Effective Technical Risk Assessments In New Product Development

Technical risks are a common cause of new product development project cost and schedule overruns. Effective technical risk assessment is therefore on the mind of investment decision makers and all new product development project managers.

Effective Technical Risk Assessment

To be effective, technical risk assessment must be performed up front so that investment decision makers can clearly weight the risk/reward of continuing while enabling product developers to plan the realistic scope of effort along with tackling the biggest technical mitigation efforts immediately.

A technical risk assessment is typically based on lessons learned from previous new product development projects, experience of team members or advisors, and historical data from similar products developed either by the company or competitors. A project pre-mortem  is an effective tactic to identify ‘project killer’ issues up-front to ensure project team members and stakeholders are not feeling pressured to express their views.

Technical risk assessments should cover the feasibility of the product including building blocks (particularly mix of existing/new), how the product building blocks integrate amongst themselves, how the product integrates with the operating environment, ability to manufacture the product cost effectively, and feasibility of new manufacturing technologies.

A central theme in any technical risk assessment therefore is that new product development outcomes depend on the maturity of the underlying hardware, software, and integrated system. A key question facing new product developers then is: How can technology maturity be measured to determine the level of technical risk? 

Technology Maturity Assessment

Good technical risk assessments depend on an effective technology maturity assessment.  The percentage of unproven technology and level of integration in the new product determines the degree of technical risk that can impact project cost, schedule, and quality.

The technology readiness level scale provides a means to assess the maturity of the subsystem building blocks in a new system. First developed by NASA as illustrated below the Technology Readiness Level scale uses nine levels as described.

technology_TRLS

The NASA TRL scale illustrated is for products used in space but the scale can be easily adapted for any operating environments for which the new product is intended.  The assessment scale is also used by the US DoD and has been adopted by the Canadian government for use in the Canadian Innovation Commercialization Program.

Product developers should deconstruct their product building blocks and assess the technology maturity level of the individual building blocks using the technology readiness levels.  Product developers need to assess whether technology proposed is ready to be used in their project. Typically subsystems should not be used unless demonstrated at TRL 7 or higher. Subsystems with TRL below 7 are really research projects presenting too much uncertainty for accurate customer schedule commitments. R&D projects can use the TRL scale to measure progress towards commercialization. Product portfolio strategies and roadmaps need to plan how new technology subsystem R&D projects will be coordinated, prioritized, and sequenced with sufficient time to reach TRL 7.

Integrated System Maturity Assessments

Product developers should also assess the technology maturity level of the integrated system. Integration problems can be as serious as individual subsystem immaturity issues if not more when the scope of the new product/project is large and often go unrecognized until well into new product development project.

The level of complexity of the integrated system drives the scope of the system level maturity assessment. The TRL scale is not very effective as system complexity increases. It is also important to recognize that complex integration can be present in both new systems (new systems with existing and new subsystems) where we would expect them but also legacy system upgrading (old systems being upgraded with new subsystems).  Limitations with the technology readiness level scale reported for major/complex projects include:

  • Emphasis on subsystems;
  • Nonlinearity of the scale particularly the large leap from TRL 6 to 7;
  • Not accounting for system integration and manufacturing; and
  • Does not indicate the degree of risk of moving up the scale.

The Risk Identification, Integration, and Ilities (RI3) approach has been proposed to  augment the technology readiness level system for manufacturing readiness and systems engineering ‘ilities’ . Another approach to assess the system level readiness is the UK MoD System Readiness Level method. The advancement degree of difficulty (AD2) method has been proposed to address the degree of risk of moving up the scale.  The cost effectiveness of applying these approaches depend on the complexity of the integrated system and size of the new product development project.

Product developers need to apply a disciplined technology maturity assessment early in any new product development project to proactively mitigate technical risks. Investment decision makers should consider impartial technical feasibility assessments based on subsystem and system technology readiness levels described in this post to remove bias from technology maturity assessments.

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