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Cost Avoidance

A $600 investment can save you 6 figures of cost!

If the typical internal billing rate for engineering is $75 per hour, then $600 is 8 hours. This translates into 2 people working 4 hours, 3 people working 2.5+ hours, or 4 people working 2 hours. Each of these three scenarios is a possible design review activity depending on the company and type of review.

Any one single error, if caught late into the product launch, can easily generate a six figure cost to fix it. Worse yet, the pressure to fix the problem is intense as the fix can't be done soon enough. If there is not a single big error, there are often 25-100 smaller change orders on products prior to their release and often an additional 25-100 change orders after the product is released. These smaller change orders add up to six figures as well. The cheapest engineering changes, typically found in software-only environments, average $1500 per approved change order. The typical low-end range of engineering changes in mixed-design environments, average $2000-3000 per approved change order. A high-end figure, common to complex products and regulated industries, average $10,000-$12,000 per approved change order.

It seems like we can and do always find the time to "run after" a product that is found to have problems. We do this under time and resource pressure, under management pressure, and too often under the scrutinizing eyes of customers. Why then is it so difficult to find the time in a more proactive manner to attempt to eliminate these high stress business activities?



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