world. The general trend has since then been to move all R&D to Iceland, even though there is still some R&D work done in Sweden (CAD/CAM solutions) and Seattle. The result is that the company is getting more money back on invested money nowadays than fifteen years ago, but this is also based on the knowledge within the company, where the employees has gained experiance during the years and most of the needed machinery are already installed. Schedules and budgets There are no absolute numbers for the cost of Project Management in Össur, but it can be approximated by using estimation where 6% of the company´s income is reinvested into R&D. From the IT industry a common number of 10 to 20% of the R&D costs is invested in Project Management. Budgeting is based on the revision of the list of projects for one year ahead. Scheduling both on large and small scale.The gate system requires the Project Manager to estimate the dates of each gate and depending on the size and complexity of a project, the time between gates are scheduled with a list of milestones or a detailed gantt-chart. The gate process has been used since 1998/1999 and used Gantt-charts to some extent from the beginning of Project Management. Structure of meetings Gate meetings are very structured since they have a certain agenda and a presentation to go through. Other meeting do not have a certain structure and are based on the issue at the moment, but they ususally have an agenda, that is sent out prior to the meeting. There is obviously a problem with the meetings in Össur that has not been dealt with within the company, where people show up late, take phones during meetings and leaves in the middle. There is a culture of informal meetings aswell and these can sometimes appear to be very important for a project and the day-to-day communication is handled this way.Gate meetings on the other hand must be formal in order to give authority to the Gate process and it is here where the main decisions are taken. Quality management and it’s effect on project management Össur take part in the ISO commitee meetings by performing tests prostetic components. More of cooperation with Universities all over the world and global organisations on the R&D area than in the Project Managament area. 21
    • Communication, tools and software The Gate system is a tool for planning in itself and it is also a software to run projects. The project office uses Microsoft Project to align resources to the current projects. Documentation is done at the gates. Allocation of resources Time estimation is sometimes performed in projects where the technology is known, it is doubtful if it is efficient in research projects. Future development of project management at Actavis It was a conscious decision to convert to Project Management and not something that evolved over some time. There may be a change in the management of projects since the company's computer system is being exchanged and the Project Management may have to be modified to fit. Although there is no major or specific changing in Project Management planned to date. If Össur is planning to expand to new markets, the Project Management may have to be changed. For example if the time to market will be shortened, the routines and management will be influenced. The lifetime of a project in order to launch a product earlier on the market and to run fewer projects are generally a main goal for Össur. The best system is of course somewhere out there and the present system can always be improved. Effects of external factors: Project management is influenced by regulations in the way that any Project Manager probably will have to stand trial in court due to a failure of a product. Mergers with other companies have had an influence on the Project Management in the way that if something is good in the merging company's system and it fits into Össurs processes it is used, even though any specific change recently has been done. Opinions on project management No specific text book model but uses according to quality standard, ISO 10328??? and to refering to standards concering software development UNI??? and uses recommendations from FTA about software development. The Project Mangament is based on quality standards rather than Project Management theories or gurus, because the company's entry point is through the quality system. For example the documents that is used are based on requirements from standards. Management view: The main parameters that are influenced of the management are money and recources. The quality system is interveined with the daily work so that it is generally not thought of as a quality system. Initiation of Projects: The initiator of projects are mainly management 20%, idea base 20%, marketing 40% and R&D 20%. An initiation of a project from an emloyee can be done by turning to a Product Manager for the corresponding product line that can make a small business plan and technical assessment. To take an idea further the head of R&D and director of Project Management will be contacted. Usually a business 22
    • plan is done by an engineerer and a Project Manager. 23
    • Conclusions What are our conclusions of the comparison? What is similar and what is different? What is especially interesting? 24
    • References Bracchini Miguel A. (1997). The Manhattan Project. The History and Ethics Behind the Manhattan Project. Online, April 2, 2005 at http://www.me.utexas.edu/~uer/manhattan/project.html Crow, Kenneth. (1996). Building Effective Product Development Teams / Integrated Product Teams. New Product Development Solutions Online, April 3, 2005 at http://www.npd-solutions.com/pdt.html Crow, Kenneth. (2001). Characterizing and Improving the Product Development Process. New Product Development Solutions Online, April 3, 2005 at http://www.npd- solutions.com/pdprocess.html Meredith Jack R., Mantel Samel J. jr, 2003 Project Management - A Manager Approach, 5th edition. John Wiley & Sons Inc. USA Verkefnastjórnunarfélag Íslands - The Project Management Association of Iceland, (2005). Homepage. Online. April 2, 2005 at http://www.vsf.is/ 25