(105d) Preparing Product Cost Assessments with Limited Data

Understanding the value of a new product or process in financial terms at the earliest possible time can help R&D personnel make wise decisions about which projects to support. When financial calculations are made in the early stages of a project, they can be used to identify those improvements in the product or process that will have the greatest impact on its ultimate profitability. Unfortunately, cost calculations can be difficult to make when the data required is still being generated. This presentation will focus on techniques that can be employed to make financial calculations in spite of technical uncertainties such that decisions about projects and processes can be made quickly and resources can be conserved for use on the most promising opportunities.

Specifically, the presentation will cover:

- Elements of cost: fixed and variable

- Process parameters that affect cost

- Capital depreciation

- The 'cost' of capital

- Handling uncertainty

- Sources of data