Procter & Gamble Pharmaceuticals produces $2 billion in profit per year with 500 employees in research and development. Like other new drug developers, the company invests 10-plus years in the creation of a new drug with decision points from phase to phase. With an industry standard one out of ten success rate and a typical program cost of $500 million to develop one successful drug, it is imperative that the company is able to use its time most efficiently. That includes bringing successful products to market sooner to increase revenues and eliminating non-successful drugs faster to save money.
In 2004, Procter & Gamble Pharmaceuticals faced a significant challenge. We were expecting a major influx or work, but were not going to be getting any additional resources. We needed to be able to manage our project priorities and resources using a portfolio-wide system. We also needed to improve our productivity by increasing our project/pipeline capacity while keeping resources constant.
We turned to Critical Chain Project Management (CCPM) with its emphasis on execution management to help us standardize our processes. We went from three project completions in the first quarter of 2005 with 25 projects in the system to completing 8 projects in the first quarter of 2006 with 41 projects in the system. Today, we are completing 12+ projects per quarter with a similar number of projects in the pipeline.
Not only have we increased project throughput, but we have also improved predictability. We have increased the percentage of due date compliance from 55 percent to 80+ percent.
Project Challenges in Drug Research & Development
The nature of projects, structure of teams and the value of project management changes as you go from one stage of biopharmaceutical drug development to the next. However, the following characteristics of projects remain the same:
Uncertainties: Drug development involves an array of uncertainties from high technical risk in early stages to more mundane risks such as vendors not delivering on time in the late stages. Work is rarely completed as planned. Managers spend time re-creating and updating plans. Timelines are continuously pushed out. Projects are consistently delivered late.
Shared resources: All projects involve multiple functions and the same people can work on a number of different projects simultaneously. However, due to the uncertain nature of projects, resource planning becomes difficult. In execution, delays on one project cascade to other projects through shared resources. Needing the same people on multiple projects induces multitasking. Projects become less synchronized due to resources not being available as planned.
Instead of holding people accountable in execution to task estimates given in planning, Critical Chain allows individual tasks to be late while emphasizing overall project completion on time. It thus allows project managers to give aggressive duration estimates for tasks in order to reduce cycle time. It then adds strategically placed buffers to manage execution for on time delivery versus CP/PERT, which uses durations estimates that contain safeties or padding which then gets wasted in execution.
For example, in clinical trials, enrollment is a huge variable that often takes much longer than estimated. So rather than estimating 12 months for enrollment and watching that slowly become 18 months, CCPM would use an aggressive duration of eight months, with 4 months added to the project buffer. Then, through the ongoing buffer management process, the team can obtain an early warning of impending bottlenecks and can proactively manage them rather than fight fires after it becomes too late.
Specialized Critical Chain software like Concerto Execution Management System from Realization takes buffer management to the next level by prioritizing work at the project/portfolio level as well as at the task level so that everyone is "reading from the same script." The common practice of whoever screams the loudest is avoided or has no impact. This aspect is of great value to those who are assigned to multiple projects.
Concerto uses the portfolio or pipelining prioritization process in connection with buffer management so the tasks/projects that are at highest risk of not meeting their due date (i.e. those with the highest buffer consumption vs. work completed) are given the highest priority. For P&GP, this aspect of Critical Chain has been useful to ensure that the entire pipeline of projects is adequately staffed and "flowing" and that Early Phase projects receive the same attention as Late Stage projects since resources are shared across phases of development.
In summary, as uncertainties strike during execution, the buffer gets used up. The Concerto system automatically calculates how much of the buffer is still available for future uncertainties and uses this information to provide:
* Task priorities to resources,
* Early warning signals to project managers, and
* Information to resource managers on how to resolve emerging bottlenecks.
Implementing Critical Chain at Procter & Gamble Pharmaceuticals
To be successful whenever changing processes and procedures, one needs management commitment and a culture change. Implementing Critical Chain at P&GP required an overall improvement in our project management standards and increased the quality of project planning and execution, contributing significantly to increasing P&GP's productivity. Critical Chain requires a complete, logic driven, resource loaded network schedule. The project manager plays a more critical role in proactively analyzing and steering the project in execution compared to the more common role in pharma of glorified administrator. Due to the transparency of buffer status and priorities, we have also seen more team involvement and ownership in the planning and execution processes.
