In this paper we address problems which
arise when large organizations attempt a tight
integration of design and cost while developing
complex products. Topics include the sources of cost
and design data, the arrangement of the databases, and
the interfaces required. We also discuss the
management methods required to develop and
implement Design/Cost Database Commonality

Hoult, David P.

Meador, C. Lawrence

DSpace@MIT

1METHODS OF INTEGRATING DESIGN AND COST INFORMATION TOACHIEVE ENHANCED MANUFACTURINGCOST/PERFORMANCE TRADE-OFFSDavid P. HoultDavid Hoult received a BS in mathematics from theMassachusetts Institute of Technology (MIT) in 1958.  Hereceived a MS (1958) and Ph.D. (1962) in aeronautics fromCalTech.  He joined the Mechanical Engineering Facultyat MIT in 1967, and remained a tenured faculty memberuntil 1974, at which time he became a Senior ResearchAssociate.  Currently he is co-director of the ManufacturingInstitute at MIT.C. Lawrence MeadorC. Lawrence Meador received a BS in mechanicalengineering from the University of Texas at Austin in1970.  He received a MS in mechanical engineering and aMS in management from the Massachusetts Institute ofTechnology (MIT) in 1972. He is on the academic staff ofthe Massachusetts Institute of Technology where he hasheld various teaching and research appointments for thepast fifteen years and is currently the co-director of theMacro-Engineering Research Group at MIT. He is also thePresident of Management Support Technology Corp., astrategic management consulting and systems integrationfirm located in Framingham, MA.ABSTRACTIn this paper we address problems whicharise when large organizations attempt a tightintegration of design and cost while developingcomplex products.  Topics include the sources of costand design data, the arrangement of the databases, andthe interfaces required. We also discuss themanagement methods required to develop andimplement Design/Cost Database Commonality.INTRODUCTIONThe least expensive way to create a low-costproduct is to design low cost into the productinitially.  This requires knowledge of the productfabrication method and the fabrication costs, in thedesign stage. Capturing the appropriate costknowledge in the. design phase is simple for productswith only a few parts and a few fabrication steps.However, a modern aircraft with five million uniqueparts presents an entirely different problem.  Recentresults by Hoult & Meador [1] show that havingCost Awareness in Design can lead to major savings.The result of capturing the appropriate costknowledge in the design phase leads to theintegration of design and cost.  This integration dealswith the intersection(s) of cost accounting,engineering design, and manufacturing.  Well, youask, what do you mean by the intersection of suchdifferent areas?  It’s like comparing apples, orangesand grapes!  If that’s the problem, we need somevery special ways to think about it.  Moreover, if weare talking about such complex things as modernaircraft (and automobiles, and TV sets, and2dishwashers...)  the design and development teamsinvolve lots of people, so there must be some veryspecial technical management issues that also arise.This paper describes the tools, methods, andmanagement processes needed to integrate this designand cost information.  The process by whichorganizations have achieved this goal involvesconsiderable culture change that takes time toaccomplish.  It also requires new tools that are notyet fully developed. It requires a special vision torecognize how these tools can powerfully augmentIntegrated Product and Process Development Teams(IPPDT).This research is based, in part, on resultsand insights from the Lean Aircraft Initiative at MIT,and from the Lean Enterprise Model (LEM), one ofthe outputs of that research [2].  In our next sectionwe discuss elements of integrating design and cost inan IPPD & IPPDT.  A description of the tools beingdeveloped, and the technology issues that arise intheir development will also be discussed.As in many issues that require culturalchange, management must be involved in a broadway.  But in integrating design and cost,management must also be involved locally.  TheManagement of Design Cost Integration deals withthe complex trade-offs between local and globalmanagement issues that arise in integrating designand cost.THE ELEMENTS OF INTEGRATED DESIGNAND COST IN IPPD & IPPDT.There are four main elements of integrationof design and cost, shown schematically in Figure 1.IntegratedProductProcessDatabaseDesignSystemValidationof Cost ModelsCostModelingElements of Integrated Design and CostFigure 1First, the integrated database includesproduct information (designs, parts, and so on),fabrication and assembly processes, and accountingcosts.  This database is linked to the Design System(CAD), Cost Modeling, and Validation.  