According to ISPE’s Project Management for the Phamaceutical industry guide, a good project execution strategy is divided into Initiation, Planning and Delivery steps.
I have experienced many projects where the Initiation and Planning stages were not performed properly and the result was: low quality or low productivity plants, delays, costs over budget approved, ROI not met and stakeholder expectations not met. Over the past two years I have noticed a major movement in the pharmaceutical market where industries are working and organizing their projects better. This has been done through the creation of PMO organizational structures and the creation of the project manager position as a formal position in the organization. This movement is important and helps the planning and delivery of projects, but it is not enough to guarantee a good start. In recent years we started projects where the business case was not clear, the project was not feasible or even cases where equipment was purchased without a clear reason. How to prevent this from happening? Through feasibility studies and conceptual design developed with criterion!
The goal of a feasibility study is to answer if the idea or business case is good and feasible. This requires defining high level requirements such as: estimated sales volume, technologies to be used, target market, installation location, regulatory requirements, total investment cost, operating cost and high level implementation schedule. With this information it is possible to assess project risks and calculate payback, net present value and internal rate of return and even improve the initial idea. As such, a project is executed only if it has strategic alignment, is financially feasible, or if it meets a regulatory demand.
After the execution of the feasibility study the next step is to execute the conceptual design. The objective of this step is to study alternatives for meeting the idea or business case, defining the best alternative and refining cost and execution time estimates. In the conceptual design are defined:
- user requirements;
- regulatory requirements to be met;
- plant sizing according to the demands;
- option analysis (plant concept, architectural concepts, layouts, technologies, utility systems);
- sourcing strategy (what to buy, definition of purchase packages, hiring models, market capacity, supplier development).
The conceptual design should be executed by a team of senior professionals with interdisciplinary knowledge, experience in the pharmaceutical market and with a vision of projects from different industries. Stakeholder participation from all areas of the organization is also critical to secure that requirements and needs are raised, discussed, and the most appropriate solutions defined and applied. As shown in the graph below, we can see that in the conceptual design we define about 80% of the project cost against a significantly low investment made.
The conclusion is that the early stages of the project are critical to ensuring the success of the project. Sometimes it seems tempting to take shortcuts or think that discussing and planning the project is a waste of time and that what really matters is getting your hands dirty and making things happen. Unfortunately the end of projects that start incorrectly is not good. To give you an idea market data shows that the initiation phase (feasibility study + conceptual design) cost a maximum of 1% of the total investment, that is, we invest a maximum of 1% to safely define how to invest the other 99%. Sounds like a good deal, right?
For more information on project management best practices, see the Harvard Business Review article at: https://hbr.org/2016/11/the-four-phases-of-project-management
Flavio Luiz Lisboa, PMP®, MBA