Balancing Cost And Performance
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- Words: 2,419
- Pages: 31
Cost – Performance Trade Studies During Product Development
Take Corrective Action To Improve The Development Process The Solution: – Weave Best Practices of cost management into the development process – Implement Critical Parameter Management (CPM) techniques – Merge cost management with CPM throughout development – Share cost and performance information in a near real time environment
Merging cost and performance information with near real time feedback results in improved performance, reduced (or at least better understood cost), better adherence to schedule, fewer failures, and reduced total ownership cost.
© 2008 Cognition Corporation and David M Cronin
1 of 33
Cost – Performance Trade Studies During Product Development
What We Want To See During Development Example Of Using CAIV* & CPM** On A Program To Improve Affordability 35
Planned Cost Reduction Actual Cost Reduction Project Cost Goal Project Cost Stretch Goal
Cost
30
25
GNG Make / Start Buy Design
Critical Design Review (Gate)
20
System Development Time © 2008 Cognition Corporation and David M Cronin
*CAIV = Cost As Independent Variable **CPM=Critical Parameter Management 2 of 33
Cost – Performance Trade Studies During Product Development
We Need To Impact Cost During Early Program Phases 70
60
50
40
% 30
20
10
0 TOC Spent $ Impact on O&S Costs
Concept
Full Dev
Production
O& S
3
12
20
65
70
15
10
5
The Majority of the Customer’s Cost is in the “O&S Phase” but that cost is mainly defined in the “Concept Phase”. © 2008 Cognition Corporation and David M Cronin
3 of 33
Cost – Performance Trade Studies During Product Development
Start By Weaving Cost Management Into The Product Development Process
© 2008 Cognition Corporation and David M Cronin
4 of 33
Cost – Performance Trade Studies During Product Development
Implement Best Practices Of Cost Management
$
Manage WBS Structure With Multiple Configurations “On The Fly”
₪ Estimate Costs With Multiple Methods And Fidelities
₫
Manage Multiple Cost Estimates Over Time For Each Element
£
Roll Up Multiple Cost-Configuration Scenarios
¥
Flag And Trace Cost Drivers With Detailed Reports
¢
Define Cost Estimating Relationships At All System Levels
€
Identify, Implement, And Track Cost Reduction Initiatives
© 2008 Cognition Corporation and David M Cronin
5 of 33
Cost – Performance Trade Studies During Product Development
First Create and Manage The WBS/BOM Import WBS/BOM From Various Sources (Spreadsheet, Corporate Database, PLM), Or Create Structures On The Fly Import and manipulate existing structures
Trace History Of Configuration Changes With Variants
© 2008 Cognition Corporation and David M Cronin
6 of 33
Cost – Performance Trade Studies During Product Development
There Are Many Methods For Successful Cost Modeling In A Near Real Time Environment € AdHoc € Rough Order of Magnitude (ROM) € Cost by Analogy, with complexity (“similar to”) € Individual spreadsheets € Parametric - based on industry standards (“out of the box”) € Parametric - with product line calibration € Historical Data € Engineering Buildup-Actuals € Cost Factors and Rates € Supplier Quotes: Materials € COTS detailed and budget estimating tools © 2008 Cognition Corporation and David M Cronin
7 of 33
Cost – Performance Trade Studies During Product Development
Over Time We Will Reduce The Cost Model Uncertainty
Cost Uncertainty
Estimated Cost
Actual cost of New Technology
Uncertainty Range
Very Good Estimating Tools (Based on Some System Design)
TECHNOLOGY EVALUATION No System Design To Base Estimate
DESIGN REVIEWS
POST RELEASE Actual Costs Make up Majority of Estimates
Cost Modeling is only as good as the Technical Design Input © 2008 Cognition Corporation and David M Cronin
8 of 33
Cost – Performance Trade Studies During Product Development
Now Attach All Cost Information To The WBS/BOM Structures Existing Estimates, New Estimates, Or Link To Data In Legacy Systems
M A N U F A C T U R I N G
Process Times
Raw Material Data
Cost Centre Rates
© 2008 Cognition Corporation and David M Cronin
P U R C H A S I N G
Suppliers Cost, Qty Associated Cost Effectivity Sub Con, Make/Buy, etc
