Program Management Solutions in Product Development and R&D

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+++ Tips for Program Management in Product Development +++ How Microsoft Technology Can Make Controlling Programs Easier and More Successful +++

By Johann Strasser                                                                                                              Read article in German

Programs in product development are becoming more and more complex while the time to deliver gets shorter. This also increases the requirements for the multi-project or program environment.

In many cases, simple solutions, e.g. based on Microsoft Project Client or Excel lists, can no longer stand up to the challenge. The reason? These solutions make the timely and clear control of complex programs with tight schedules and many dependencies impossible.

Are you possibly up against the same challenge? This article will tell you how to master the challenge and control your programs more successfully. We will start with a short definition of terms.

Multi-Project and Program Management: Where’s the Difference?

Let us start with the definitions we are using in this article. A program comprises several projects, which are mutually interdependent. Unlike in multi-project management, all projects in a program serve to achieve a common overall program goal.

Therefore, a program is, roughly, a main project with many sub-projects. It is usually aligned to corporate strategy.

Interested in the future of project management? Read about 11 PM Trends for 2019.

According to PMI® standards, program management comprises among other things:

  • Definition of interfaces
  • Coordination of schedules
  • Higher-level cost planning
  • Coordination of resources
  • Overall risk management
  • Joint change management

Program and Cost Structure Should Match Each Other

As you know, a program requires a project structure defined to answer this purpose and involving – with increased frequency – external partners.

Aside from that, you need an appropriate cost structure. In most cases, this will not correspond to the project structure. It originates in the ERP system and must be in harmony with the project structure, i.e. it must be possible to represent the requested cost data, such as the monthly forecast.

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Figure 1: Internal and external program structures and the corresponding cost structure

Program Control with the Aid of a Program Office

A program office is an important prerequisite for large programs. Ideally, it will support the program manager at your company in handling the huge amount of available data.

At the same time, it will prepare the decisions of the steering board. For smaller programs, support from an established Project Management Office (PMO) may be sufficient.

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Figure 2: Program control with the support of a program office

Note: This article will provide you with 8 Tips for Successful Program Management!

Challenges in Product Development

Programs in product development, e.g. for household appliances, vehicles, electronic or pharmaceutical products, often consist of a preceding research portion and an ensuing development portion. Here are some of the most important challenges they face:

  • The high complexity and number of projects or rather tasks continuously and periodically cause high coordination effort.
  • Research portions with an unknown finish and outcome make planning difficult, as the estimation of the effort can hardly be based on empirical values.
  • Not all projects are defined at the beginning, since research results are not yet certain and new findings can generate additional projects.
  • Product variants are dependent on basic technologies, which are often redeveloped.
  • The scope of the program may also include very different types of projects, which go beyond pure product development, e.g. the construction or conversion of production sites. For this, the program manager needs broad knowledge and extensive experience.
  • High investments in research and development can be hard to amortize in the case of competitive industries and low quantities. In other cases, a good ROI can be easier to achieve despite high development costs due to high quantities.
  • Development in the respective projects and their dependencies has to bring about the right portfolio decisions.
  • The transition from development to production needs to be arranged.
  • You need to manage bottlenecks in the case of scarce resources in development teams or costly test environments.
  • Continuous improvement by standardizing structures should make control and reporting easier for recurring programs.
    In the context of increasing globalization, you have to involve external partners and distributors across different countries, too.

Looking for a practical example? Here is how this applies to the Electronics Industry.

More Control in Program Management: Tracking Development Costs in the ERP System

Depending on the types of products and the production output, development costs will later be reflected in the prices of your products. Hence, some industries require you to monitor R&D costs meticulously and to stay within budget.

Usually, you would manage the budgets in the ERP system. The monthly forecast with which you compare it is provided by your project management system. This makes the automatic synchronization of the two systems beneficial. As a rule, such a synchronization pays off quickly due to the frequent and regular demand for data exchange between the two systems.

Importantly, such a solution will not only allow you to create the desired cost structures in the ERP system and to transfer them by a simple click to the right locations. A powerful integration of the project management and the ERP worlds will also enable you to process different currencies and conversion factors.

To be able to transfer costs to the ERP system, you will have to do two things in the project management system:

  1. synchronize the required master data, such as cost centers, activity types and cost types
  2. assign the master data to the resources
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Figure 3: Transfer of planned work and cost from PPM to SAP (e.g. with TPG PSLink)

As shown above, the regular recording and updating of R&D costs is an important issue for most companies. These costs need to be available and up to date in the ERP system at least monthly. This is why a smooth data exchange between the IT systems involved is so important.

Want to learn more about IT integration? Read about the integration of MS Project and Jira.

This kind of integration is quick to implement. It starts with the initial coordination between program management and accounting regarding structures and cost data.

