ACostE Rallying Point Event

©2009 Rolls-Royce plcThe information in this document is the property of Rolls-Royce plc and may not be copied or communicated to a third party, or used for any purpose other than that for which it is supplied without the express written consent of Rolls-Royce plc.This information is given in good faith based upon the latest information available to Rolls-Royce plc, no warranty or representation is given concerning such information, which must not be taken as establishing any contractual or other commitment binding upon Rolls-Royce plc or any of its subsidiary or associated companies.

ACostE Rallying Point Event

Steve Wiseall – Rolls-Royce plc

Lucy Bolton & Chris Clegg – Leeds Univ Business School3rd Nov 2009

Cost Engineering – roles & organisations during early product design

Rolls-Royce proprietary data

Agenda

Background and context – Aerospace focus

Leeds University Business School feasibility study

Individual Questionnaire

Open Discussion Questions

Conclusions & next steps

Appendices


Many companies that develop complex products utilise a gated New Product Introduction process, (NPI)

In Rolls-Royce this is called the Product and Introduction and LifeCycle Management process, (PILM)

Stage 0 – Innovation & opportunity selection - ongoing

Stage 1 – prelim concept design – typically 6 months

Stage 2 – full concept definition – typically 6 months

Stage 3 – product realization – ~ 24- 30 months

Stage 4 – Production & in-service support ~ 20- 30 years

Stage 5 - Continuing in-service support ~ 10- 20 years

Stage 6 – End of life disposal

Manages business and technical risk through process


New Product Introduction

TIME

100%

75%

50%

25%

0%

CU

MU

LA

TIV

E L

IFE

CY

CL

E C

OS

T

ConceptualDesign

PreliminaryDesign

DetailDesign

Production ProductUse

CommittedCost

Knowledge ofthe Design

IncurredCost

70%

85%95%

7%18%

50%

1%

Life Cycle Costs Are Locked In Early

Significant opportunity to influence cost

outcome


Cost of Correction vs. Time of Detection

1

10

100

1,000

10,000

Concept Design Development Production In-Service

Cost outcomes are determined at early stages of NPI process

X10 rule – problems discovered late in the process are expensive to fix

Significant opportunity to influence cost is associated with early stages of design – architecture selection, concept down selection…


Chief Cost Engineer, (Civil - Future Programmes)Business case iteration

Long range Forecasting, timescales for realisation may be up to 20-30 years

Business cost targets (system - engine)

Short/medium/ long term concept studies, many paper engine studies

Concept down selection – stage 1

It’s about good decision making and de-risking NOT final design

Major partners may not be fully decided

Future Programmes Dedicated Engine Project team – NPI, Fleet Operations

Chief Cost Engineer (eg Trent XWB)Sub-system and component preliminary to detail design (NPI)

Design to Target Cost

High fidelity cost models

Cost model integration into design systems to improve balance of design, cost as a design attribute

Integrated Project Team, (IPT) operation & product definition decision making

Supply chain increasingly decided through Stage 2 onwards

Project organisation

NPI Fleet


In the early stages of design:Significant opportunity to influence cost, associated with – architecture selection, concept down selection…

Can the concept definition meet the business case cost targets ? – requires a prediction of absolute cost in the future

Architectural choices and concept down selection is the design focus - requires prediction of relative cost differences between concept options, may not require absolute cost ?

Further opportunity at PILM stage 2/3 at component level to support IPT operation to get a better ‘balanced design’ where cost is considered concurrently as a tradeable attribute not a consequence of the design.

New - Cost Methods group formed to help develop and embed the capability to answer these questions and support the application of the capability


Rolls-Royce COST ENGINEERING

VISION

‘To embed cost engineering processes, skills and tools into the organisation such that unit cost is understood and ‘ traded’ enabling optimum business solutions (product and supply chain) to be designed concurrently in a timely and efficient manner’


People / Organ

Process

Information Tools & Methods

Adopted Socio-Technical view of Cost Methods capability development

Engineers tend to focus on the technological part - Tools and Methods

Lessons learnt from IT implementation benchmarking studies and internal RR studies show that to embed changes in a broad way requires an increased emphasis on: organisational design, people, training, skills, roles, support.


