ACostE Rallying Point Event. Cost Engineering – roles & organisations during early product design. Steve Wiseall – Rolls-Royce plc Lucy Bolton & Chris Clegg – Leeds Univ Business School 3 rd Nov 2009. Agenda. Background and context – Aerospace focus - PowerPoint PPT Presentation
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Stage 1 – prelim concept design – typically 6 months
Stage 2 – full concept definition – typically 6 months
Stage 3 – product realization – ~ 24- 30 months
Stage 4 – Production & in-service support ~ 20- 30 years
Stage 5 - Continuing in-service support ~ 10- 20 years
Stage 6 – End of life disposal
Manages business and technical risk through process
Rolls-Royce proprietary data
New Product Introduction
TIME
100%
75%
50%
25%
0%
CU
MU
LA
TIV
E L
IFE
CY
CL
E C
OS
T
ConceptualDesign
PreliminaryDesign
DetailDesign
Production ProductUse
CommittedCost
Knowledge ofthe Design
IncurredCost
70%
85%95%
7%18%
50%
1%
Life Cycle Costs Are Locked In Early
Significant opportunity to influence cost
outcome
Rolls-Royce proprietary data
Cost of Correction vs. Time of Detection
1
10
100
1,000
10,000
Concept Design Development Production In-Service
Cost outcomes are determined at early stages of NPI process
X10 rule – problems discovered late in the process are expensive to fix
Significant opportunity to influence cost is associated with early stages of design – architecture selection, concept down selection…
Rolls-Royce proprietary data
Chief Cost Engineer, (Civil - Future Programmes)Business case iteration
Long range Forecasting, timescales for realisation may be up to 20-30 years
Business cost targets (system - engine)
Short/medium/ long term concept studies, many paper engine studies
Concept down selection – stage 1
It’s about good decision making and de-risking NOT final design
Major partners may not be fully decided
Future Programmes Dedicated Engine Project team – NPI, Fleet Operations
Chief Cost Engineer (eg Trent XWB)Sub-system and component preliminary to detail design (NPI)
Design to Target Cost
High fidelity cost models
Cost model integration into design systems to improve balance of design, cost as a design attribute
Integrated Project Team, (IPT) operation & product definition decision making
Supply chain increasingly decided through Stage 2 onwards
Project organisation
NPI Fleet
Rolls-Royce proprietary data
In the early stages of design:Significant opportunity to influence cost, associated with – architecture selection, concept down selection…
Can the concept definition meet the business case cost targets ? – requires a prediction of absolute cost in the future
Architectural choices and concept down selection is the design focus - requires prediction of relative cost differences between concept options, may not require absolute cost ?
Further opportunity at PILM stage 2/3 at component level to support IPT operation to get a better ‘balanced design’ where cost is considered concurrently as a tradeable attribute not a consequence of the design.
New - Cost Methods group formed to help develop and embed the capability to answer these questions and support the application of the capability
Rolls-Royce proprietary data
Rolls-Royce COST ENGINEERING
VISION
‘To embed cost engineering processes, skills and tools into the organisation such that unit cost is understood and ‘ traded’ enabling optimum business solutions (product and supply chain) to be designed concurrently in a timely and efficient manner’
Rolls-Royce proprietary data
People / Organ
Process
Information Tools & Methods
Adopted Socio-Technical view of Cost Methods capability development
Engineers tend to focus on the technological part - Tools and Methods
Lessons learnt from IT implementation benchmarking studies and internal RR studies show that to embed changes in a broad way requires an increased emphasis on: organisational design, people, training, skills, roles, support.
Rolls-Royce proprietary data
Leeds University Business School, (LUBS) Feasibility Study (six months)
ObjectivesTo gather initial data & information from identified stakeholders on the “As-Is” Cost Engineering environment in Rolls-Royce, (covering processes, tools, roles, organisation, expectations and flow of information)
To benchmark other identified organisations (in the same topic areas)
To feedback and analyse the information and identify areas for improvement
To utilise the outcome of the feasibility study to develop a more comprehensive change programme in 2010/2011
Deliverables Scenarios planning workshop Reports – RR internal/externalACostE reportTwo year programme plan
Comprehensive study
Training, trials and workshops
LUBS - Project status
Rolls-Royce proprietary data
Input to the benchmarking process today…
Audience engagement by inputting your thoughts and ideas on the roles and organisation of Cost Engineering in early product design from within your organisation.
Data collection via two routes: round table discussion and feedback + anonymous questionnaire
These data will be collated & analysed, the proposal is to provide a report that would be published to the ACostE website.
If interested further, please let us know if you want to be engaged in the planned two-year year follow-on benchmark study. Please leave contact details
Rolls-Royce proprietary data
“Cost needs to be more of a priority”
“There are a lot of people in the organisation with ‘cost’ in their titles who are not actually responsible for cost - So who is accountable?”
“It is a struggle working over different functions and cost is always between these things as there is no ownership.”
“Most people are just not interested in cost and don’t think about it until they are told that a project is not affordable!”It’s really important to have people thinking about cost upfront.”
“A cultural problem; we need to change people’s views of cost.”
DRAFT
Rolls-Royce proprietary data
“We need to have one heartbeat running through the organisation when it comes to Cost Engineering”
“A management push is required; everyone should consider cost whether you are a Cost Engineer or not.”
“There are plenty of good costing tools out there, it’s about getting the people and methods in place.”
“From a people point of view we need to be clear who the owners of the cost are and give them the skills to manage it.”
“It would be really powerful if Cost Engineers worked as a single community, yet still recognising that they have different types of customers.”