There is always a tendancy for costs to drift up during the development phase. The reasons for this vary, but unless the costs are monitored on a regular basis throughout the project, they can easily get to a level where drastic and traumatic action is needed to recover the situation. With DTC we compare our current best estimates of costs against targets set at the beginning of the project. This is done on a regular basis, perhaps once a week or once every two weeks, and corrective action initiated before the problems become too great. This regular correction ensures that the product is delivered to cost.
The diagram above shows a simplistic view of the working of DTC.
The price of our product is largely defined by the market, and is a factor over which the project team will have very little control. Profit levels will be decreed by the company executive, and is simmilarly beyond the control of the project team. The differenc between these two fixed values is the cost which must be achieved if the product is to be a market success. This value is also fixed.
The fixed cost value is the target cost for the whole product. Most products will be split into subsystems. From historical and other data we should be able to divide the overall target cost into targets for the various subsystems. This can be repeated down to any level that is considered appropriate for the product in question. Target values are entered into TeamSET on the DTC Summary screen
DTC adds the latest cost estimates for parts and labour for each subsystem, and compares them with the targets. In TeamSET the first 'guess' at the costs can be taken from DFA and MA if no better data is available. Subsequently, more accurate estimates will be added for parts and labour. The subsystem cost estimates are always calculated from the best available data for each component.
