Control of Automotive Component Project Development Cost

With the development of the global automotive industry, the cycle of vehicle replacement is becoming shorter and shorter. The amount of automotive components development project is increasing, but the project development cycle has been shortened. Based on researching the cost structure and actual development task, put forward the cost control method by combining WBS, CBS and OBS can be helpful to speed up the development work and control the development cost. Introduction There are more and more new development projects in automotive components enterprises with the vehicle models are changing. New project development cost directly influenced the price of automotive components. It is a critical issue that how to construct a project development cost allocating responsibilities of task during the process of development. Construction of Project Development Cost Project development cost during preliminary product research and development includes: Development labor cost: means labor cost when project development team members develop; Validation cost: is used to validate the results of product design and production; Sample cost: includes cost for purchasing, producing and optimizing material; Business cost: means the cost of business travel, visit, investigation and entertainment; Support cost: means support cost for external cooperation, including labor and travel etc; General tooling: It is out of project cost in general, but regarded as investment reimbursement by combining with some projects profit or equipment cost counted into produce cost; Type specific tooling: is a tooling made for a typical project product, cannot be shared with other product. It is often counted into project cost, paid by customer singly or amortized into price. Way to Amortize Project Development Cost The cost of product mainly consists of the project development cost and typical tooling, which need to negotiate with customers about how to pay back. Onetime payment cannot be counted into cost share. Otherwise, it should be counted into component cost. There is an example for the amortization counting method as (Table. 1) shows. Basic elements needed are: Lifetime quantity: whole quantity predicted in product lifetime; Gross cost: one-off payment from each development cost directly; Customer share: one-off payment for each development cost from customers; Interest rate: the interest rate of each development cost in reimbursement years; Interest cost: the interest of each development cost in reimbursement years; Amortization quantity: component quantity for shared, it should be less than lifetime quantity. Counting method: Amortized piece price=∑ gross cost+(gross cost-customer share)×interest rate×0.5×years amorization quantity (1)