1. Orange County Convention Center
Orlando, Florida | June 3-5, 2014
Strategic Product Development and Cost
Estimates for Futuristic Products
Vedant Borse (HCL AXON)

2.  Understand Product Costing and Challenges with
estimating cost of Future Product
 Eliminate Manual/ Excel based calculations and
reduces the risk of estimation variance
 Closed loop Solution Approach for accurate Product
Costing, Planning and Execution
LEARNING POINTS

3. How do I estimate Cost?
Detailed Level Estimates
BOM with
Detailed
Part List
•Travel
•Freight
•Contract
•Labor
•Vehicle
•Parts
•Test
CostManpower
+
Executive Advance Planning Departments/ Project
- 6Years - 4Years - 3Years
High Level #1 Estimates
Buildable Combinations
Matrix (BCM)
•Travel
•Freight
•Contract
•Labor
•Vehicle
•Parts
•Test
CostManpower
+
• Development Complexity Known
• Feature List Unknown
• Parts List Unknown
High Level #2 Estimates
Features and Parts
List (High Level)
Features List
•Travel
•Freight
•Contract
•Labor
•Vehicle
•Parts
•Test
CostManpower
+
• Feature List Known
• Parts List Partial
• Development Complexity Calculated
• Parts List Known
• Feature List Known
• Development Complexity Calculated
Reduce Estimation
Accuracy to: +/- 5%
Reduce Estimation
Accuracy to: +/- 0.5%

4. Challenge 1: Varying YoY Cost Estimates
-10%
-5%
0%
5%
10%
15%
20%
0
50
100
150
200
250
300
Year 6 Year 5 Year 4 Year 3 Year 2 Year 1 Actual
Cost
Variance
Cause
 Development Assumption Not Clear in Early Stage
 Estimator include Buffer in budget
 Detail Spending Is not clear
Sample Lifetime Cost History for a Single Vehicle Development Estimates
Variance
~20% Variance
Year on Year Estimation Est. Vs Actual
~5% Var.

5. Challenge 2: High Consolidated Variance
(80.00)
(60.00)
(40.00)
(20.00)
-
20.00
40.00
60.00
Year 6 Year 5 Year 4 Year 3 Year 2 Year 1 Actual
Product F
Product E
Product D
Product C
Product B
Product A
Total Variance
Issues
 Poor Estimation Accuracy occurs in all projects.
 Poor Spending Control occurs in all projects.
Year on Year Estimation Est. Vs Actual
Actual

6.  No Part List/ BOM data results in to estimate cost Long estimation process
 Varying range of complexities, type of development, its flow, duration, etc leads
to hundreds of permutation and combination to estimate a product cost for
Labor, Parts, Products, Design, Build, Test, Prototype Cost, Whitebody, etc.
 Unclear varying factors forces use of weak resource estimates technique
resulting in Inaccuracy in Project Resource Planning for future Products (Eg. 20%
avg. variance/Prj )
 Shorter time to market and increasing variant launch (Minor Model, Major
Model, NPDI) adds to more pressure on estimates and product development,
resulting in incorrect estimates
 Use of custom tools or Excels adds difficulty in collating estimates from multiple
business units
 Unavailability of robust estimation technique limits alternatives/ estimates
scenarios (Eg. 3/Prj), thus Limiting alternatives/ estimates scenarios for Lineup
Planning of multiple vehicle and multiple launch years projects
Future Product Cost Estimates Challenges

7.  Microsoft Excel
 Custom Home Grown Solution
 MS Access
 Highly customized PLM Solution
 Guestimates/ Person Dependent
Current Estimation Tools

8.  Varying Year on Year costing estimates results
in Bad Image to investor
 More reporting requests, thus requiring large
pool of planning resources required for
estimation and report preparation
 Inability to created multiple estimates
scenarios for each vehicle, while creating
single lineup for all vehicles across globe for
each variant becomes distant possibility
Consequence

9. HCL AXON PLM Practice
• Resource expertise in SAP PLM
PLM Highlight:
 Leader in SAP PLM Implementation (12+ years practice, 40+ implementation)
 HCL AXON has amongst the highest number of PLM client references
 SAP PLM/PPM Practice COE’s in US, Asia and Europe
Unique Industry Specialization:
 Pharmaceuticals, Consumer Healthcare, Consumer Packaged Goods, Discrete Manufacturing and Professional Services. Delivered the
largest PPM user in Pharma and the most complex project in CPG
Platform Pioneer
 Developed an accelerator for PLM/PPM in Consumer Healthcare
 First SAP partner globally for the Rapid Deployment Solution (RDS) of Portfolio and Project Management (SAP PPM)
 SAP partner globally for the Rapid Deployment Solution (RDS) for Visual Enterprise (VE)
 SAP Ramp up Partner with dedicated SAP PLM Lab (PPM 6.0, PLM 7.0)
SAP Endorsement
 Co-authored R&D whitepapers with SAP
 More Sapphire conference success stories than any other partner
 Top collaborator with SAP for PLM in Life Sciences
Manufacturers pursuing integrated PLM/MES/ERP
environments in HCL's primary industries - particularly
those with SAP as their ERP platform - should consider HCL
for PLM services.
“