Themethodology of how to create and link suchintegrated elements is not yet well understood.  It isimpractical to collect a large complex database in asingle unit.  Rather, it may involve the creation of avirtual database, using object oriented technology.This involves the assignment of an “object” to thepart being designed, the fabrication process, and thecosts that arise from the production of the part.  It isthe “object agent” that makes the link.The Design System includes the CADmodeling system, and often includes a CAM(computer-aided manufacturing) module inside theCAD system.   There are a few commercial tools thatlink the design system and the cost model.  Theselinks involve some novel, and at present, poorlyunderstood problems.The cost modeling may include traditional,empirical correlation’s of costs with design features.Another choice is to use a more rigorous, and fasterapproach using Complexity Theory as proposed byHoult & Meador [3].  Some cost modeling software,such as that offered by Cognition, includes a shell fora knowledge-based expert system that can warn ofpoor design decisions.  Cognition also offers a toolthat links its software to Pro/Engineer, a feature-basedCAD system.  We discuss later in this document theissues of how CAD systems need to be linked to costmodels.3Accuracy of the cost model is one of severalissues.  Capturing essentially all the detail of adesign in the Cost Model is also important.  Inaddition, the ability to predict the relative costs oftwo closely related designs is very helpful.  Typicalaccuracy for a preliminary cost estimate might be +-30%, but if the relative cost trends are captured, thedesigner has useful guidance for cost reduction.The validation of Cost Models extracts datafrom the database and compares the data withpredications of the cost model.  There are a number ofissues here.  The capture of all direct costs is veryimportant.  Also the capture of indirect costs isimportant but is difficult and not always needed.Clearly, Figure 1 shows a complex andsophisticated information system.  The technicalmanagement of such a novel system warrants specialattention.  Some of these management issues will bediscussed in a later section.  Here, it is worthmentioning that setting up a system such asdescribed in Figure 1 is, even in the mostknowledgeable organizations, a task of several years.To integrate design and cost, the process ofdeveloping products must include costs in an orderlyway.  Costs are best controlled the earlier they arebrought into the design phase.  Figure 2 shows aGANTT chart of the product development process.Maintain Database,  Store InformationCost AllocationDesign / Cost TradesValidation of Design & CostProductionProduct Development TasksFigure 2The product is being developed by severalIPPD teams, which are formed when the clock inFigure 2 starts running.  The tasks shown in Figure2 focus on the links between design and cost and theimportant role the database plays in the process.The first task in provider developmentconcern is cost allocation.  Let’s assume that all theappropriate information for the particular productbeing developed is in the database and accessible tothe IPPD teams.  The cost allocation infers a flowdown of the target costs to finer and finer levels ofdetail until all elements of cost, down to the last nutand bolt, has a target cost. It will be appreciated thatthis is no small task for a modern aerospace product,such as a Boeing 777 airliner.The Design/Cost Trades Task is typicallytime-constrained. This arises because in thedevelopment of complex products the IPPD teammakes a design decision and immediately begins torealize its consequences. If the cost impact of thedesign decision are not known immediately, costlyrework arises when the consequences of the designdecision must be cost-corrected.  Thus, it happensthat  one of the metrics for Database Commonality isthe time to roll-up cost estimates for the product. Inthe U.S. aerospace industry, typical roll-up timeswere months [1], but the best in class rolled up costsdaily.  In the appliance industry, one leading firm hascost roll-up times measured in minutes instead ofhours. In a Wall Street Journal article in 1995, aChrysler representative was quoted as saying that costroll up time of 24 hours was too slow.  Figure 2shows the feedback to the database of the cost trade-offactivity. This feedback loop characterizes one featureof the Lean Enterprise Model: the principle of“smooth flow of information” [4].When the initial production runs are made,costs are validated so that the cost models shown inFigure 1 remain up to date.  The database shouldcontain actual costs and a comparison of the initialcost estimates with the actual costs so that anysystematic bias in the cost modeling can bediscovered and corrected.Finally, when the product goes intoproduction the actual costs are recorded in thedatabase and the cost elements of Figure 1 updated forthe next product.  