F I N A N C I A L
Rates Burdens Exchange Rates
Foreign Overhead Factor 9 of 33
Cost – Performance Trade Studies During Product Development
Then Create And Manage Cost Reduction Initiatives
Initiatives Are Important: They Help Us Keep Track Of Potential Cost Drivers And Our Specific Future Actions To Effect The System Cost © 2008 Cognition Corporation and David M Cronin
10 of 33
Cost – Performance Trade Studies During Product Development
It Is Critical That Cost Management Results Output To Engineers As Well As To Cost Professionals Navigate And Search By Configuration, Estimate, Initiative, Cost Drivers
Multiple Outputs For Different Users Of Cost Data © 2008 Cognition Corporation and David M Cronin
11 of 33
Cost – Performance Trade Studies During Product Development
We Then Create Cost Management Trade Scenarios B e lu g a C o c k p it
W in g ( P )
W in g ( S )
F u s e la g e
L a n d in g G e a r
“Make v Buy” B e lu g a
“What If”
C o c k p it
W
in g
C o c k p it
W in g ( P )
W in g ( S )
F u s e la g e
Target
L a n d in g G e a r
B e lu g a ( P )
W
in g
( S )
F u s e la g e
L a n d in g
G e a r
B e lu g a C o c k p it
W in g
(P )
W in g
(S )
F u s e la g e
L a n d in g
G e a r
I Would Love To Have Performance Related Input To Help Drive These Scenarios ! © 2008 Cognition Corporation and David M Cronin
12 of 33
Cost – Performance Trade Studies During Product Development
Now, Implement Critical Parameter Management Early In The Development Process
© 2008 Cognition Corporation and David M Cronin
13 of 33
Cost – Performance Trade Studies During Product Development
What Is Critical Parameter Management (CPM)? CPM Is A Disciplined Methodology Used To Capture System Performance In A Structured Repository
Marketing
MFG
Critical Parameter Management (CPM)
Systems Engineering
Subject Matter Experts
Partners Design
© 2008 Cognition Corporation and David M Cronin
Suppliers
Standards 14 of 33
Cost – Performance Trade Flow Studies Of During ProductParameter Development Snapshot Process Critical Management
Voice of the Customer Needs
Cp/Cpk
Component CTF Specs….
y &C ap ab ilit
Subassembly CTQs..…
f(x)
f(x)
f(x)
Flo w
nts me
ire qu Re of
Component ‘Critical to Function’ (CTF) Requirements
Cp/Cpk
Subsystem Level CTQs…..
na l
wn
Do
Subassembly Level Requirements
Cp/Cpk
om i
w Flo
Subsystem Level Requirements
System Level CTQs…..
Cp/Cpk
Up of N
System Level Requirements
© 2008 Cognition Corporation and David M Cronin
15 of 33
Cost – Performance Trade Studies During Product Development
Critical Parameter Relationships The System Functional Paths Determine The Critical Parameter Architecture The Critical Parameter Architecture Crosses ALL Boundaries Of The Physical Architecture (WBS) This Is The Primary Difference Between Systems Requirements Management And Critical Parameter Management
© 2008 Cognition Corporation and David M Cronin
16 of 33
Cost – Performance Trade Studies During Product Development
Establish The Critical Performance Parameters
Flow Down Critical Parameter Tree
Create System Performance Hierarchy & Relationships There Are Many Ways To Create This Tree Including QFD, Direct Flowdown, And Functional Path
© 2008 Cognition Corporation and David M Cronin
Radar Project
17 of 33
Cost – Performance Trade Studies During Product Development
Transfer Functions Enable Feedback Throughout The System σ Transfer Functions are Required for Predictive Engineering Calculates nominal output value given a set of inputs y = f(x1, x2, … xn) Calculates variations of the output value & input sensitivities σ y = sqrt(s1*σ 12+s2*σ 22 …. +sn*σ n2)
σ Popular Methods for Developing Transfer Functions Explicit Engineering Equations Experiments; DOE & Monte Carlo (Virtual & Physical) Testing: Regression Analysis (Physical Only) “Black Box” Application Software Tools Company “Tribal Knowledge” © 2008 Cognition Corporation and David M Cronin
18 of 33
Cost – Performance Trade Studies During Product Development
Transfer Functions Make The CPM Tree “Come Alive”
CTQ Design Intent “Flow Up” based on Design Spec’s of Inputs (X’s) Performance
s De n ig
Post Analysis Sigma Shift
In nt te s es oc Pr
Producibility
pa Ca
CTQ Process Capability “Flow Up” based on Estimated/Actual Process Capability (Short & Long Term)