Leeds University Business School, (LUBS) Feasibility Study (six months)

ObjectivesTo gather initial data & information from identified stakeholders on the “As-Is” Cost Engineering environment in Rolls-Royce, (covering processes, tools, roles, organisation, expectations and flow of information)

To benchmark other identified organisations (in the same topic areas)

To feedback and analyse the information and identify areas for improvement

To utilise the outcome of the feasibility study to develop a more comprehensive change programme in 2010/2011


Six month feasibility study 2009

Two year programme

2010 2011 2012

Approach

Internal structured interviews

External structured interviews

ACostE event – Questionnaire & round table discussion

Analysis of data

Deliverables Scenarios planning workshop Reports – RR internal/externalACostE reportTwo year programme plan

Comprehensive study

Training, trials and workshops

LUBS - Project status


Input to the benchmarking process today…

Audience engagement by inputting your thoughts and ideas on the roles and organisation of Cost Engineering in early product design from within your organisation.

Data collection via two routes: round table discussion and feedback + anonymous questionnaire

These data will be collated & analysed, the proposal is to provide a report that would be published to the ACostE website.

If interested further, please let us know if you want to be engaged in the planned two-year year follow-on benchmark study. Please leave contact details


“Cost needs to be more of a priority”

“There are a lot of people in the organisation with ‘cost’ in their titles who are not actually responsible for cost - So who is accountable?”

“It is a struggle working over different functions and cost is always between these things as there is no ownership.”

“Most people are just not interested in cost and don’t think about it until they are told that a project is not affordable!”It’s really important to have people thinking about cost upfront.”

“A cultural problem; we need to change people’s views of cost.”

DRAFT


“We need to have one heartbeat running through the organisation when it comes to Cost Engineering”

“A management push is required; everyone should consider cost whether you are a Cost Engineer or not.”

“There are plenty of good costing tools out there, it’s about getting the people and methods in place.”

“From a people point of view we need to be clear who the owners of the cost are and give them the skills to manage it.”

“It would be really powerful if Cost Engineers worked as a single community, yet still recognising that they have different types of customers.”


LUBS Questionnaire – 18 questionsRolls Royce Cost Engineering Change Programme Questionnaire

Please work through the following checklist of questions quickly giving your views of current cost systems and metrics within your organisation.

1 =

Not

at

all

2 =

A litt

le

3 =

A m

oder

ate

amou

nt

4 =

Qui

te a

lo

t

5 =

A gr

eat

deal

6 =

Tota

lly

7 =

Not

ap

plic

able

8 =

Don

’t kn

ow

In your company, to what extent: (Please circle your answer)

1. Are current cost processes effective? 1 2 3 4 5 6 7 8

2. Could these cost processes be improved? 1 2 3 4 5 6 7 8

3. Are existing cost roles organised effectively? 1 2 3 4 5 6 7 8

4. Could the current organisation of cost roles and responsibilities be improved? 1 2 3 4 5 6 7 8

5. Are current cost tools effective? 1 2 3 4 5 6 7 8

6. Could these cost tools be improved? 1 2 3 4 5 6 7 8

7. How effective is the current arrangement of the organisation? 1 2 3 4 5 6 7 8

8. Could this organisational design be improved? 1 2 3 4 5 6 7 8

9. Are your expectations met regarding the current cost system? 1 2 3 4 5 6 7 8

10. Is cost information managed effectively across different functions/areas? 1 2 3 4 5 6 7 8

11. Is there innovation in the area of Cost Engineering? 1 2 3 4 5 6 7 8

12. Is innovation within Cost Engineering a genuine priority? 1 2 3 4 5 6 7 8

13. How effective is the current metrics system with regard to unit cost? 1 2 3 4 5 6 7 8

14. Could the current unit cost metrics system be improved? 1 2 3 4 5 6 7 8

15. Is the overall cost system effective? 1 2 3 4 5 6 7 8

16. Is there a culture that is supportive of change in the area of cost? 1 2 3 4 5 6 7 8

17. Would employees resist new change initiatives for the cost system? 1 2 3 4 5 6 7 8

18. Would new behaviours be sustained following a change initiative in Cost Engineering? 1 2 3 4 5 6 7 8


Key Questions for Round Table Discussions

1. Based on experiences in your professional career, what have been the biggest barriers and enablers in embedding and achieving a cost-aware culture?

