MSOM 5108 / Mark Gershon

Final Paper

David Powell

August 16, 2013

1.) Project Management is vital to the development of Medical Devices. According to

industry expert David Kolesar, “For medical devices, the project scope is usually

relatively large and thus requires multiple communication channels across multiple

functional areas. A company must also establish an internal quality system that ensures

compliance with design controls and applies risk management principles” (Kolesar,

May).

Project Management has been used in the Medical Device Development for over 30

years. The industry has recently begun to use the Stage Gate Process. The concept is

simple. There are activities recommended for each project from a “master check list”

(Danzyger, May), which form a stage. If the project meets certain criteria, it can move

forward through the gate, which acts as a checkpoint. “Gate keepers provide an

independent review of project merits, guide the team, and make gate decisions

(Danzyger, May).

The Stage-Gate diagram below was created by the Product Development Institute, Inc.

It shows how the Stage-Gate process can take a new medical device from an idea, to a

plan, to development, and finally to the market. For this discussion, I will be discussing

mostly Stage 3, Development, and part of Stage 4, testing and validation. The process

appears linear, but in reality there may be other projects that should be done in parallel.

For example, as the product moves through stage 4, Testing and Validation, the

Marketing Strategic Plan will need to begin, in order to be ready for the product launch.

2.) In selecting a project for the Medical Device industry, a primary category is

feasibility. The product must be able to be produced at a realistic cost. Also, it must have

a high probability of being safe for human use, and of being cleared by the FDA. Lastly,

before selecting a project, a company needs to know that is will be profitable. The best

indicator is the percentage of market share the company can gain in a 5 year period.

After 5 years, there may be a better device that enters the market. Also, the company

does not want to enter a market that is over crowded with many competitors fighting for a

small percentage of the market.

a.) In order to cost justify the Endograft, the company needs to make a

noticeable profit. More than a positive NPV, the company needs to increase

the overall sales revenue of the company by 10%. For any product that gains

less than 10%, there will be a huge opportunity loss. Essentially, the 2 years

spent on this project could have been used on another product that will

increase revenue by greater than 10%.

3.) Selection of the Team Structure, Project Manager, and Team.

The structure chosen for this project is a Matrix structure, because almost every

department in the company is involved. “Because it incorporates all functions and

departments, a matrix management style is ideally suited for medical device projects”

(Kolesar, May).

Additionally, a matrix organization can facilitate better collaboration, and

communication. “Unlike a traditional top-down management style, matrix management

involves cross-functional interactions with authority and responsibility being shared

among the participating departments” (Kolesar, May).

The project manager chosen is from the production department. In my opinion, that

department would be the most neutral of any of the departments. Their careers aren’t as

closely tied to the success of the project. However, this department also needs new

products for the good of the company, and their own longevity. They would be the best

go between of R &D, Marketing, and Engineering.

If at all possible Collaborative Production Management, CPM should be used in a Matrix

environment. This is the “management of the people, business processes, technology,

and capital assets involved in procuring and receiving raw materials; implementing

product designs, specifications, formulations, or recipes by manufacturing products;

distributing these products; and supporting them through their end-of-life” (Hyperion).

There are many software systems out there that can be used, such as “ HYSYS™,

Dynsim™, AspenPlus™ and OTISS™”(Hyperion). However, if a company is brand new

to CPM, then they should not try to initiate it for a large, high visibility project, such as

this one. See Matrix organization chart below.

4.) Create Work Breakdown Structure (WBS): The WBS is part of a hierarchical

planning process. It is essentially a list of all activities that must be accomplished, in the

general order they occur. I based this WBS on the typical Stage-Gates of a generic

product development process. This WBS is fairly general, and does not list specific

vendors, account numbers, etc. This would need to be broken down into more levels.

It’s possible that many of these tasks will need be broken down further.

5.) The Responsible, Accountable, Consult, Inform document (RACI), goes hand in

hand with the WBS. It lists every task in the WBS, and delineates which team

member is responsible for it. Moreover, it also lists who is accountable, who should

be informed, and who should be consulted. It can help a great deal by guiding the

team members in their communications.

6.) Project Budget: The project budget is key in developing new medical devices. The

company needs to know before moving an idea from concept, to new project that it will

be profitable. If the product costs too much, or takes too long to develop, the company

will shelve the concept. It may be work years later in another market, or with newer

technology. Additionally, many leading edge medical devices come from startup

companies. The products may be too risky for larger, more conservative companies.

However, if a startup can get a product half way to development, or get an FDA

clearance, they may be acquired by a larger company.

The total cost from idea to FDA clearance is: $1,105,924.00. This may be on the high end,

but it was difficult to calculate some of the costs. This budget was completed top down, by

estimating the work element costing. Each position’s hourly rate was multiplied by the number

of hours. In tasks where it would be divided among the team, it was extrapolated further. This

was activity budgeting, vs. Cost category budgeting. There is not enough detail at this level to

break the budget down by time period, and to create an S-curve. That would require breaking the

WBS items down into deeper levels, and creating individual time lines.

Additionally, the company wants a high, positive Net Present Value. Specifically, the company

wants to be able to increase its total revenue by 10% by the 5th

year. It is not worth developing

the product simply to break even. As mentioned previously, with the lost time, and capital

opportunity, the company could develop another product. Additionally, the company could use

that capital to acquire a device from another company.

7.) Schedule Project: A GANTT chart was created using OPEN project PM software. Only part of the Gantt chart can be shown, since the project is 169 days long.

8.) Risk Management: The major risk for a Medical Device Development Project is that

the FDA clearance will be delayed, or worse, denied. The best way to reduce this risk is

to follow the plentiful guidance given by the FDA regarding submitting Medical Devices

for approval. The industry is highly regulated, and therefore gives a clearly defined path

for bringing a product to market.

Additionally, there is an International Organization for Standardization (ISO) number

dedicated strictly to risk management for Medical Device Manufacturers;

ISO14971:2007. The purpose is to assist manufacturers in establishing a medical device

risk management process.

Using a Failure Mode Effects Analysis (FMEA) ranking for this device would give us the

below table:

Following the ISO and FDA guidance will greatly reduce the chance for a delay in

clearance. The other red threat is an internal delay in development. With good project

management, and following the Project plan, that risk is also reduced.

References:

Speer, J. (May, 2011 9). Rules for medical device project management. Retrieved from

http://www.creoquality.com/2011/05/rules-for-medical-device-project-management/

(Speer, May)

Sastri, V. (October, 2005 1). Integrating-product-development-part-1: Design six sigma.

Retrieved from http://www.mddionline.com/article/integrating-product-development-

part-1-design-six-sigma

(Sastri, October)

Kolesar, D. (May, 2004 01). Effective project management for medical devices. Retrieved

from http://www.mddionline.com/article/effective-project-management-medical-devices

(Kolesar, May)

Danzyger, H. (May, 2012 02). New-product-development-stage-gate-process-overview.

Retrieved from http://www.slideshare.net/danzyger/new-product-development-stage-

gate-process-overview

(Danzyger, May)

Hyperion. (n.d.). Collaborative production management. Retrieved from

http://hyperionsystems.net/whatwedo/manufacturing-operations-management

(Hyperion)

http://www.expertbriefings.com/tips/effective-project-management-for-developing-

medical-devices/

http://www.asl.ethz.ch/research/zpe/come/Guideline