y
lit bi
Static Shift © 2008 Cognition Corporation and David M Cronin
Dynamic Drift 19 of 33
Cost – Performance Trade Studies During Product Development
We Can Now Predict System Performance Roll Up The Tree With Sensitivities For Each Critical Performance Parameter While Tracking Sensitivity For Each Parameter And Notify The Affected Owners Of the System Radar Project
ria ti
on s
Performance
f(x)
f(x)
f(x)
f(x)
f(x)
f(x)
f(x)
f(x)
Flo
wU pN
om
ina l&
Va
Producibility
© 2008 Cognition Corporation and David M Cronin
20 of 33
Cost – Performance Trade Studies During Product Development
Now Merge The Best Practices Of Cost Management And Critical Parameter Management For Near Real Time Feedback Of Cost And Performance
© 2008 Cognition Corporation and David M Cronin
21 of 33
Cost – Performance Trade Studies During Product Development
The Goal Is To Have A Trade Space For Cost And Performance
Cost Management
Critical Parameter Management
A New System Design Trade Space Use Best Practices From Each Discipline To Optimize System Cost And Performance
AT THE SAME TIME
© 2008 Cognition Corporation and David M Cronin
22 of 33
Cost – Performance Trade Studies During Product Development
WBS/BOM Trees (Cost) And CPM Trees (Performance) Can Now Work Together Form
Fit
Bill of Material Hierarchy
Defines: Physical/Geometric Relationships Material Specifications Manufacturing Procedures
Does NOT Define: Functional Characteristics Performance Capabilities © 2008 Cognition Corporation and David M Cronin
Function
Critical Parameter Hierarchy
WBS….. Defines Fit Configuration
CPM Tree… Analyzes Fit Capability
Defines: Functional Parameter Relationships System Performance Capabilities Direction/Focus for Engineering
Does NOT Define: Assembly Characteristics System “Packaging” 23 of 33
Cost – Performance Trade Studies During Product Development
WBS/BOM Elements Are Bi-Directionally Associated With Critical Performance Parameters
We Can Also See What Particular Performance Parameters Are Driving My Cost As A Part Number We Can See What Specific Part Numbers Are Associated With My Critical Performance Parameters
© 2008 Cognition Corporation and David M Cronin
24 of 33
Cost – Performance Trade Studies During Product Development
Cost Roll Ups Become Transfer Functions In The Performance (CPM) Structure
If Any Aspect Of A WBS/BOM Part Changes, Flag The Effected Performance Parameter(s) And Notify Appropriate Users Of The Change
© 2008 Cognition Corporation and David M Cronin
25 of 33
Cost – Performance Trade Studies During Product Development
Performance Parameter Interactions Trigger Cost Studies
If Any Aspect Of A Performance Parameter Changes, Flag The Associated WBS/BOM Part And Notify Appropriate Users Of The Change
© 2008 Cognition Corporation and David M Cronin
26 of 33
Cost – Performance Trade Studies During Product Development
Trace History Of Performance Changes And Their Cost Impact On Each Part Number
–
Wow, I Was Just Informed That A Performance Specification Changed; Better Check This Part Number’s Current Estimate And Update If Necessary
© 2008 Cognition Corporation and David M Cronin
Of Course, If I Have Defined A Transfer Function For Cost, The System Will Update The Cost For Me Automatically And Keep A History Of The Changes
27 of 33
Cost – Performance Trade Studies During Product Development
Design Trade Space For Balancing Cost And Performance We can now do real trades with rapid feedback Unaffordable
The Knee
Target: “Best Value”
Performance Objective
Performance (y)
Cost / Performance / Schedule Trade Space
Performance Threshold Cost
dy/dx
Cost
Cost
Unacceptable Performance
Threshold
Objective
Cost (x) © 2008 Cognition Corporation and David M Cronin
28 of 33
Cost – Performance Trade Studies During Product Development
An Ideal Cost And Performance Optimization Cycle Metrics: Unit Cost, Score Card, CRI Status, Watch List, Mitigation Plan
Identity Risk & Opportunity Performance Model
Prioritize Risk & Opportunity
Critical Parameter Management
Optimize Design For Six Sigma System Performance System Cost
Customer Requirements & Concerns
Trade Studies
Affordability Model
Optimize Cost vs. Performance
Cost as An Independent Variable
