4. Company’s Project Termination
The Company does not have a unified system for terminating projects. It has a very well established and detailed system for managing the Innovation Funnel, not always followed strictly. A manager reported that is somewhat usual, albeit not at all desired, that a project move from one phase to the other without passing through a gate.
Besides the variability between market segments, the interviews revealed some common criteria the managers use to verify, along with formal criteria that form the gates between the project phases, such as tests protocols, regulatory and freedom to operate analysis.
Managers gave one example for each project type of recent terminated project that best summarizes the area’s policy for project termination. The projects are shown in
Table 1. The managers, during the interviews, also pointed a series of other criteria that are applied to the portfolio that did not shown up in the examined projects. These criteria are analyzed on the next section of this paper.
We will begin with the similarities and try to group them to better understand the relationship between the criteria and the project types. Then, the exceptions and exclusive criteria will be discussed and a scheme for illustrating the case will be drawn.
B. General criteria
The two main criteria for terminating a project are Financial feasibility and Customer commitment. All the managers observe these two criteria and a change in their value will kick off the process of ad hoc review for that project.
Financial feasibility means the potential gross margin and volume the market will provide. This is seen as a variable during the planning phase and may change during development; therefore, it is always monitored. The input to estimate this variable is a responsibility of the Commercial team, which will try to provide accurate forecasts for the market.
Customer commitment represents the guarantee that the client will buy a certain volume of the resulting product. This factor is very volatile and always surrounded by uncertainties. The Commercial team is responsible to assess costumer commitment, since they verify if client maintains the same commitment during development. The Customer’s commitment is one of the deliverables in the project’s Design phase.
4. Company’s Project Termination
The Company does not have a unified system for terminating projects. It has a very well established and detailed system for managing the Innovation Funnel, not always followed strictly. A manager reported that is somewhat usual, albeit not at all desired, that a project move from one phase to the other without passing through a gate.
Besides the variability between market segments, the interviews revealed some common criteria the managers use to verify, along with formal criteria that form the gates between the project phases, such as tests protocols, regulatory and freedom to operate analysis.
Managers gave one example for each project type of recent terminated project that best summarizes the area’s policy for project termination. The projects are shown in
Table 1. The managers, during the interviews, also pointed a series of other criteria that are applied to the portfolio that did not shown up in the examined projects. These criteria are analyzed on the next section of this paper.
We will begin with the similarities and try to group them to better understand the relationship between the criteria and the project types. Then, the exceptions and exclusive criteria will be discussed and a scheme for illustrating the case will be drawn.
B. General criteria
The two main criteria for terminating a project are Financial feasibility and Customer commitment. All the managers observe these two criteria and a change in their value will kick off the process of ad hoc review for that project.
Financial feasibility means the potential gross margin and volume the market will provide. This is seen as a variable during the planning phase and may change during development; therefore, it is always monitored. The input to estimate this variable is a responsibility of the Commercial team, which will try to provide accurate forecasts for the market.
Customer commitment represents the guarantee that the client will buy a certain volume of the resulting product. This factor is very volatile and always surrounded by uncertainties. The Commercial team is responsible to assess costumer commitment, since they verify if client maintains the same commitment during development. The Customer’s commitment is one of the deliverables in the project’s Design phase.
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