Project Charter

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timer Asked: Oct 18th, 2018
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Question Description

Projects that start with effective planning have a better chance of finishing strong. The creation of a good project charter will help the team coalesce around clarified objectives and will help guide the team to a successful conclusion.

In Module One, you wrote an overview of the case study you will be using for your final project. Your next step in this milestone will be to create a project charter continuing with the same case study.

To complete this assignment, review the Milestone One Guidelines and Rubricdocument, where you will find links to the case study, a case study data set, and a project charter template for your use.

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Value-driven project and portfolio management in the pharmaceutical industry: Drug discovery versus drug development – Commonalities and differences in portfolio management practice Kerstin M. Bode-Greuel and Klaus J. Nickisch Date Received (in revised form): 31st January, 2008 Kerstin M. Bode-Greuel is founding and managing partner of Bioscience Valuation in Germany and USA, and of Bioscience Market Research, USA. Her 20-year experience covers virtually all therapy areas in pharmaceutical R&D and strategic marketing. She held senior positions at Bayer AG, and after five years of independent management consultancy, co-founded Bioscience Valuation. Her publications include two expert SCRIP reports, professional journal articles and chapter of a textbook. She is Associate Lecturer at University of Essen’s Masterclass programme, as well as speaker/workshop leader in international conferences. Kerstin studied medicine in Germany and UK, and was educated in corporate finance at the Wharton School of the University of Pennsylvania. Klaus J. Nickisch received his PhD in Organic Chemistry from the Technical University Berlin in 1979. He then joined the Schering AG as a medicinal chemist doing research work in the endocrinology and cardiovascular field for five years. In 1985 he moved into development and finally led the chemical development department for many years. In 1999 he moved to project management and became head of project- and portfolio management of Specialized Therapeutics, a business unit of Schering AG located in the US. He finally got promoted to heading global project management. After the acquisition of Schering AG by Bayer AG, he joined the Berlin School of Economics where he is now in charge for building a new MBA programme for pharmaceutical management. Abstract The concept of portfolio management has been widely used in the pharmaceutical industry. It is used to evaluate the commercial value and the risk structure of development projects. The final goal is to select a portfolio of projects that addresses the strategic objectives of the organisation optimally and that leads to the highest overall portfolio value. Companies now start to apply the portfolio management concept on their research portfolios. Although the basic principle remains the same, the methodology applied has to be adapted to the greater uncertainty that early research projects carry. Commonalities and differences of the portfolio management process in research and development are described and recommendations are given how to harmonise the two different approaches. Journal of Commercial Biotechnology (2008) 14, 307–325. doi:10.1057/jcb.2008.6; published online 4 March 2008 Keywords: portfolio management, research, development, pharmaceutical industry, risk management Correspondence: Kerstin M. Bode-Greuel, Bioscience Valuation BSV GmbH, Am Zigeunerbergl 3, Grainau 82491, Germany Tel: + 49 8821 966979 0 Fax: + 49 8821 966979 29 E-mail: k.bode-greuel@bioscience-valuation.com © 2008 PALGRAVE MACMILLAN 1462-8732 INTRODUCTION The increasing discussion about rising healthcare cost is fuelled by reports that General Motors paid more for healthcare than J OU RNA L O F C O M M E RC I A L B I OTE C H NO L O G Y. VOL 14. NO 4. 307–325 OCTOBER 2008 www.palgrave-journals.com/jcb 307 Bode-Greuel and Nickisch for steel per vehicle in 2004,1 and Starbucks paid more for health insurance than for coffee in 2005.2 The continuing rise in development costs for drugs has increased pressure on R&D organisations to contribute to higher efficiency in the overall process of coming up with new drugs. In the last few years the industry has made significant efforts to address these challenges3 and to increase the productivity of the drug development process. Some of the initiatives have without doubt led to considerable improvements. Examples are the earlier determination of a drug’s toxicology profile and early tests to investigate the suitability of a new drug candidate for oral administration or once a day dosing. The question is no longer how good we are in what we are doing but whether we are doing the right things. Further improvements of the overall process should shift from attempts of enhancing effectiveness to a greater emphasis on the efficiency of the processes applied. In this context a lot of emphasis is put on portfolio management. In the broadest definition, portfolio management describes the process of maximising the value of R&D portfolios through proper resource allocation. This requires an alignment of portfolio management with strategic business objectives. Such objectives should not only be general (e.g., innovation) and quantitative (eg ROI or sales targets). They should also define disease areas of interest, clearly outline the remaining medical needs, and specify the indications that are considered worth pursuing. This will enable decision makers and functional R&D managers to identify projects with both strategic fit and a high value proposition. Depending on the size of the organisation, either a corporate or therapeutic area strategies need to be developed, approved, and endorsed by the entire organisation. Value-driven project and portfolio management implies quantitative financial and risk analysis of individual projects and overall portfolios. Such analyses elucidate options for 308 © 2008 PALGRAVE MACMILLAN 1462-8732 improving the value and risk structure of individual projects on the one hand and therapeutic areas or overall corporate portfolios on the other hand. They are applicable and relevant to companies of any size. Value-driven project and portfolio management is a methodology enabling the alignment of project decisions with corporate strategy and defined business objectives. Although portfolio management has been applied in the financial industry for many years and Harry Markowitz was honoured with the Nobel Prize for outlining this concept it was only around the end of the last century that the application of value-driven portfolio management in the pharmaceutical industry