Modeling impacts of process architecture on cost and schedule risk in product development

To gain competitive leverage, firms that design and develop complex products seek to increase the efficiency and predictability of their development processes. Process improvement is facilitated by the development and use of models that account for and illuminate important characteristics of the process. Iteration is a fundamental but often unaddressed feature of product development (PD) processes. Its impact is mediated by the architecture of a process, i.e., its constituent activities and their interactions. This paper integrates several important characteristics of PD processes into a single model, highlighting the effects of varying process architecture. The PD process is modeled as a network of activities that exchange deliverables. Each activity has an uncertain duration and cost, an improvement curve, and risks of rework based on changes in its inputs. A work policy governs the timing of activity execution and deliverable exchange (and thus the amount of activity concurrency). The model is analyzed via simulation, which outputs sample cost and schedule outcome distributions. Varying the process architecture input varies the output distributions. Each distribution is used with a target and an impact function to determine a risk factor. Alternative process architectures are compared, revealing opportunities to trade cost and schedule risk. Example results and applications are shown for an industrial process, the preliminary design of an uninhabited combat aerial vehicle. The model yields and reinforces several managerial insights, including: how rework cascades through a PD process, trading off cost and schedule risk, interface criticality, and occasions for iterative overlapping.