With a broad outline of the element ofintegration and cost, and an idea of how the productdevelopment process can integrate design and cost,we now turn to some of the outstanding issues inactually getting it done.4The first issue is feature mapping (i.e. thelink between design features and manufacturingfeatures).  The cost modeler must extract from thedesign those features made by a specificmanufacturing process in order to define a cost forthose features. Even with a feature-based CADsystem, such as Pro/E, a given feature in the CADmodel can be manufactured in a number of differentways.  That is, the mapping from design features tomanufacturing features is one to many. Each choicefor a mapping ideally leads to a different costestimate.  This problem of feature mapping is justbeginning to be addressed.However, for a class of products thisproblem is tractable.  The class is characterized byproducts built from nearly standard componentsfabricated with a limited number of technologicallymature and very well characterized manufacturingprocesses.  In this class are most appliances, and asignificant fraction of all automotive components.For these products, the method for dealing with thefeature mapping problem has two steps:  First limitthe domain of the cost model to a limited and wellcharacterized class of parts and a small number ofmanufacturing processes by which these parts can bemade.  Second, develop a small number of decisionrules or a decision support system to define themapping.The second issue is cost capture, a simpleconcept but extraordinarily difficult to implement insome cases. How do you determine what a given partactually costs?  Most manufacturing cost accountingsystems run on standard costs and variances.  Thedifficulty with such accounting data is that when it isposted to the cost ledger, it is aggregated, and lacksthe detail of exactly how much each little feature ofthe product costs.  But the goal of integration ofdesign and cost is precisely to capture and modelsuch detail, so that costs can be reduced continually,by a series of small steps.There is a second, more complex problemwith cost capture: the indirect cost issue.  Inaerospace products, touch labor is less than 10% ofthe cost of the product.  With the large design effort,the non recurring (that is, indirect) costs are a largefraction of the cost of the product.  Capturing theindirect costs requires an activity based accountingcost system (ABC), and some way to deal with thefeature mapping issues as they are reflected in theABC allocations.Commercial firms with low overheads havesuccessfully ignored this problem so far.THE MANAGEMENT OF DESIGN COSTINTEGRATIONThe coherent management of design costintegration poses some unique problems.  They arisein part from the practical problems of limiting thedomain of application of design tools, cost models,and other elements of the database.  With domainlimitation each IPPD team has the tools and dataneeded for its tasks, but need not spend effortsearching vast amounts of unhelpful data.Balancing this need for local delegation andmanagement is the global  need for database creationand management.   Figure 3 shows these ideas.More specifically, surveys, interviews andexperience have shown that selecting andimplementing a CAD tool is a global  decision.Likewise, the shell for the cost model is a globaldecision as well.  Training clearly falls in the samecategory.Global LocalCost ModelToolsTrainingData BaseMaintainenceLinkagesModelTailoringProcessValidationModelValidationFigure 3Let us defer for a moment the global  issuesof database creation and maintenance, and themethods for linking the elements of the databasetogether.5The local issues arise from the need to limitthe domain of application of the tools and databasewhen they are applied to a specific design project, andthe fact that validation is always specific to particularparts and processes, and hence local.The local issues require different methods ofdelegation than do the global  issues.  Virtually allthe organizations that we have interviewed that havebeen successful in integrating design and cost haveimplicitly or explicitly recognized this distinction.The database management issues requirespecial discussion.  The elements of the databaserequired to integrate design and cost are shown inFigure 4.History of Design DecisionsDesign FeaturesSpecificCost ModelsManufacturingProcessesValidationIndirect CostsDirect CostsDatabase ComponentsFigure 4At the top of Figure 4 is a little recognizedelement: the history of design decisions.  In the past,this history was, and currently is, carried around inthe heads of the designers.  