The limited informativeness of resource discrepancy feedback to designers

Abstract

Investigates the feedback to product designers of engineering and production costs in five industrial equipment firms. Reports that, despite the ubiquity of cost as an important design criterion, and the role that feedback should play in both individual and organizational learning, there were several significant problems: (1) Cost feedback was given as the difference between outcome and estimate in order to remove the effect of external factors, but this feedback then confounded the performance of estimation and design activities. (2) Distributional information in historical cost feedback was usually overlooked. The result was an excessive attention to detailed planning, consistent under‐estimation, and persistently negative feedback. (3) Designers and supervisors disagreed about the predictability of costs. Supervisors drew stronger inferences from feedback because they believed particular outcomes were more representative. (4) Engineering cost outcomes had poor reliability owing to the incentives to smooth cost discrepancies over different elements of the design; as a result it was unclear which were the problematic elements and opportunities were lost for calibrating the estimating process. This calibration also suffered from cost measurements being made at a higher level of aggregation than cost estimates. (5) The considerable delays between making design decisions and observing cost outcomes made it hard to learn cost‐effective design strategies through experience. There were instances where designers simply never found out how much it cost to engineer and produce their designs.

A Cost Estimation Tool Integrated into FIPER

“…Despite the importance of the design details to product cost, a recent study found the delay between the design decision and cost determination hindered the designer's ability to learn about the process implications of design decisions [2]. In addition, the consequences of the costly decisions were often not fed back to designers at all [2].…”