Overhead cost to design and develop products/services per projects that enters the test market products/services phase

This measure calculates overhead cost to design and develop products/services per project that enters the test market products/services phase (in which prototypes are used to assess market potential). The ‘design and develop products/services' phase includes assigning resources to product/service projects; preparing business cases and technical assessments; developing and documenting design specifications; building prototypes; eliminating quality and reliability problems; conducting in-house testing; identifying performance indicators; collaborating with suppliers; and contracting manufacturers. Overhead costs refer to those that an organization cannot identify as direct costs of performing a process; these include occupancy, facilities, utilities, and maintenance, etc. This measure is part of a set of Cost Effectiveness measures that help companies understand all cost expenditures related to the process "design, build, and evaluate products and services."

Benchmark Data

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Measure Category:
Cost Effectiveness
Measure Id:
101681
Total Sample Size:
12 All Companies
Performers:
25th
– Median
– 75th
–

Compute this Measure

Units for this measure are dollars. Lower values are better.

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Overhead cost to design and develop products/services / Number of projects that enter the test market products/services phase

Key Terms

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Overhead Cost

For the purpose of this study, provide the total actual overhead costs for the year related to the specified process. These are costs that cannot be identified as a direct cost of providing a product or a service. Include the primary allocated costs such as occupancy, facilities, utilities, maintenance costs, and other major costs allocated to the consuming departments. Exclude systems costs that are allocated, since these will be captured separately as systems cost.

Cost Effectiveness

Cost effectiveness measures are those in which two related variables, one of which is the cost and one of which is the related outcome related to the expenditure are used to determine a particular metric value.

Median

The metric value which represents the 50th percentile of a peer group. This could also be communicated as the metric value where half of the peer group sample shows lower performance than the expressed metric value or half of the peer group sample shows higher performance than the expressed metric value.

Measure Scope

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Cross Industry (6.1.1)

  • 2.2.1.1 - Assign resources to product/service project (10083) - Allocating resources to the design, development, and evaluation of product/service concepts. Allocate funds, personnel, and time for developing the new and/or revised products/services. Begin to design the potential new product/service concepts that have been prioritized and selected for further development.
  • 2.2.1.2 - Prepare high-level business case and technical assessment (10084) - Preparing a business-level business case and a technical feasibility assessment in order to move the product/service projects forward. Weigh the costs and benefits of designing, developing, and evaluating the shortlisted product/service concepts. Prepare a business case to justify the product/service projects. Conduct a technical appraisal to ensure that the organization has the technical know-how and resources to further develop these concepts.
  • 2.2.1.3 - Develop product/service design specifications (10085) - Creating design specifications. Create specifications for the design of new or revised product/service concepts as a measure to meet during development. Have the senior functional-level solutioning or design staff create a framework of compliance standards for these products/services.
  • 2.2.1.4 - Document design specifications (10086) - Documenting requirements to meet in the design of new or revised products/services. Specify technical, quality, and costing requirements, as well as ergonomic, safety, and servicing requirements for such products/services. Ensure the information presented can be understood by the personnel executing the design and includes examples, anecdotal references, and illustrations.
  • 2.2.1.5 - Conduct mandatory and elective external reviews (legal, regulatory, standards, internal) (10087) - Conducting any mandatory and elective appraisals of the product/service design specifications in order to ensure compliance with external standards. Carry out external reviews of specifications created for the development of new product/service designs. Conduct mandatory appraisals such as legal and regulatory, as well as any optional assessments that, for instance, pitch the specifications against industrial benchmarks.
  • 2.2.1.6 - Build prototypes (10088) - Building prototypes for shortlisted product/service concepts. Develop prototypes for those product/service concepts that have been identified for further development. Provide proof-of-concepts, and test any processes involved. Build prototypes in line with the design specifications already outlined. Enlist the solutioning and/or design staff.
  • 2.2.1.7 - Eliminate quality and reliability problems (10089) - Eliminating any problems relating to utility of the product/service over the course of its expected lifetime. Tweak the prototype in order to comply with the required quality and reliability standards. Further refine the prototype, so it may be subjected to testing.
  • 2.2.1.8 - Conduct in-house product/service testing and evaluate feasibility (10090) - Carrying out an in-house appraisal of the prototypes in order to validate design and feasibility. Test the product/service prototypes to confirm their compliance with design and usability standards. Corroborate the viability of the design, and validate the feasibility of their production. Identify any areas for improvement.
  • 2.2.1.9 - Identify design/development performance indicators (10091) - Identifying performance parameters. Determine the parameters to measure performance of the design and development of the product/service concepts into prototypes.
  • 2.2.1.10 - Collaborate on design with suppliers and contract manufacturers (10092) - Interacting with suppliers and manufactures to determine design decisions. Collaborate with vendors, suppliers, contractors, and subcontractors to verify feasibility of co-producing the prototype's design. Ensure that efforts can be coordinated with other stakeholders in the organization's supply chain ecosystem at the time of manufacturing, producing, or packaging the finished product/service.