ACostE Rallying Point Event Cost Engineering – roles & organisations during early product design

Steve Wiseall – Rolls-Royce plc Lucy Bolton & Chris Clegg – Leeds Univ Business School 3 rd Nov 2009 ©2009 Rolls-Royce plc

The 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.

Agenda

 Background and context – Aerospace focus  Leeds University Business School feasibility study  Individual Questionnaire  Open Discussion Questions  Conclusions & next steps  Appendices Rolls-Royce proprietary data

 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) Manages business and technical risk through process 

Stage 0 – Innovation & opportunity selection - ongoing

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Stage 1 – prelim concept design – typically 6 months

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Stage 2 – full concept definition – typically 6 months

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Stage 3 – product realization – ~ 24- 30 months

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

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

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Stage 6 – End of life disposal

Rolls-Royce proprietary data

New Product Introduction Life Cycle Costs Are Locked In Early

100% 75% 50% 25% 0% 95% Committed Cost 70% 85%

Significant opportunity to influence cost outcome

Conceptual Design 7% 1% Preliminary Design Knowledge of the Design Detail Design 18% 50% Incurred Cost Production Product Use TIME Rolls-Royce proprietary data

Cost of Correction vs. Time of Detection

10,000 1,000 100 10 1 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… Rolls-Royce proprietary data

Project organisation

NPI Fleet Future Programmes Dedicated Engine Project team – NPI, Fleet Operations

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Chief Cost Engineer, Chief Cost Engineer (eg Trent XWB) (Civil - Future Programmes)

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Sub-system and component preliminary to detail design

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Business case iteration (NPI)

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

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Design to Target Cost

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High fidelity cost models

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Business cost targets (system - engine)

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

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Concept down selection – stage 1

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

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

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

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Supply chain increasingly decided through Stage 2 onwards

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Major partners may not be fully decided

Rolls-Royce proprietary data

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 proprietary data

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’

Rolls-Royce proprietary data

Adopted Socio-Technical view of Cost Methods capability development

Process People / Organ 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.

Information

Rolls-Royce proprietary data

Tools & Methods

Leeds University Business School, (LUBS) Feasibility Study

(six months) Objectives

 To 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 Rolls-Royce proprietary data

LUBS - Project status

Six month feasibility study 2009

Approach

 Internal structured interviews  External structured interviews 

ACostE event

– Questionnaire & round table discussion  Analysis of data 2010

Deliverables

 Scenarios planning workshop  Reports – RR internal/external 

ACostE report

 Two year programme plan Two year programme 2011  Comprehensive study  Training, trials and workshops 2012 Rolls-Royce proprietary data

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.

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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 Rolls-Royce proprietary data

“Cost needs to be more of a priority”

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“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?”

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

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“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.”

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

Rolls-Royce proprietary data DRAFT

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

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

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

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“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.”

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

Rolls-Royce proprietary data

LUBS Questionnaire – 18 questions

Rolls 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.

In your company, to what extent:

(Please circle your answer)

1. Are current cost processes effective? 2. Could these cost processes be improved? 3. Are existing cost roles organised effectively? 4. Could the current organisation of cost roles and responsibilities be improved? 5. Are current cost tools effective? 6. Could these cost tools be improved? 7. How effective is the current arrangement of the organisation? 8. Could this organisational design be improved? 9. Are your expectations met regarding the current cost system? 10. Is cost information managed effectively across different functions/areas? 11. Is there innovation in the area of Cost Engineering? 12. Is innovation within Cost Engineering a genuine priority? 13. How effective is the current metrics system with regard to unit cost? 14. Could the current unit cost metrics system be improved? 15. Is the overall cost system effective? 16. Is there a culture that is supportive of change in the area of cost? 17. Would employees resist new change initiatives for the cost system? 18. Would new behaviours be sustained following a change initiative in Cost Engineering? 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 Rolls-Royce proprietary data

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.

Rolls-Royce proprietary data

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 Rolls-Royce proprietary data

Appendix

Rolls-Royce proprietary data

Cost Methods group - positioning

Engine Systems & Services Director: Mike Goulette Electrical Systems Head: Phil Cartwright Materials & Mechanical Behaviour Director: Mike Hicks Design Systems Engineering Heads: Ian Martindale Computer Aided Engineering Head: John Cooper Business Management Head: Mark Halliwell Rob Macalman Team Leader – Cost Modelling Martin Rhodes Head of Cost Methods Steve Wiseall Team Leader - Cost Methods Strategy Simon Muschamp Chief Cost Engineer – Future Programmes Processes & Systems Director: Frank Litchfield Dave Reuss Development Specialist 8 RROIPL Engineers 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

Rolls-Royce proprietary data

Model development approach

Stakeholder Requirements capture and analysis MoM Information capture at Op level by commodity house style type including op level scaling rules

ME - engagement high ME - engagement medium

Validate information capture and search ability Develop, build and trial cost model Verify, validate and Document cost model Use model Further model trials including link with WECM Maintain model Publish model

Rolls-Royce proprietary data

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

Components Units Assemblies

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

Web View & Reporting Tree View Uncertainty Handling - Monte Carlo Simulation Cost Drivers - Sensitivity Analysis

 Key cost tool for Chief Cost Engineer - XWB programme 

Key features of the product

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Visual hierarchical structure

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Object-Oriented – library re-use

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Risk Analysis capability

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Sensitivity

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Traceability – units, metadata

Rolls-Royce proprietary data

Analysis should include Cost in Design Optimisation

Analysis Geometry KBE Taguchi

EWH42 EWH62 EWH12 EWH21 EWH32 EWH30 EWH10 EWH22 EWH60 EWH11 EWH31 EWH20 EWH61 EWH41 EWH52 EWH51 EWH40 EWH50 0 0.02

0.04

0.06

Sum of squares

0.08

0.1

0.12

0.14

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

Rolls-Royce proprietary data