•Assess and Prioritize •Track and Report Risks
Performance (y)
•Develop and Implement Mitigation
Business Strategy & Goals
Unaffordable
Optimal Area
Performance Objective
Cost / Performance / Schedule Trade Space Performance
dy/dx
Cost
Threshold Cost
Cost
Unacceptable Performance
Threshold
Objective
Cost (x)
Tools: QFD, CAIV, CPM, DOE R&O, FMEA, PCAT, SDM, DFMA, and MSA © 2008 Cognition Corporation and David M Cronin
29 of 33
Cost – Performance Trade Studies During Product Development
The Call To Action Implement An Effective Cost Management Process – We All Have Some Process For This Now: Good – Must Formalize The Data Structures For Cost Management – You Need A Flexible Open System To Manage The Cost Information – Begin Creating Cost Relationship Equations Based On Performance – Improve The Process For Sharing Cost Information Across Departments Implement Critical Parameter Management (CPM) – Start In Small Steps: One Part Of One Program At A Time – Weave CPM Into Your Development Process – Just In Time Training To Engineers – Start CPM As A Separate “Silo” From Cost Management – As You Progress With CPM, Add The Cost Connections – You Need a Flexible Open System To Manage CPM Information – Feedback The CPM Information To The Cost Management System
Combine The Two Processes After You Have Experience With Each © 2008 Cognition Corporation and David M Cronin
30 of 33
Cost – Performance Trade Studies During Product Development
How Can You Get Started Doing This? – Many Companies In Multiple Industries Are Active In This Effort – There Is Not Currently One Venue For Bringing Together Both Processes – Attend Conferences: Cost Management And Critical Parameter Management – Create An Informal Multi-Industry Consortium To Share Best Practices – I Can Put You In Touch With People Doing This Work – I Can Visit You And Provide An Assessment Of Your Processes – I Can Provide You With Lists Of Appropriate Conferences, Papers, And Suppliers Who Can Help You With This Process Improvement Work © 2008 Cognition Corporation and David M Cronin
31 of 33
Take Corrective Action To Improve The Development Process The Solution: – Weave Best Practices of cost management into the development process – Implement Critical Parameter Management (CPM) techniques – Merge cost management with CPM throughout development – Share cost and performance information in a near real time environment
Merging cost and performance information with near real time feedback results in improved performance, reduced (or at least better understood cost), better adherence to schedule, fewer failures, and reduced total ownership cost.
© 2008 Cognition Corporation and David M Cronin
1 of 33
Cost – Performance Trade Studies During Product Development
What We Want To See During Development Example Of Using CAIV* & CPM** On A Program To Improve Affordability 35
Planned Cost Reduction Actual Cost Reduction Project Cost Goal Project Cost Stretch Goal
Cost
30
25
GNG Make / Start Buy Design
Critical Design Review (Gate)
20
System Development Time © 2008 Cognition Corporation and David M Cronin
*CAIV = Cost As Independent Variable **CPM=Critical Parameter Management 2 of 33
Cost – Performance Trade Studies During Product Development
We Need To Impact Cost During Early Program Phases 70
60
50
40
% 30
20
10
0 TOC Spent $ Impact on O&S Costs
Concept
Full Dev
Production
O& S
3
12
20
65
70
15
10
5
The Majority of the Customer’s Cost is in the “O&S Phase” but that cost is mainly defined in the “Concept Phase”. © 2008 Cognition Corporation and David M Cronin
3 of 33
Cost – Performance Trade Studies During Product Development
Start By Weaving Cost Management Into The Product Development Process
© 2008 Cognition Corporation and David M Cronin
4 of 33
Cost – Performance Trade Studies During Product Development
Implement Best Practices Of Cost Management
$
Manage WBS Structure With Multiple Configurations “On The Fly”
₪ Estimate Costs With Multiple Methods And Fidelities
₫
Manage Multiple Cost Estimates Over Time For Each Element
£
Roll Up Multiple Cost-Configuration Scenarios
¥
Flag And Trace Cost Drivers With Detailed Reports
¢
Define Cost Estimating Relationships At All System Levels
€
Identify, Implement, And Track Cost Reduction Initiatives
