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