Example 2: An international medical company wants to develop and market a full thoracic medical digital radiology, (DR) X-ray system (including hardware and software) to be sold to large medical institutions; this is classified by regulatory agencies as a 'medical product'. This is an example of a highly complex electromechanical system, but produced in very low quantities (50 to 100).

NRE - Design is complex and extensive state-of-the-art concepts. All of the Development Functions are required; DR technology embraces high risk. A recycling scheme needs to be established to ensure proper reuse, reclamation, recycling and disposal of the equipment components at its end of life. - Importance is high.

NPD - A large design team and small, but experienced, legal and marketing teams are required, as are very specific facilities - Importance is high.

NRQ - Many International regulatory agency requirements must be met - Importance is high. (Note that as of this writing medical products are exempt from the hazardous substance laws; however expect this to change in the future.)

RCM - Assembly and test is important, but WIP, FGI etc. will be minimal - Importance is medium.

RPC - Training is critical, sales and distribution are less critical - Importance is medium.

RMC - Installation, calibration, service and warranty management are very critical - Importance is high.

PRM - Enhancements, cost reduction is of less importance - Importance is low.

Most of the effort in this product's life is in the design, regulatory and environmental compliance, manufacturing/facilities setup and installation/service & calibration stages. Marketing costs, manufacturing costs and cost-reduction are of less importance. Development funds go mostly into design engineering, regulatory agency compliance, facilities, installation setup and service. Marketing and Legal are crucial, but profit is best served if this talent is purchased or rented, not developed.

Conclusion of Section 1:

The relative importance of each Cost Category depends on the development program, quantity and complexity of the product. The weightings suggested in the matrix may not be absolute, but the main point is that by following the described methodology, a project team will stop and take notice of the costs expected to be incurred over the life of the product. As a result, the team will be more able to effectively secure the appropriate amount of development funds and then efficiently partition those funds within the development project.