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The prospect of budgeting for a complex undertaking, such as designing a new implant or planning a clinical trial, can be daunting for orthopedic product development teams. Uncertainty and apprehension are bedfellows, and it’s natural for the process to challenge even the most confident and experienced orthopedic industry professionals.
Shaher Ahmad is a Partner at Factor 7 Medical with extensive expertise in Product Lifecycle Management. Ahmad’s background in leading orthopedic product development teams has given him insight into how to best calculate the cost of new projects.
At this year’s OMTEC conference, Ahmad offered orthopedic device professionals five pieces of practical advice on budgeting for future orthopedic products.
1. Prepare for Questions from Higher-ups
When developing a budget for your new project, you’ll have plenty of questions for other people. Ahmad advised that you consider and be prepared for the questions that higher-ups have for you.
“You’re going to your leadership saying, ‘We have this new implant, a new instrument, new tray, new design,’ etc. What are some of the questions that are usually asked? ‘How much is it going to cost us, and when is it going to be ready?’ These are the main two questions I’ve been asked besides, ‘Why is it taking so long?’” he said.
“There’s a reason why they’re asking, of course. They have fiduciary responsibility for the company. They also have to answer questions from people who are even higher than them, and before they commit to you, they want to make sure that they are doing the right thing based on the answers you give them.”
It’s wise that you expect a tough line of questioning during the budgeting process. It’s better to expect scrutiny and examination going into meetings with company leaders about new project budgets because “they happen 100% of the time,” Ahmad said.
2. Understand the Expectations of Stakeholders
Companies usually set one annual budget, and likely your orthopedic company does too. Most budgets are complex yearly exercises that encompass planning for multiple projects simultaneously, Ahmad noted. As you set out to consider the cost of your next project, you should know the expectations set from the top and understand how decisions will be perceived by stakeholders.
“I’m going to safely assume that you’re dealing with more than just one project,” Ahmad said. “So, the budgeting process is part of an exercise that a company goes through, and it all adds up and needs to be in line with the money that is available. The budget is your costing plan, and it acts as the baseline measuring your performance once the project starts. During this process, ask what information is going to get communicated to the stakeholder, and consider what you’re asking them to commit to as well. They want to know, and that’s fair.”
Ahmad also stressed that it’s difficult to say any budget is set in stone. “Things can change. Things will change,” he said, adding that this must be honestly conveyed to all stakeholders.
3. Adopt a Team Approach
Commercialization of orthopedic products is a team effort that requires buy-in from R&D, regulatory, marketing, sourcing and more. Ahmad recommended enlisting help from experts outside of R&D teams, saying that diverse perspectives result in more accurate cost estimates.
“The best thing to do is to give this a team approach,” he said. “You want to know that you have a team that has a cross-functional element. You don’t want just an R&D engineering team working on this. That’s just not enough, because there is more involved in running and funding a project than just engineering elements. A diverse experience will lead to a more accurate estimate.”
Ahmad suggests that your team includes colleagues with experience in budgeting. That includes people who have learned from previous failures.
“Past experience is a good indication that you’re probably going to do it better next time,” he said.
4. Document All of the Details
“Not all technologies/designs are created equally, and they don’t cost the same either,” Ahmad noted before stressing the importance of grasping the complexity of new product designs.
“The technology or the design itself — its complexity — will be reflected in the cost and budget you’re going to put together,” he said. “The more involved it is, the more costly it will be. We need to not only realize that, but implement it in our way of thinking and in the way we are building this budget.”
Ahmad recommends that you list everything that is going to be involved in the project, from the implant to the packaging to the instruments — everything. Write it all down, and then ask your team what’s missing. Fill in the holes with their perspective, and then run through the list again until you are confident in your details.
5. Expect Change
Ahmad sold the value of knowledge in his presentation, but he made it clear that change is often inevitable no matter how prepared you are.
“The more you know, the better off you will be,” he said. “But I don’t care how much you know; things could change. Just be ready for it. Consultants, clinicians, other project managers and experts in the field will keep orthopedic leaders informed and adaptive to change.”