For instance, we ask management to work with us to set project priorities, define how many projects can be in the red (at risk for on time completion), and to identify and estimate measures. From a culture change aspect, we ask people to update their tasks on a weekly basis, something they originally did not like doing, especially those dealing with long duration tasks. To eliminate bad multi-tasking, our people now follow Concerto priorities, although they had been accustomed to having their own. Lastly, we look at everything from a global perspective, even though our people have several hundred different job skills and most managers were originally reluctant to flow resources to whatever was needed at a given time.
We established the 3 Rules of Critical Chain:
1. Pipelining Every time a new project is added, we check for capacity. When we began to undertake pipelining, our management originally had us go back and redo it as they did not believe the results. As our drum, we chose our internal statistics group, who hold a key role in delivering our business results.
2. Planning We recognize that all plans have dependencies and consequences on the flow of development. To determine them, we created standard processes or templates versus the continued use of individually created plans:
d. Quality CMC/supply chain
3. Execution Focus Utilizing buffer management, we hold monthly portfolio status meetings with our resources managers, project leaders and project managers so that they understand the overall portfolio and know how projects and resources fit into it. We have created a quadrant report that is based on our portfolio trend chart. The upper left quadrant identifies those projects in the 50/50 zone, meaning that less than 50 percent of the work has been completed but the project has used up over 50 percent of its buffer. Those are the projects on which we need to focus since they are at highest risk of meeting their due dates.
Indicators that Drive Execution
We use a weekly dashboard report to drive compliance and to check on our productivity. In doing so, we
* Update our In Process tasks regularly, striving for an 80 percent target.
* Follow our task level priorities, paying particular attention to those In Process tasks and WIP tasks that are red. Again, we target an 80 percent compliance.
* Manage our buffer. We want less than 10 percent of our projects to be greater than 100 percent buffer consumed and we want less than 25 percent of projects in the red.
* Check our flow index of buffer consumed to work completed, targeting for an index of less than 1, meaning the percent of work completed is greater than the percent of buffer consumed.
Today, our main challenge is to improve the consistency of our throughput and due date compliance results. We need to get better at setting our initial due dates and in creating proactive buffer management. We need to reduce the number of projects that are in red status by getting people to react when the project is in yellow instead of waiting until the project becomes red.
The use of CCPM has become a sustaining strategy for us. We are collecting the reasons for delays to find out which skills need more help and/or what processes need improvement. We are identifying the integration tasks in our templates and projects in order to pipeline using a "virtual drum" for more even resource allocation across all resources.
We continue to educate people to understand the system. To do so, we hold quarterly training or work one-on-one with our new task managers, resource managers and project leaders who interact with the system on a regular basis.
What Have We Achieved?
As evidenced by the number of presentations at pharma conferences as well as the number of pharma companies represented at CCPM meetings and conferences, CCPM has definitely had an increased presence in the pharmaceutical industry since P&GP initially began our implementation approximately five years ago. One speaker at the DIA/PMI Project Management conference held Oct. 23-24 in Washington, D.C. observed that pharma was placing more importance on project management to meet goals and deliverables than in the past because opportunities were fewer, R&D budgets were shrinking and regulatory pressures were greater.
Thus, it is more important than ever to meet deadlines to have a competitive edge. CCPM has been shown to improve due date performance across a wide variety of industries.
The features of CCPM and Concerto that attracted P&G Pharmaceuticals and that continue to be of value are its web-enabled/Enterprise aspect. No additional software is needed for each user's computer and all project plans are in one place, able to be seen individually or as a portfolio. Plans are created in MS Project, which is already familiar to many. With the resource management capabilities, no separate system is needed so we are able to see and manage at both macro (portfolio) and micro (project) levels.
Cutting weeks on various tasks adds up quickly to months and years. Besides the quantitative improvements, there are also qualitative benefits. Managers feel in control of operations and now make decisions proactively to resolve issues before they escalate to problems.
As important, the rank and file do not need to multitask because they now get clear task-level priorities. They can focus on delivering the highest quality output.