© 2008 Cognition Corporation and David M Cronin
5 of 33
Cost – Performance Trade Studies During Product Development
First Create and Manage The WBS/BOM Import WBS/BOM From Various Sources (Spreadsheet, Corporate Database, PLM), Or Create Structures On The Fly Import and manipulate existing structures
Trace History Of Configuration Changes With Variants
© 2008 Cognition Corporation and David M Cronin
6 of 33
Cost – Performance Trade Studies During Product Development
There Are Many Methods For Successful Cost Modeling In A Near Real Time Environment € AdHoc € Rough Order of Magnitude (ROM) € Cost by Analogy, with complexity (“similar to”) € Individual spreadsheets € Parametric - based on industry standards (“out of the box”) € Parametric - with product line calibration € Historical Data € Engineering Buildup-Actuals € Cost Factors and Rates € Supplier Quotes: Materials € COTS detailed and budget estimating tools © 2008 Cognition Corporation and David M Cronin
7 of 33
Cost – Performance Trade Studies During Product Development
Over Time We Will Reduce The Cost Model Uncertainty
Cost Uncertainty
Estimated Cost
Actual cost of New Technology
Uncertainty Range
Very Good Estimating Tools (Based on Some System Design)
TECHNOLOGY EVALUATION No System Design To Base Estimate
DESIGN REVIEWS
POST RELEASE Actual Costs Make up Majority of Estimates
Cost Modeling is only as good as the Technical Design Input © 2008 Cognition Corporation and David M Cronin
8 of 33
Cost – Performance Trade Studies During Product Development
Now Attach All Cost Information To The WBS/BOM Structures Existing Estimates, New Estimates, Or Link To Data In Legacy Systems
M A N U F A C T U R I N G
Process Times
Raw Material Data
Cost Centre Rates
© 2008 Cognition Corporation and David M Cronin
P U R C H A S I N G
Suppliers Cost, Qty Associated Cost Effectivity Sub Con, Make/Buy, etc
F I N A N C I A L
Rates Burdens Exchange Rates
Foreign Overhead Factor 9 of 33
Cost – Performance Trade Studies During Product Development
Then Create And Manage Cost Reduction Initiatives
Initiatives Are Important: They Help Us Keep Track Of Potential Cost Drivers And Our Specific Future Actions To Effect The System Cost © 2008 Cognition Corporation and David M Cronin
10 of 33
Cost – Performance Trade Studies During Product Development
It Is Critical That Cost Management Results Output To Engineers As Well As To Cost Professionals Navigate And Search By Configuration, Estimate, Initiative, Cost Drivers
Multiple Outputs For Different Users Of Cost Data © 2008 Cognition Corporation and David M Cronin
11 of 33
Cost – Performance Trade Studies During Product Development
We Then Create Cost Management Trade Scenarios B e lu g a C o c k p it
W in g ( P )
W in g ( S )
F u s e la g e
L a n d in g G e a r
“Make v Buy” B e lu g a
“What If”
C o c k p it
W
in g
C o c k p it
W in g ( P )
W in g ( S )
F u s e la g e
Target
L a n d in g G e a r
B e lu g a ( P )
W
in g
( S )
F u s e la g e
L a n d in g
G e a r
B e lu g a C o c k p it
W in g
(P )
W in g
(S )
F u s e la g e
L a n d in g
G e a r
I Would Love To Have Performance Related Input To Help Drive These Scenarios ! © 2008 Cognition Corporation and David M Cronin
12 of 33
Cost – Performance Trade Studies During Product Development
Now, Implement Critical Parameter Management Early In The Development Process
© 2008 Cognition Corporation and David M Cronin
13 of 33
Cost – Performance Trade Studies During Product Development
What Is Critical Parameter Management (CPM)? CPM Is A Disciplined Methodology Used To Capture System Performance In A Structured Repository
Marketing
MFG
Critical Parameter Management (CPM)
Systems Engineering
Subject Matter Experts
Partners Design
© 2008 Cognition Corporation and David M Cronin
Suppliers
Standards 14 of 33
Cost – Performance Trade Flow Studies Of During ProductParameter Development Snapshot Process Critical Management
Voice of the Customer Needs
Cp/Cpk
Component CTF Specs….
y &C ap ab ilit
Subassembly CTQs..…
f(x)
f(x)
f(x)
Flo w
nts me
ire qu Re of
Component ‘Critical to Function’ (CTF) Requirements
Cp/Cpk
Subsystem Level CTQs…..
na l
wn
Do
Subassembly Level Requirements
Cp/Cpk
om i
w Flo
Subsystem Level Requirements
System Level CTQs…..
