(375d) Assessment of Performance Risk in Product Design & Development

Product design and development projects are subject to substantial uncertainties termed "project risks". Unless these risks are identified and managed prior to product launch, they can lead, not only to project failure, but can even create dire consequences for the entire business enterprise.

While conventional project risks often relate to time and cost issues which readily lend themselves to quantitative treatment, risks in product design and development projects more typically relate to performance issues where the knowledge base is inadequate for quantitative treatment. For example, performace issues may include uncertainties related to the market's need for the product being designed, the technical feasibility of meeting the design requirements, the adequacy of the skills of the design team, the supply chain capability of the business enterprise, and the response of competitors in the marketplace, to name just a few. Although these issues may be quantified through the assignment of arbitrary numeric scales, they are semi-quantitative at best and hence require non-quantitative techniques to identify, assess and manage them.

This paper will present a methodology developed by a major multinational product-centered company to analyze performance risk in product design and development projects. It uses a checklist of some 25 issues that all product design and development projects must consider during project planning and execution. These issues are assessed by project teams using a system of "anchored scales" to reduce misunderstanding and subjectivity and thereby aid consistency of judgement. The output is a risk plan that becomes an integrated part of the project plan, including metrics for determining whether the identified risks are being mitigated over time and signals to monitor for negative events.

Based on over a decade's experience, this technique has been proven to be a useful tool for helping teams cope with the uncertainties of new product design and development.