Measuring Value in Product Development
Name
Measuring Value in Product Development.pdf
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584.89 KB
Format
Adobe PDF
Checksum (MD5)
1d9bd9a3e1931f038662ec9c43ae3981
Author(s)
Smith, Jim
Date Issued
March 2000
Publisher
Massachusetts Institute of Technology
Series/Report no.
The Lean Aerospace Initiative Working Paper Series;WP00-05
Abstract
“What is value in product development?” is the key question of this paper. The answer is
critical to the creation of lean in product development. By knowing how much value is added by
product development (PD) activities, decisions can be more rationally made about how to
allocate resources, such as time and money.
In order to apply the principles of Lean Thinking and remove waste from the product
development system, value must be precisely defined. Unfortunately, value is a complex entity
that is composed of many dimensions and has thus far eluded definition on a local level. For this
reason, research has been initiated on “Measuring Value in Product Development.” This paper
serves as an introduction to this research. It presents the current understanding of value in PD,
the critical questions involved, and a specific research design to guide the development of a
methodology for measuring value.
Work in PD value currently focuses on either high-level perspectives on value, or detailed looks
at the attributes that value might have locally in the PD process. Models that attempt to capture
value in PD are reviewed. These methods, however, do not capture the depth necessary to allow
for application. A methodology is needed to evaluate activities on a local level to determine the
amount of value they add and their sensitivity with respect to performance, cost, time, and risk.
Two conceptual tools are proposed. The first is a conceptual framework for value creation in
PD, referred to here as the Value Creation Model. The second tool is the Value-Activity Map,
which shows the relationships between specific activities and value attributes. These maps will
allow a better understanding of the development of value in PD, will facilitate comparison of
value development between separate projects, and will provide the information necessary to
adapt process analysis tools (such as DSM) to consider value.
The key questions that this research entails are:
· What are the primary attributes of lifecycle value within PD?
· How can one model the creation of value in a specific PD process?
· Can a useful methodology be developed to quantify value in PD processes?
· What are the tools necessary for application?
· What PD metrics will be integrated with the necessary tools?
The research milestones are:
· Collection of value attributes and activities (September, 200)
· Development of methodology of value-activity association (October, 2000)
· Testing and refinement of the methodology (January, 2001)
· Tool Development (March, 2001)
· Present findings at July INCOSE conference (April, 2001)
· Deliver thesis that captures a formalized methodology for defining value in PD (including
LEM data sheets) (June, 2001)
The research design aims for the development of two primary deliverables: a methodology to
guide the incorporation of value, and a product development tool that will allow direct
application.
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