Development Costing

The keywords Industry 4.0, interconnectivity, autonomous driving, climate change and electrification usually correlate directly with steadily increasing spending on development work. A large share of these development costs is incurred on commissioning external service providers. With our calculations we provide support to Procurement so they can assess the value of the requested services and put the results into action in negotiations.

Globalisation
and competition

The traditional manufacturers of industrial products have to adapt themselves and their research and development activities to new competitors and their innovative products at lightning speed. This means there is strong cost pressure on process and product.

Project and product costs

The Product Development
Process (PDP)

The phases in the PDP depend
on the industry and customer

  • 1

    Phase 1

    PRODUCT DEFINITION

  • 2

    Phase 2

    CONCEPT DEVELOPMENT AND VALIDATION

    SERIES DEVELOPMENT AND VALIDATION

  • 3

    Phase 3

    PREPARATION OF SERIES PRODUCTION

    LAUNCH OF SERIES PRODUCTION

The first costs to be incurred in the early phase of the product development process are the development costs. After commissioning a supplier, the development costs usually increase rapidly as the project progresses as a result of changes. Using our Development Costing approach it is possible to determining the costs of developing components and software enabling the potential for cost reductions to be addressed more effectively in negotiations.

Impact of development
on costs

The methodology we have developed enables us to analyse in detail the very complex processes for hardware and software which run in a series of continuous iteration loops in an agile development and to depict these processes transparently. This is based on a comprehensive basis of knowledge and data and a calculation tool which provide the results in a transparent and clear manner.

AWS Development Costing - Calculation

Calculation tool output

The costing itself can be set up along the product development process (PDP) on an industry-specific basis as well as on a company-specific basis. The PDP is divided up into the smallest of sub-processes with clear tasks being defined for each sub-process. Working out particular cost-drivers for the sub-processes allows the costs of the different project requirements to be calculated in detail.