10. Solution options
 Easy Cost Planning
 PDCE
 iPPE
 BOBJ PCM
Criteria
 No Material Master, varying range of complexities, type of development, its
flow, duration,
 Show possible permutation and combination
 Calculate 2.5 Billion data combination and generate results for
 Cost: Labor, Parts, Products, Design, Build, Test, Prototype Cost, etc.
 Quantity: Manpower, Products, BOM/MM, etc
Solution Options

11.  Combination of Process improvement with enablement
via right technology should be the mantra
 Build a closed loop estimation process
Closed loop Solution: SAP PPM+PCM+ECC
f(x)
Approval
Workflow
PCM
Profitability & Cost Management
PPM
Portfolio & Project Management
Project Execution
FinancialTime Reporting
Features and Parts
Project System
Project Highlights
 First PPM-PCM Integration
 First Unified UI Integration
 First PCM-BODS-PCM Real-
time Integration

12.  Automotive Estimation formulas are very complex
 They involve varying parameters
 Type of development (Minor Model, Major Model Change MMC),
Full Model (FMC) or New Product (NPDI))
 Varying range of complexities (Carryover, Modify, New)
 Build Lot (Stages of Development) and duration
 Development flow
 Departments (Body, chassis, Interior, Electrical, Transmission, etc
 While estimating the process Crash test vehicles has further complex
dimension
 Every Company has a complex formula for estimation
 N_Motor CFM: Common Module Family
 F_Motor BCM: Buildable Combinations Matrix
 T and Y Motor has similar methods
Define Formula

13. BOBJ-PCM Formula and Lookup
Super User can control
Formula Tables, Condition to
apply specific Table, Structure
of Table and Formula

14.  Build Estimation Projects
 Extent Project for Next Levels of Estimation
 Extent Estimation Project to Execution Project
 Variance Analysis between estimates and Actuals to
improve the formula via a Closed Loop process
(PCM-PPM-ECC Integration)
 Build a Lineup view of all the projects stacked
together
Define Project and Lineup

15. Project Planning and Estimation Inputs

16. Calculation in PCM
Underlying Calculation in
PCM from inputs from PPM

17. Rollup Estimation to Project and Lineup

18. Lineup Summarization

19. SAP Implementation (Old vs New)NewSystem(SAP)OldSystem(Manual)
Resource Estimation and
Formula
Project Resource
Estimation
Lineup Scenario
Resource Simulation
Financial
Manual Process
Project Estimates
Project Lineup
f(x)
Approval
Workflow
PCM
Profitability & Cost Management
PPM
Portfolio & Project Management
Project System
Project Execution
Financial
Time Reporting
TTP Project
Benefits
-Improved Accuracy from 20% to
5% due to formula PDCA
-Best Decision Making due to
Alternatives: 3 scenarios to10
scenarios
- Huge Annual Saving in terms of
Estimation House and Cost
Issues:
-Manual Repeat process
-Low Accuracy
-More Efforts
Timesheet
Calculation via
spreadsheets
Calculation via
spreadsheets
Parts
System
Parts
System
High Efforts/ yrs for
Estimation
Lower Simulation/
Project
High Efforts/ Project for
Estimation
Higher Simulation/
Project
Lower Efforts/ Project
for Estimation

20.  Better Planning decisions, by providing:
 More accurate estimates. Accuracy improvement from
 20% avg./Prj → 5% avg./Prj
(If condition change, clear analysis reasons)
 More lineup alternatives. Increase Alternatives from:
 3 scenarios→10 scenarios
 Time Saving
 Forecasters time: 130hrs/Prj→10hrs/Project (About $0.4M
Saving)
Benefits

21. THANK YOU
THANK YOU FOR PARTICIPATING
Vedant Borse
Solution Architect, PLM / PPM / PCM
HCL AXON
EAS Division – HCL Technologies
15 Exchange Place, Suite 730, Jersey City, NJ 07302
Mob: +1 919 744 6166
www.hcl-axon.com
www.hcltech.com
www.hcl.com
HCL Booth #213