Once the interface product has been adapted (configuration) to the individual requirements, the various roles in your company will have the necessary information available automatically or at the push of a button. The implementation will be completed after only a few weeks. It will soon make many process steps much easier and increase the quality of your data.

Controlling Programs with Cross-Project Links

Projects in a program are mutually dependent in many ways. However, you should not set links directly between the projects (see broken arrow in the picture below).

We recommend a different approach. Represent the dependencies via the respective higher control level (see solid arrows in the picture below). This is the only way to ensure that the responsible program managers can actually meet their responsibilities of control. We refer to these as bottom-up status updates.

In addition, we recommend the responsible program managers to create top-down targets. After that, they have to discuss these targets with the project managers and sub-project managers affected.

Looking to improve your program management? Look at our 7 Improvement Measures!

Usually, it is not advisable for the program managers to change the targets directly in the projects at the lower level. All project managers and sub-project managers should stay in charge of their own plan. They should be allowed to implement the program managers’ targets manually themselves. This will help you achieve a higher acceptance of the system.

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Figure 4: Indicating the dependencies via the higher control level

A suitable software for multi-project and program management providing these bottom-up status reports and top-down targets is available. This will give you a transparent illustration of the current planning compared to the targets (see Figure 5 below).

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Figure 5: Bottom-up status updates and top-down control of the program (via TPG ProjectLink)

Many tools will only provide partial solutions out of the box. However, you can extend the existing functionalities in Microsoft Project Server or Project Online to include task links in multi-project or program management.

Comparison of the Responsibilities of Program Manager and Sub-Project Manager

The program manager: The program manager carries operational responsibility for the program. The program team consisting mainly of sub-project managers supports him or her in this task. It is the mission of the program manager to guarantee the central coordination and control of the projects by providing clear targets at the program level. What this means:

  • Identifying dependencies and interfaces
  • Central and active management of these

 

In most cases, the program manager works with the support of his or her own program office. The program manage’s responsibilities include among others:

  • Coordination of schedules
  • Coordination of resources
  • Overall risk management
  • Joint change management
  • Other operational tasks

 

The sub-project manager: Sub-project managers manage one or several sub-projects and report directly to the program manager. It is their responsibility to deliver sub-project plans with valid data to the program manager. In their area, they are also expected to actively contribute to the control of the program. They need to observe the dependencies within the program closely. When they notice variances, they have to communicate them. They also have to update their own plans in accordance with the targets from the program.

The schedule coordination between the different sub-projects occurs mainly via central program management and less between the sub-project managers directly. This makes it easier keep the effects on the whole program under control.

Schedule Control in Program Management: The Milestone Trend Analysis

The Milestone Trend Analysis (MTA) is an important tool in programs. As projects are usually structured with similar milestones, it will be easy and beneficial for you to use this tool for your program controlling.

You will obtain information on the schedule development from the sub-projects. These will be compared with the targets from the program schedule. Thus, you will identify variances over the course of time as well as need for action in the case of delays.

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Figure 6: Schedule control using the Milestone Trend Analysis (MTA) in the program environment

Integrating External Partners

There is a trend in the in the globalized production world to execute programs with the aid of external partners. The objective should be to integrate these into the planning process as well as possible with a suitable IT solution. To this end, it makes sense to access a shared project database, and we urgently recommend such a solution.

It may be that the security requirements at your company do not allow external participants access to your server. In the age of cloud solutions, you are lucky to have other options. By storing your program data in the cloud, you will find it easy to give external partners access to the projects without allowing access to your corporate network.

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In addition to the global cloud, Microsoft has been offering the German Cloud since early 2017. This service allows you to save your Project Online data in German datacenters and in accordance with the strict German data protection. Another possibility is to implement hybrid models combining company servers and cloud components. To name an example, this would make the integration of the Project Online data with your self-operated ERP system possible.

Moreover, modern cloud solutions provide the option to subscribe to licenses as required. This makes you highly flexible in designing the work environment for your programs – and, as a rule, it makes you independent from your company-internal IT department.

Conclusion – Program Management Solutions in Product Development and R&D

This article has introduced you to the difference – in our definition – between multi-project management and program management.

You have received valuable tips and learned which approaches and solutions will best support program management in the product development environment. You have found out:

  • Why your program and cost structure should be in harmony and how to achieve this
  • How to support the program managers in controlling the program
  • What are the typical challenges in product development
  • How to track development costs in the ERP system
  • With what approach to set cross-project links (bottom-up and top-down) in programs
  • How to control your program with a Milestone Trend Analysis
  • In what way to integrate external partners with the aid of cloud solutions

What has been your experience with programs? What solutions are you using? We look forward to reading your comments and questions in the comment area below.

Final tip: Subscribe to the TPG Blog Newsletter now and never miss another blog post.

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