Product development and commercialization can be summarized as a balancing act between the competing constraints of product cost, scope, and schedule. Thousands of decisions are made while a product is under development and the end result is typically a sub-optimal result of these decisions. A consistent theme exists as a team moves through the process of bringing a product to the customer: it is virtually impossible to optimize all the requirements of the program/product.
Since optimization is impossible, it is necessary to prioritize the objectives of the project in order to ensure success. Without prioritization, the individuals working on programs will be pulled in opposing directions and will be continually redirected during the project, resulting in failure. Proper prioritization of product cost, scope, and schedule will result in success.
The three objectives of a program are product cost, product scope, and program schedule.
Product Cost refers to the many financial metrics, including total budget, cost of goods sold, gross margins, or any other financial metrics used on the project.
Product Scope refers to the product features that will be designed into in the final product.
Program Schedule refers to the amount of time available to complete the project.
Unfortunately, it is impossible to change one of these objectives without affecting the others. The cost, scope, and schedule each act as constraints and therefore movement of one affects the others. This is typically referred to as the project management triangle by program managers.
How do you manage a project knowing that everything cannot be optimized? The management team at Leardon Solutions has managed hundreds of programs using a simple method of prioritization which requires that the team takes away the constraints that will cause failure. This method requires thinking of the cost, scope, and schedule in terms of three levels of priority.
a) Determine which of the three program objectives is the most important. This chosen objective will be the first program priority that must be constrained and cannot change under any circumstance. For example, if the product being developed is for the snowboard market and must be available two months prior to the skiing season, the program schedule should be chosen as the highest priority. The team must make changes to the product scope or product cost in order to meet the program schedule.
b) Choose one of the two remaining program objectives that can change but must be held within a range. After the top program priority that cannot change under any circumstance is chosen, there are only two objectives left. The second priority should be thought of as an objective that can be modified but should always be kept as close to the goal as possible. In the snowboard example, program schedule is the top priority and everything else must adapt to meet the program schedule. If all similar products in this snowboard product category have a retail price around US$50, this product might also need to be close to this retail price. It might not be possible to hit this price exactly because of the rigid schedule constraint, but the product cost should be optimized by minimizing the product manufacturing cost or modifying the gross margins.
c) The outcome of the last program objectives will be accepted as is. Unfortunately, since the first program priority was constrained and the second program priority was optimized, there is no ability to control the third program priority. The program manager must accept whatever results from the actions of constraining and optimizing. For the snowboard product example, the product scope is considered the third program priority. The product designer might have wanted to include a small injection molded plastic toe bumper on the front of the product to improve the looks of the product and prevent wear of the toe. But due to the schedule constraint (injection molding tool has a six week lead time) and the product cost optimization (this additional part adds cost), the design engineer should not include the toe bumper in the design.
Some hard tradeoffs need to be made when prioritizing the program cost, scope, and schedule. By performing this exercise and communicating the priorities, the product development team will be given very clear objectives that allow the members to make their own tradeoffs knowing the overall program priorities. This will result in successful programs for both large and small projects at companies of all sizes.