2. Please produce a list of the top five barriers and top five enablers to feedback to the group.


Conclusions & next steps

Individual questionnaire responses and round table feedback will be analysed, a report generated and made available to attendees via ACostE

Proposal that the report will be published on ACostE website under the Engineering & Manufacturing sub-committee

Further engagement opportunity in 2010/2011 in benchmarking project with Rolls-Royce & Leeds University Business School


Appendix


Cost Methods group - positioningEngine Systems & Services

Director: Mike Goulette

Electrical Systems

Head: Phil Cartwright

Materials & Mechanical Behaviour

Director: Mike Hicks

Computer Aided Engineering

Head: John Cooper

Design Systems Engineering

Heads: Ian Martindale

Business Management

Head: Mark Halliwell

Processes & Systems

Director: Frank Litchfield

Martin Rhodes

Head of Cost Methods

Steve Wiseall

Team Leader - Cost Methods Strategy

Simon Muschamp

Chief Cost Engineer –Future Programmes

Rob Macalman

Team Leader – Cost Modelling

Dave Reuss

Development Specialist

Sree Tammineni

Methods development - Whole Engine, level 3

Component, Key Systems integration

Southampton UTC Computational Eng

Julie Cheung – Eng D

Stuart Jinks – Eng D

Stephan Langmaak – Eng D

Jay Meas - PhD

Redolpho Rito - PhD

8 RROIPL Engineers


Stakeholder Requirements

capture and analysis

MoM Information capture at Op level by commodity house style type including op level scaling rules

Validate information capture and search ability

Develop, build and trial cost model

Verify, validate and Document cost model

Further model trials including link with WECM

Publish model Use model Maintain model

ME - engagement high

ME - engagement mediumModel development approach


Vanguard Cost Modelling System, (VCMS)

Vanguard studio investment after DATUM capability acquisition project – ‘go live’ date Oct 08

Supports cost knowledge capture, re-use and design iteration & what-if evaluations

Cost models considered in the same way as other analytical models e.g. stress, aerodynamics – vision for MDO

Key cost tool for Chief Cost Engineer - XWB programme

Key features of the productVisual hierarchical structure

Object-Oriented – library re-use

Risk Analysis capability

Sensitivity

Traceability – units, metadata

Tree View

Units

Assemblies

Cost Drivers - Sensitivity Analysis

Uncertainty Handling - Monte Carlo Simulation

Web View & Reporting

Components


Initial optimisation applications

Subsequent optimisation applications

0.0

2.0

4.0

6.0

8.0

10.0

Rel

ativ

e m

atu

rity

ind

ex

Initial optimisation applications

Subsequent optimisation applications

0.0

2.0

4.0

6.0

8.0

10.0

Rel

ativ

e m

atu

rity

ind

ex

0.0

2.0

4.0

6.0

8.0

10.0

Rel

ativ

e m

atu

rity

ind

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Geometry

KBE

Analysis

Optimisation Framework tool

0 0.02 0.04 0.06 0.08 0.1 0.12 0.14

EWH50

EWH40

EWH51

EWH52

EWH41

EWH61

EWH20

EWH31

EWH11

EWH60

EWH22

EWH10

EWH30

EWH32

EWH21

EWH12

EWH62

EWH42

Sum of squares

Move credibility of cost models up maturity / credibility axis to enable MDO/Robust Design with cost included in the trade study

Analysis should include Cost in Design Optimisation

Documents

ACostE Rallying Point Event