Duration and Cost of Product Development

Most people without experience in product  development are astounded by how much time and money are required to develop a new product. The reality is that very few products can be developed in less than 1 year, many require 3 to 5 years, and some take as long as 10 years. Exhibit 1-1 shows five engineered, discrete products. Exhibit 1-3 is a table showing the approximate scale of the associated product development efforts along with some  distinguishing characteristics of the products.

The cost of product development is roughly  proportional to the number of people on the project team and to the duration of the project. In addition to expenses for development effort, a firm will almost always have to make some investment in the tooling and equipment required for production. This expense is often as large as the rest of the product  development budget; however, it is sometimes useful to think of these expenditures as part of the fixed costs of production. For reference purposes, this production investment is listed in Exhibit 1-3 along with the development expenditures.

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References and Bibliography

A wide variety of resources for this chapter and for the rest of the book are available on the Internet. These resources include data, templates, links to suppliers, and lists of publications. Current resources may be accessed via www.ulrich-eppinger.net Wheelwright and Clark devote much of their book to the very early stages of product development, which we cover in less detail. Wheelwright, Stephen c., and Kim B. Clark, Revolutionizing Product Development: Quantum Leaps in Speed, Efficiency, and Quality, The Free Press, New York, 1992. Katzenbach and Smith write about teams in general, but most of their insights apply to product development teams as well. Katzenbach, Jon R., and Douglas K. Smith, The Wisdom of Teams: Creating the High-Performance Organization, Harvard Business School Press, Boston, 1993. These three books provide rich narratives of development projects, including fascinating descriptions of the intertwined social and technical processes. Kidder, Tracy, The Soul of a New Machine, Avon Books, New York, 1981.

Sabbagh, Karl, Twenty-First-Century Jet: The Making and Marketing of the Boeing 777, Scribner, New York, 1996. Walton, Mary, Car: A Drama of the American Workplace, Norton, New York, 1997.