Cp/Cpk
Up of N
System Level Requirements
© 2008 Cognition Corporation and David M Cronin
15 of 33
Cost – Performance Trade Studies During Product Development
Critical Parameter Relationships The System Functional Paths Determine The Critical Parameter Architecture The Critical Parameter Architecture Crosses ALL Boundaries Of The Physical Architecture (WBS) This Is The Primary Difference Between Systems Requirements Management And Critical Parameter Management
© 2008 Cognition Corporation and David M Cronin
16 of 33
Cost – Performance Trade Studies During Product Development
Establish The Critical Performance Parameters
Flow Down Critical Parameter Tree
Create System Performance Hierarchy & Relationships There Are Many Ways To Create This Tree Including QFD, Direct Flowdown, And Functional Path
© 2008 Cognition Corporation and David M Cronin
Radar Project
17 of 33
Cost – Performance Trade Studies During Product Development
Transfer Functions Enable Feedback Throughout The System σ Transfer Functions are Required for Predictive Engineering Calculates nominal output value given a set of inputs y = f(x1, x2, … xn) Calculates variations of the output value & input sensitivities σ y = sqrt(s1*σ 12+s2*σ 22 …. +sn*σ n2)
σ Popular Methods for Developing Transfer Functions Explicit Engineering Equations Experiments; DOE & Monte Carlo (Virtual & Physical) Testing: Regression Analysis (Physical Only) “Black Box” Application Software Tools Company “Tribal Knowledge” © 2008 Cognition Corporation and David M Cronin
18 of 33
Cost – Performance Trade Studies During Product Development
Transfer Functions Make The CPM Tree “Come Alive”
CTQ Design Intent “Flow Up” based on Design Spec’s of Inputs (X’s) Performance
s De n ig
Post Analysis Sigma Shift
In nt te s es oc Pr
Producibility
pa Ca
CTQ Process Capability “Flow Up” based on Estimated/Actual Process Capability (Short & Long Term)
y
lit bi
Static Shift © 2008 Cognition Corporation and David M Cronin
Dynamic Drift 19 of 33
Cost – Performance Trade Studies During Product Development
We Can Now Predict System Performance Roll Up The Tree With Sensitivities For Each Critical Performance Parameter While Tracking Sensitivity For Each Parameter And Notify The Affected Owners Of the System Radar Project
ria ti
on s
Performance
f(x)
f(x)
f(x)
f(x)
f(x)
f(x)
f(x)
f(x)
Flo
wU pN
om
ina l&
Va
Producibility
© 2008 Cognition Corporation and David M Cronin
20 of 33
Cost – Performance Trade Studies During Product Development
Now Merge The Best Practices Of Cost Management And Critical Parameter Management For Near Real Time Feedback Of Cost And Performance
© 2008 Cognition Corporation and David M Cronin
21 of 33
Cost – Performance Trade Studies During Product Development
The Goal Is To Have A Trade Space For Cost And Performance
Cost Management
Critical Parameter Management
A New System Design Trade Space Use Best Practices From Each Discipline To Optimize System Cost And Performance
AT THE SAME TIME
© 2008 Cognition Corporation and David M Cronin
22 of 33
Cost – Performance Trade Studies During Product Development
WBS/BOM Trees (Cost) And CPM Trees (Performance) Can Now Work Together Form
Fit
Bill of Material Hierarchy
Defines: Physical/Geometric Relationships Material Specifications Manufacturing Procedures
Does NOT Define: Functional Characteristics Performance Capabilities © 2008 Cognition Corporation and David M Cronin
Function
Critical Parameter Hierarchy
WBS….. Defines Fit Configuration
CPM Tree… Analyzes Fit Capability
Defines: Functional Parameter Relationships System Performance Capabilities Direction/Focus for Engineering
Does NOT Define: Assembly Characteristics System “Packaging” 23 of 33
Cost – Performance Trade Studies During Product Development
WBS/BOM Elements Are Bi-Directionally Associated With Critical Performance Parameters
We Can Also See What Particular Performance Parameters Are Driving My Cost As A Part Number We Can See What Specific Part Numbers Are Associated With My Critical Performance Parameters
© 2008 Cognition Corporation and David M Cronin
24 of 33
Cost – Performance Trade Studies During Product Development
