Design to Cost Updated on with Audiences Responses on 25 June 2010

Transcription

1 Design to Cost Updated on with Audiences Responses on 25 June 2010 With five-minute perspectives from Andrew Langridge Linda Newnes Philip Wardle Steve Wiseall and the opportunity for contributions from YOURSELVES! SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 1

2 Andrew Langridge Visiting Fellow, Cranfield University The Design to Cost Paradox SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 2

3 My Opinion There is no such thing as Design to Cost Get used to it and move on! SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 3

4 Don t Panic (yet) (as it says on all the best books!) SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 4

5 Relax This is only a worry / problem / issue if you equate the need to design to a fiscal value to the process of working at a CAD station Finding the best value solution to a problem is far more than this Proper use of cost in the concept and pre-design phases can provide guidance to the team to seek a value for investment solution Allows us to utilise historic data to predict likely outcomes for complex projects We can also Use cost as in independent variable (CAIV) as long as you are willing to trade Safety, Reliability, Total cost of ownership SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 5

6 Good News If we work together we can continue to investigate the benefits of Designing to a budget What can I / You afford Should cost Target cost Designing to a perceived market value Target price Market rules / limitations Designing to a requirement What's the best quality solution with the lowest investment profile How do I trade deliverables with effort / schedule / cost SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 6

7 Thank you SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 7

8 Linda Newnes University of Bath Design to cost should be through the lifecycle (not sure I would use DTC) Make informed decisions on specification against costs trade-offs. Feedback actual costs what can we improve on knowledge management. In general I would tend to focus on what is really required and reduce the uncertainty. SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 8

9 Trade-offs: specification & cost Recently completed PhD Mo Saravi (Papers are/will be in public domain, thesis is not) Aims: Introduce a method to improve the accuracy of average cost at the conceptual stage of design to assist designers to select the final concept. Propose a method to improve trade-off between performance and cost to facilitate decision making at the conceptual stage of design. Objective: Using Taguchi s orthogonal array approach to reduce the uncertainty in the product specifications in order to reduce the variance in the average costs. Note focused on the manufacturing cost but applicable through CADMID stages. SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 9

10 Modelling Uncertainty Currently investigating data & model uncertainty. We have models, data, estimate and actuals Aim to ascertain appropriate modelling method. Can use this in design to cost. SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 10

11 Thank You Linda Newnes Head of Costing Research University of Bath Telephone: SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 11

12 Philip Wardle BAE Systems A Strawman Proposal for DTC Metrics To promote awareness and ownership of cost requirements as well as functional, performance, service levels etc in the project team To provide early visibility of emerging cost (and schedule) overrun To give managers the opportunity to make proactive interventions SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 12

13 Political Reality Changes, complications, and delays to overcome technical challenges caused project completion costs to skyrocket, but the full magnitude of completion costs were not routinely evaluated or reported A. DeMarco, The International Space Station Mgmt and Cost Evaluations Task Force, PRICE Systems Report. The International Space Station project is a good example of a project where cost targets were very uncertain from the outset were they realistic, were they achievable? It is politically unacceptable that our community abdicates responsibility for cost and schedule escalation, e.g. we need understanding of how and when escalation arises and must intervene proactively to mitigate where possible It ll cost what it costs doesn t meet the customer s expectations, even for the most complex projects with little past experience and few metrics to work on SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 13

14 Strawman Proposal Before award of contract use Cost as an Independent Variable (CAIV) and Analytical Hierarchy Process (AHP) to trade capability and cost, and to set priorities as to which requirements are must have and must be funded After award of contract apply key Design to Cost (DTC) processes as part of good Project Management to help honour cost and schedule commitments SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 14

15 Key DTC Processes - 1 RF Cassette Equipped Box Enclosure DC Distribution Input Splitter Transistor PA Modules (5 off) Output Combiner As part of the standard Project Management process there should be a breakdown structure giving target costs for development, prototypes, production, and in-service support Target costs are expressed as shall cost (cannot exceed) and should cost (stretch target) and are apportioned to the lower levels in the breakdown structure as design maturity grows SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 15