was published.4 Around the same time, an investigation across various industries provided evidence that portfolio management based on quantitative financial analyses using the net present value (NPV) algorithm correlates well with value creation. Value destruction, however, was observed more frequently in companies that built their portfolio decisions only on simplified scoring methods or semi-quantitative portfolio matrices such as those introduced in the 1980s.5 Most pharmaceutical companies have implemented portfolio management in drug development.6–9 An increasing number of companies is now making efforts to apply it to discovery research and early development. Not surprisingly, given the relatively short period of use, the inherent complexity of the issue has prevented the establishment of a broadly accepted best practice in R&D portfolio management. This review focuses on the entire portfolio management process with special emphasis on commonalities and differences in the research and development environment. For aspects where, based on the authors’ experience, a best practice emerges this is clearly stated. Otherwise, different approaches are described and compared. We begin with the description of portfolio management in development because there it has a longer history than in J OU RNAL OF CO M M E RC I A L B I OTE C H NO L O G Y. VOL 14. NO 4. 307–325 OCTOBER 2008 Value-driven project and portfolio management in the pharmaceutical industry research. This has led to a significant body of experience on which portfolio management in early R&D can build. CURRENT BEST PRACTICE OF PORTFOLIO MANAGEMENT IN DEVELOPMENT (BEYOND PROOF OF CONCEPT) There are two major tasks for implementation of value-driven portfolio management: evaluation methodology and metrics on the one hand, and the corporate evaluation and prioritisation process on the other hand. There is a general agreement in the pharmaceutical industry that the evaluation of projects entering ‘full’ development after successful proof of concept (PoC) should include quantitative financial parameters. Furthermore, there appears to be a generally accepted set of portfolio management metrics.6–9 The portfolio management process, however, differs, as well as the degree of implementation, reflecting individual companies’ corporate structure and culture. There are some prerequisites for successful portfolio management that apply to all systems: the evaluation of projects must be sufficiently detailed, interdisciplinary, consistent, and embedded in a practicable corporate process. Value-driven project management in development The first step towards value-driven portfolio management is the establishment of effective project management. Project management is the predominant operative instrument for the execution of portfolio decisions. Four common tools are applied to align project management with portfolio decisions: • • • • Target product profile (TPP) A stage-gate decision process Timeline and budget management Sales forecast aligned with TPP and development plan © 2008 PALGRAVE MACMILLAN 1462-8732 The four tools mentioned above provide information required to evaluate and prioritise projects, and to analyse whether the portfolio is aligned with corporate objectives. TPPs are generally applied, but not always in an effective way. The stage-gate decision process is related to the major preclinical and clinical development milestones and is also a wellestablished principle in the pharmaceutical industry. At each stage-gate, it is decided whether the achieved results support continuation of development, and the project may be reprioritised depending on other projects competing for resources. Time line and budget management has been the responsibility of project management for a long time. Sales forecasting and financial project evaluation is undertaken to a variable extent and level of detail, depending on companies’ policies at which development stage quantitative analyses should commence. In addition to the four tools mentioned above, risk analysis has become a particular point of concern for about five years, both in project and in portfolio management.10 In the context of the pharmaceutical and biotechnology industry, it is helpful to differentiate two different categories of risk as they are managed by different stakeholders: strategic and operative risk.11 In brief, strategic risks typically affect go/no-go decisions and may have a significant impact on value; therefore, they are matters of concern predominantly for project and portfolio management. Operative risks represent issues that may lead to deviations from the development plan and budget. They require particular attention by line functions and coordination by project management, as they are often cross-functional. Operative problems may eventually gain strategic relevance. Strategic risk analysis has been applied for some time in R&D portfolio management and is usually represented as estimates of the probability of achieving milestones. The systematic management of operative risk has been initiated more recently; here, risk is often not represented as probability but rather J OU RNA L O F C O M M E RC I A L B I OTE C H NO L O G Y. VOL 14. NO 4. 307–325 OCTOBER 2008 309 Bode-Greuel and Nickisch as semi-quantitative categorisation and plotted against categories of impact. In the following, ways towards effective application of TPPs and strategic risk analysis (in the format of decision trees) are described. In addition, sales forecasting procedures and financial analyses adapted to the needs of portfolio management are outlined. Target product profile (TPP) A TPP serves as a blueprint of the desired future product. It defines the disease category and targeted patient population, the requested efficacy, safety and tolerability characteristics, and technical details such as, for example, formulation and mode of application of the product to be developed. The TPP describes features of the future marketed product that can realistically be expected based on the properties of the compound and the pathophysiology of the disease to be treated. It takes into account both regulatory and market requirements, as the profile should reflect both a registrable and a commercially viable product. Ideally, TPPs for individual projects and their respective targeted disease categories are well aligned across discovery research, development, and marketing functions. The FDA has recently defined a template for TPPs to facilitate communication with the agency.12 This is an extensive document of several pages not only requesting target criteria but also a description of trial designs and obtained development results. As internal tool for value-driven management, focused TPPs are more suitable, summarising the features that drive development and marketing plans. Such TPPs do usually comprise not more than 1–2 pages. TPPs define the