Costing something that does not exist

costing to design

We are often approached by prospective clients who have an idea for a new product that they would like to develop.  Of course, what the inventor needs to know straight away is how much the product will cost to develop, how long it will take and how much it will cost to make.

These questions are perfectly understandable and valid, but very difficult to answer. 

What actually drives the cost? 

In our business there nothing is more true than the old saying “the devil is in the detail”.  

Manufacturing cost is mostly driven by materials, process and time. Consider a traditional subtractive process such as milling or turning. You pay for a block of material up-front and then spend time (money) machining material away. The more material you remove the more the part will cost, so in general the trick is to start with the smallest piece possible, remove as little as possible from it and generate no more features than you absolutely need. Think of it in terms of every additional cut adding more cost.

Compare that to a traditional additive process such as injection moulding, casting or extruding. By comparison the desired shapes are formed relatively quickly and with minimal material, as material is only added where it is needed. Features are generally created simultaneously, so you can effectively make parts that are “feature rich” for only the cost of the extra material. However, process limitations often necessitate secondary operations such as the threading of holes or to achieve particular geometry such as levels of flatness, dimensional accuracy or surface finish. In many cases it is these “secondary operations” that harbour the bulk of the costs and tip the scales one way or the other when considering which production method would be cheapest.

Volume projection and production tooling

As parts are designed and optimised for specific manufacturing processes it’s necessary to commit to a process early at the concept stage in order to achieve the lowest part costs. Along with material selection (driven mostly by functional requirements), a key influencer of process choice is manufacturing volume. If the volume projection is wildly wrong (usually optimistic!) then the chances are that the design will be optimized for the wrong process, in which case the likely outcome is that the product will cost more than it ought to and that the target costs are never realised.  

Another stumbling block is that in general to achieve lowest production costs you need to invest up-front in production tooling. These costs can be very high, with mould tools potentially costing tens of thousands of pounds for each and every part. Such an investment in NRE (Non-Reoccurring Engineering) takes conviction and a serious leap-of-faith.  

The best approach

The very best approach then is to have a well-researched business case setting-out the size of the sales opportunity in terms of sales volumes and price. From that projection a manufacturing cost target be set and an NRE budget established.

Larger businesses with a track record in developing products are likely to be more successful in budgeting accurately as they tend to have the necessary resources to collect high-quality information on the likely design and manufacturing costs. High quality input takes a lot of effort to generate, so unless the development and manufacturing resources are already on the payroll and have the inclination to put the effort in then at best the input is likely to be hastily put together or perhaps even not forthcoming.

The most successful product development companies will follow a strategy of starting lots of projects and culling those that are likely fail to meet the targets early in their development, before too much cost is committed. The small independent inventors, however, are less inclined to do their market research quite so thoroughly and are less likely to be in a position to collect high quality information on all the necessary costs. Another potential pitfall is that they may also be more emotionally invested in their ideas and so are perhaps less likely they are to abandon their project if costs start to drift off target.

How we quote for an engineering project

The procedure we follow when quoting design is to fully consider the functionality based on our understanding of the requirements. Having a well-defined and documented description of the requirements is best as it ensures we are “on the same page” with the client and that nothing is missed. We start by itemising all the features the solution needs to have to fulfil its function, and then think in terms of the design time required to deliver those features. Line items are added for necessary sub-system engineering activities such as thermal management, structural engineering and tolerance studies. The resulting list is a detailed work scope with a corresponding cost for each line item. This is often referred to as a “bottom-up costing” as the total is a sum of the cost of all line items.

We will then set project milestones to help break the proposal into manageable chunks. This offers a level of quality control at each phase to ensure we’re on track to achieve the goals set at the beginning of the project to the satisfaction of the client. Each milestone acknowledges that the preceding phase has been completed satisfactorily and importantly indicates readiness for the next phase of development to commence.

The systematic methodology we use has been evolved over time to maximise the chances of our designs achieving all stated functional requirements as well as hitting commercial targets.

The importance of a professional, systematic approach

With sound market research and good planning, engagement with a specialist design company like Warley Design minimises the chances of hidden costs arising throughout the project and maximises the chances of project success.

Warley Design offers mechanical design, engineering and product development services to a broad range of industries. Have a project in mind? Call us now on Tel: +44 (0)1277 261066 or email us at info@warleydesign.co.uk


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