In the aerospace industry,with fewer and fewer ongoing development programs,it is likely that the designers with experience are laidoff, or working on some other project. We shouldmention that military weapons systems can have verylong lifetimes: for example, the F-16 has been builtfor 25 years, through some 50 modifications.Contrast this with the shorter cycle in automobiles.Our case study research (see T. Stout [5]) has shownthat having a coherent design history can lead tomajor savings in product life cycle costs.Currently the design features database isbeing captured in one overall CAD system, whichcontains all the mechanical parts of the product. Forexample, Chrysler and Boeing used CATIA for theNeon and 777 respectively.From the management perspective, theremaining bubbles in Figure 4 are more challenging.To control the risks in product development, in mostcommercial industries, the manufacturing processesused in building new products are quite mature.  Inthese cases, the database of manufacturing processes isfairly easy to construct, with its appropriate costfactors.In advanced military equipment, themanufacturing processes may be quite new, and inthose cases, there are major difficulties in quantifyingthe manufacturing processes, and building theirdatabase elements.The lower bubbles in Figure 4 can be themost difficult, as they involve issues of featuremapping and cost capture across the different areasof application.  The path goes from design history tospecific design features to manufacturing processeswhich fabricates the design features to the costassociated with fabrication.The methodology to properly construct andlink this database is undergoing rapid evolution atpresent. Database Commonality is achieved bybuilding these linkages.THE KEYS TO SUCCESSFUL DESIGN COSTINTEGRATIONThere are world wide trends to shorten thetime it takes to develop new products. In the worldauto industry, reduction in product development timeis becoming a competitive weapon. Times to developnew autos have fallen from 60 months to under 24months in recent years.  Because the design effort isroughly proportional to the time spent, there is acorresponding large cost saving.  The faster productsare developed, the more important the informationarchitecture which allows the fast and appropriate useof information.Of these architectures, none is moreimportant than integrating design and cost.  Putsimply, cheaper products are faster to design andbuild, and easier to sell, all other things being equal.6But “other things being equal” implies the need forrapid, detailed and accurate design cost trades.There are four keys to successful integrationof design and cost.  The first is the managementcommitment to the global  and local issues describedabove.  In doing this, there must be a recognitionthat integrating design and cost requires a majorculture change  in many firms. Culture change doesnot happen quickly, and requires careful planning.             The establishment of DatabaseCommonality and the necessary Cost modeling tools,and their links to the elements of the databaserequires careful planning, so that the issues of featuremapping and cost capture are consistent with thechanging culture.For the organizations which reach towardsthe goal of design cost integration, the rewards aregreat: lower cost products developed faster with lessinvestment.REFERENCES 1. Hoult, David P. , Meador, C. Lawrence, Maresi,Dennis, & Deyst, John: Cost Awareness InDesign: The Role of Data Commonalty, SAE #95MJA413, to be presented at SAE InternationalCongress & Exposition, Detroit, Michigan,February 26-29, 1996. 2. The Lean Aircraft Initiative is a joint effortbetween industry, government, and universities.It consists of 29 companies and divisions ofcompanies, spanning the whole of the USaerospace industry, the US Air Force, Army andNavy, and a number of universities, includingMIT, Penn State, and Georgia Tech. 3. Hoult, David P. & Meador, C. Lawrence,Predicting Product Manufacturing Costs FromDesign Attributes: A Complexity TheoryApproach, SAE # 95MJA414, to be presented atSAE International Congress & Exposition,Detroit, Michigan, February 26-29, 1996. 4. Weiss, S.; Murman, E.; & Roos, D.  The LeanEnterprise Model.  To be published, AerospaceAmerica, May 1996. 5. Stout, Todd, The Role of Product DevelopmentMetrics for Making Design Decisions in theDefense Aerospace Industry.  MS in MechanicalEngineering, Massachusetts Institute ofTechnology, October 1995.

Methods of Integrating Design and Cost Information to Achieve Enhanced Manufacturing Cost/Performance Trade-offs

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Methods of Integrating Design and Cost Information to Achieve Enhanced Manufacturing Cost/Performance Trade-offs

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