Cost Roll Ups Become Transfer Functions In The Performance (CPM) Structure
If Any Aspect Of A WBS/BOM Part Changes, Flag The Effected Performance Parameter(s) And Notify Appropriate Users Of The Change
© 2008 Cognition Corporation and David M Cronin
25 of 33
Cost – Performance Trade Studies During Product Development
Performance Parameter Interactions Trigger Cost Studies
If Any Aspect Of A Performance Parameter Changes, Flag The Associated WBS/BOM Part And Notify Appropriate Users Of The Change
© 2008 Cognition Corporation and David M Cronin
26 of 33
Cost – Performance Trade Studies During Product Development
Trace History Of Performance Changes And Their Cost Impact On Each Part Number
–
Wow, I Was Just Informed That A Performance Specification Changed; Better Check This Part Number’s Current Estimate And Update If Necessary
© 2008 Cognition Corporation and David M Cronin
Of Course, If I Have Defined A Transfer Function For Cost, The System Will Update The Cost For Me Automatically And Keep A History Of The Changes
27 of 33
Cost – Performance Trade Studies During Product Development
Design Trade Space For Balancing Cost And Performance We can now do real trades with rapid feedback Unaffordable
The Knee
Target: “Best Value”
Performance Objective
Performance (y)
Cost / Performance / Schedule Trade Space
Performance Threshold Cost
dy/dx
Cost
Cost
Unacceptable Performance
Threshold
Objective
Cost (x) © 2008 Cognition Corporation and David M Cronin
28 of 33
Cost – Performance Trade Studies During Product Development
An Ideal Cost And Performance Optimization Cycle Metrics: Unit Cost, Score Card, CRI Status, Watch List, Mitigation Plan
Identity Risk & Opportunity Performance Model
Prioritize Risk & Opportunity
Critical Parameter Management
Optimize Design For Six Sigma System Performance System Cost
Customer Requirements & Concerns
Trade Studies
Affordability Model
Optimize Cost vs. Performance
Cost as An Independent Variable
•Assess and Prioritize •Track and Report Risks
Performance (y)
•Develop and Implement Mitigation
Business Strategy & Goals
Unaffordable
Optimal Area
Performance Objective
Cost / Performance / Schedule Trade Space Performance
dy/dx
Cost
Threshold Cost
Cost
Unacceptable Performance
Threshold
Objective
Cost (x)
Tools: QFD, CAIV, CPM, DOE R&O, FMEA, PCAT, SDM, DFMA, and MSA © 2008 Cognition Corporation and David M Cronin
29 of 33
Cost – Performance Trade Studies During Product Development
The Call To Action Implement An Effective Cost Management Process – We All Have Some Process For This Now: Good – Must Formalize The Data Structures For Cost Management – You Need A Flexible Open System To Manage The Cost Information – Begin Creating Cost Relationship Equations Based On Performance – Improve The Process For Sharing Cost Information Across Departments Implement Critical Parameter Management (CPM) – Start In Small Steps: One Part Of One Program At A Time – Weave CPM Into Your Development Process – Just In Time Training To Engineers – Start CPM As A Separate “Silo” From Cost Management – As You Progress With CPM, Add The Cost Connections – You Need a Flexible Open System To Manage CPM Information – Feedback The CPM Information To The Cost Management System
Combine The Two Processes After You Have Experience With Each © 2008 Cognition Corporation and David M Cronin
30 of 33
Cost – Performance Trade Studies During Product Development
How Can You Get Started Doing This? – Many Companies In Multiple Industries Are Active In This Effort – There Is Not Currently One Venue For Bringing Together Both Processes – Attend Conferences: Cost Management And Critical Parameter Management – Create An Informal Multi-Industry Consortium To Share Best Practices – I Can Put You In Touch With People Doing This Work – I Can Visit You And Provide An Assessment Of Your Processes – I Can Provide You With Lists Of Appropriate Conferences, Papers, And Suppliers Who Can Help You With This Process Improvement Work © 2008 Cognition Corporation and David M Cronin
31 of 33
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