desired label in the packet insert and therefore serve as outline for R&D with respect to the required clinical trials and development activities, that is, TPPs define the scope of investment. In order to fulfil this task, efficacy and safety/tolerability parameters are defined in a commonly agreed and, as far as possible, quantitative way, as they will drive trial design and cost. 310 © 2008 PALGRAVE MACMILLAN 1462-8732 The TPP outlines the development targets, but it does not always indicate to what extent results would be allowed to deviate from the target until further development is not worth while any more. Therefore, companies often define a minimum product profile (MPP) alongside the TPP to establish a common understanding of the minimum study results required for continuation of development. All of the MPP criteria must be achieved, and they must respect regulatory requirements. While the TPP outlines the scope of investment, the MPP represents stop/go criteria. TPPs can play a beneficial role in aligning project activities between the development functions and marketing and sales. This is best achieved if they are established through an interactive cross-functional process. TPPs also facilitate the communication of project issues and the alignment of senior management’s expectations. As such, they are an important element of value-driven management. Decision tree analysis Decision tree analysis is an effective tool to illustrate R&D decision points, the probabilities of uncertain outcomes at each milestone, and potentially resulting decision options (Figure 1). It is well established in pharmaceutical development.4,12 As investment decisions are made with respect to milestones, it is useful to examine the risk and cost of individual milestones and the value gained assuming successful completion. Decision trees serve as communication tool for portfolio management and for project management and line functions. They are also used for risk adjusted net present value analysis (‘augmented NPV’). Decision tree analysis focuses on those activities that are essential for successful development and for achievement of the TPP. If milestones are composed of several independent uncertain activities undertaken in parallel, individual probabilities are multiplied to provide the overall probability of success J OU RNAL OF CO M M E RC I A L B I OTE C H NO L O G Y. VOL 14. NO 4. 307–325 OCTOBER 2008 Value-driven project and portfolio management in the pharmaceutical industry Phase IIa (PoC) go Phase I go 60% stop 40% 35% stop Phase IIb CMC go 72% stop Phase III L.T. Tox go 54% Registration go stop 46% 90% stop 10% 28% 65% Phase PhaseIII:III:efficacy efficacy at at least least according according to minimum to minimum profile profile(6 (6months monthstreatment, treatment,p=80%), p=80%),12 12months months safety trial OK (p=80%), carcinogenicity study 54% OK (p=85%) - GO TO Registration - Phase III Carcinogenicity Phase PhaseIIIIIIand/or and/or12 12months monthssafety safetytrial trialand/ and/ or carcinogenicity study failed - STOP - 46% Figure 1: Example of a decision tree. Decision trees are tools to illustrate the potential outcomes at development milestones and the risk structure of projects. Outcomes are differentiated according to available decision options. For use in portfolio management and for valuation purposes, the layout is usually simplified as it assumes that development will be continued and the project will find an investor if milestones are achieved. The Phase III milestone in the present example is comprised of three uncertain studies whose outcomes are considered independent, while all studies must be successful in order to proceed. Probability estimates can then be multiplied to achieve the overall probability of success of the milestone. If several studies are undertaken at a milestone, care must be taken to identify potential interdependencies between studies in order to avoid an overestimation of risk.11 Decision trees may sometimes reflect more than two decision options at a milestone. For example, a Phase II milestone may lead to more than one way forward: if efficacy is as outlined in the TPP, it may be decided to go directly to Phase III; alternatively, Phase II results may suggest to investigate another treatment schedule before going to Phase III in order to maximise the chance of success of the latter. for the respective milestone. Decision trees usually extend up to approval. Market scenarios and commercialisation uncertainties are often reflected in probabilistic sales forecasts (see below). Best practice decision tree analysis is conducted with the project teams and additional experts when appropriate. The analysis benefits from a neutral moderator, often a representative of the portfolio management function. The development plan is evaluated along the TPP/MPP and its milestone structure. For those uncertain elements that affect go/no-go decisions, the probability of success is estimated. Benchmarks can be used as orientation to outline a plausible range to the team. Probabilities are assessed based on available knowledge and the © 2008 PALGRAVE MACMILLAN 1462-8732 circumstances of the individual case. An interactive and systematic discussion process has proven to be most effective as participants reflect their opinions against others. This leads to a fruitful knowledge exchange among experts and in most cases to a common agreement. It is sometimes believed that the interactive process consumes too much time, there may not be access to professional moderation capabilities, or expert teams are considered overly optimistic. Therefore, some companies prefer simplified procedures, for example, the distribution of templates that have to be filled, or they use published average success rates. However, this may result in overlooking critical project issues that arise from the interaction of functions and that would not be recognised by individuals J OU RNA L O F C O M M E RC I A L B I OTE C H NO L O G Y. VOL 14. NO 4. 307–325 OCTOBER 2008 311 Bode-Greuel and Nickisch alone. Furthermore, published benchmarks are averages across a sample of companies, and the method applied to generate them differs among sources. In addition, there is evidence that individual companies deviate significantly from average success rates, indicating differences in R&D productivity within the industry. Finally, success rates differ across therapeutic fields, and the available statistics do not provide reliable data for individual disease entities. Very often, alternative options exist for the development of projects. These may comprise a broader or restricted target patient group, a fast and risky development to achieve earlier launch versus a step-wise, risk reduced development strategy, the cheapest possible way towards registration, o ...
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MrMark
School: Rice University