16 Key DTC Processes - 2 For each element in the breakdown structure keep the ratio of the latest cost forecast to target shall cost and should cost under regular review, e.g. it might be convenient to do this concurrent with Earned Value Management (EVM) reporting For each element in the breakdown structure keep period of time since the latest cost forecast was produced under periodic review, i.e. the latency of the estimate Use traffic light reporting to identify opportunities for proactive intervention DTC Cost Metric DTC Latency Metric latest cost / target cost less than 1.05 one month or less latest cost / target cost between 1.05 and 1.09 between two and four months latest cost / target cost more than 1.10 four months or more SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 16

17 Thank you Phil Wardle Office +44 (0) x2624 or * Mobile +44 (0) See my public profile on Linked In :- SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 17

18 SCAF Workshop Rolls-Royce and BAE SYSTEMS interactive session Design To Cost Steve Wiseall Rolls-Royce plc 9 th June Rolls-Royce plc The information in this document is the property of Rolls-Royce plc and may not be copied or communicated to a third party, or used for any purpose other than that for which it is supplied without the express written consent of Rolls-Royce plc. This information is given in good faith based upon the latest information available to Rolls-Royce plc, no warranty or representation is given concerning such information, which must not be taken as establishing any contractual or other commitment binding upon Rolls-Royce plc or any of its subsidiary or associated companies.

19 New Product Introduction Manages Business and Technical risk through process Many companies that develop complex products utilise a gated New Product Introduction process, (NPI) In Rolls-Royce this is called the Product Introduction and Life-Cycle Management process, (PILM) Main interest today is PILM stage 0 and 1 Design To Cost approach Processes; Methods & Tools; People, Skills & Roles CUMULATIVE LIFE CYCLE COST 100% 75% 50% 25% 0% Conceptual Design Committed Cost 70% 1% Preliminary Design 85% 7% Knowledge of the Design Detail Design 95% 18% 50% Incurred Cost Production Significant opportunity to influence cost outcome? Product Use Small number of critical decisions compared to large number of smaller decisions applied in detail design stage 2-3 Rolls-Royce proprietary data

20 Rolls-Royce PILM process NPI Fleet Future Programmes Chief Cost Engineer, (Civil - Future Programmes) Understanding markets & Optimum business solution Short/medium/ long term product concept studies, Concept down selection Stage 1 exit It s about good decision making and de-risking NOT final design Many Radical Paper Engine studies, Long Range Forecasting, timescales for realisation may be up to years Business Cost Targets set (system - engine) Major Supply Chain partners may not be fully decided including RRSPs Dedicated Engine Project team NPI, Fleet Operations Chief Cost Engineer (eg Trent XWB) Sub-system and component preliminary to detail design (NPI) More traditional Design to Target Cost domain Higher Fidelity, generative cost models Cost model integration into design systems to improve balance of design, Cost as a design attribute Integrated Project Team, (IPT) in operation Supply chain increasingly decided through Stage 2 onwards Rolls-Royce proprietary data

21 PILM Stage 0 - Innovation & Opportunity Selection ongoing Long term societal trends environment, economics,.. Product strategy by market sector Capability Acquisition - Product, Manufacturing Process and Materials technology long term capability acquisition for future adoption at a suitable TRL System design where attributes impact on each other Long range product attribute forecasting including cost absolute or relative?, use of cost drivers rather than cost? Costing of novel components & systems lack of experience and historical data Rolls-Royce proprietary data

22 PILM Stage 1 Optimum business solution Engine concept down selection Assess many options to explore design space Rank order of preferences Engine GA & interfaces defined Relative Cost OK for this? Component costing at concept/prelim stage Costing of novel components Also requires detailed business case to support whole engine bidding and requires absolute cost estimate with uncertainty Rolls-Royce proprietary data

23 Concept to Preliminary to Detail design How best to estimate resources/(cost) at component concept / preliminary design stage when the degree of product definition is limited Use of validated generative scaling models for derivative based product definitions (design and manufacture)?, Use of correction factors for detailing compared to concept based on past experience? How to do this for novel components where there is no history of derivative designs feature based approach? Rolls-Royce proprietary data