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Project Name:
Project Charter

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Project Name: Project Charter

Project:

Project Name

Title:

Project Charter

Company
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Document number:
Version

0.1

Document status:

Draft

Author:

Doe, John

Responsible:
Date created:

18 October 2018

Protection class:

"For internal use only"

Document history
Version

Date

0.1

18 October
2018

Author

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File name: Project Charter.docx
Print date 05.05.16

Page 2 of 17

Customer
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Project Name: Project Charter

1

Background/Project purpose or justification

2

Goals
2.1
2.2

Goals
Scheduling goals/milestones

3

Project product description

4

Delivery units
4.1

Delivery units/services

5

Project success criteria

6

High-level risks

7

Key stakeholders

8

Assumptions, restrictions and external dependencies

9

Responsibility of the customer
9.1
9.2

Company
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Tasks
Resources and staffing

10 Project category
11 Project budget (overview)
12 Project startup
13 Project end
13.1

Signatures for release

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Project Name: Project Charter

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1. Background/Project Purpose or Justification
BL & Diamond pharmaceutical Ltd is a multinational corporation based in the US. It
operates in the larger pharmaceutical industry. The company seeks to engage in a project to
develop program performance report. The project will assess the performance of different
company’s drug development portfolio performance. BL & Diamond pharmaceutical Ltd
engages in many drug development portfolio that the management seeks to understand their
performance, value and risk associated with them. As such, this project will evaluate both the
commercial value and the risk structure of BL & Diamond pharmaceutical Ltd drug development
projects. The project will also determine whether all company’s programs are implemented in
line with the best program portfolio management practices.
2. Goals
The primary goals of this project is to develop a program performance report.

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Project Name: P...

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Anonymous
Good stuff. Would use again.

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