24 PILM Stage 2 Sub-system design Component costing at preliminary definition stage PILM Stage 3 - Detailed component design Design iteration including cost as an attribute IPT Operation in stage 2&3 T700 and T800 comparison Derivative designs 1. Areas of significant commonality 2. Areas of geometric scaling 3. Areas of novelty For derivative designs Areas 1+2 for reusable scaleable Generative Cost Models Trent 700 Area of significant commonality Area of main geometric change Trent 800 PILM Stage 2 - typically 6 months PILM Stage 3 - typically 24-30months PILM Stage 4 - typically ~ years PILM stage 5 typically ~10-20 years Rolls-Royce proprietary data

25 Key topics for discussion Stage 0/1 Optimum Business Solution Balance and trade customer requirements and internal business requirements (costs ) Costs and major cost opportunity set at early design stage, Emerging field of Value Driven Design System and Component costing in PILM - Stage 0 for long term studies Supporting product technology strategy development, opportunity assessment, attribute trade-off studies, technology insertion, technology forecasting, early external Supplier Engagement Use of absolute or relative costs, use of cost drivers rather than cost itself, degrees of re-use / standardisation design styles at System and Component level, MoM definitions and standards, Supply Chain assumptions Costing (and associated uncertainty) in PILM stage 1 with sufficient accuracy to support a detailed business case where component design definition, MoM and Supply Chain definition are still at conceptual stage Re-use of past data and designs, bottom-up or top down approach?, how to cope with novel components or processes, cross functional operation Design-Manufacturing-Supply chain, realistic target setting and sub-system / component flow down for target costs, use of generative cost models with scaling rules, data and model validation and associated ownership Rolls-Royce proprietary data

26 Contributions from YOURSELVES! There are five flip chart pages around the room labelled Question 1 through Question 6 On the following slides we will ask six questions We ll pose each question one at a time We ll make sure everyone understands it We ll allow two minutes to write Post Its When we ve covered all six questions we ll invite you to stick your Post It responses on the flip chart pages During the afternoon we ll try to analyse the responses and produce a summary of our collective views Over lunch Steve will display some additional questions that you might like to discuss and for which you can write more of those Post Its!! SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 26

27 Question 1 Prior to award of contract, what are the DTC responsibilities of the people conducting the negotiation? SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 27

28 Question 2 Following award of contract, what are the DTC responsibilities of the people working towards its delivery? SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 28

29 Question 3 When cost deviation is identified how would it best to investigate the causes of the deviation, and how best to follow up? {RR:Q4} DTC Cost Metric latest cost / target cost less than 1.05 latest cost / target cost between 1.05 and 1.09 latest cost / target cost more than 1.10 SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 29

30 Question 4 Assuming we agree that its a good thing to review cost estimates regularly, how would you prioritise your re-estimates given that it may not be practical to re-visit all of them on a monthly basis and why? DTC Latency Metric one month or less between two and four months four months or more SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 30

31 Question 5 Who do you feel are the leading global companies with complex products that operate a successful Design To Cost process? {RR:Q7} SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 31

32 Question 6 How could the DTC process described here be improved? If there s insufficient time to capture your thoughts now, but you d like to contribute, please give your contact information so that we can follow up later SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 32

33 Steve s Lunchtime Questions Q7: How does the Stage 0 Product Technology Strategy deliver long term market driven business cost targets? {RR:Q1} Q8: How is it best to account for Product Novelty and Manufacturing Process Novelty and associated high uncertainty in the early stages of design from the cost perspective? {RR:Q2} Q9: How is it best to allocate cost drivers so that owners have a chance of influencing what they own through the Product Introduction process? {RR:Q3} Q10: How is it best to organise the operation of the component IPT to get cost ownership and cost pro-activeness? {RR:Q5} Q11: What do you believe are the key features for an organisation to be effective at Design to Cost and why? {RR:Q6} Q11 Responses : (no responses received for Q7 Q10) SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 33

34 Plans for Feedback Hundreds of Post ITs were contributed by delegates THANK YOU! A number of delegates have asked if they could see the raw data before it is analysed this has been made available in the spreadsheets given above Steve Wiseall and Phil Wardle will produce a white paper, to be posted on the SCAF Website SCAF Workshop on Design to Cost Methods and Techniques 9 June 2010 Slide 34