Managing the costs of new product development projects: a longitudinal case study at an automotive company

The overarching research topic of this dissertation is the management of the costs of new product development projects. New product development (hereinafter NPD) is essential for most companies, as the introduction of innovative products is crucial for their long-term success. Due to the high level of uncertainty that comes with the innovative process of product development, the management of NPD costs is a highly challenging task. We illuminate the field of NPD cost management from two perspectives, which represent our research topics.

The first research topic of this thesis is the estimation of NPD costs. NPD costs are costs triggered by the activities that companies pursue to technically develop new products (i.e., labor costs of engineers, project managers, designers, and quality assessors, costs for tools and software required in NPD, costs of material and components required for testing and prototyping, and NPD-related overhead costs). Many authors have presented methods for product cost estimation in general, mostly focusing on overall product costs or direct material costs. Limited research is available about the estimation of the specific cost type of NPD costs. ... mehrWe conduct three studies to contribute to this gap. First, we give an overview of the status quo regarding NPD cost estimation. We do this by conducting a systematic literature review on methods for this purpose. Second, we develop and present the NPD cost benchmarking method. With this method, which
is mostly built on external data, we add a new approach to the literature on NPD cost estimation methods.
As third study in the context of NPD cost estimation, we present a case study in which we provide detailed, empirical insights on the challenges in NPD cost estimation, and on the application of the NPD cost benchmarking method in particular.

The second research topic of this thesis concerns decision-making processes during NPD projects.
In this uncertain and dynamic environment, decision-makers often rely on heuristics to choose between alternative options for responding to unpredicted developments during NPD projects (for example, changes in market demands, technical challenges, or new information about competitors). Empirical insights are mostly missing about how such decisions are made. Our fourth study provides insights on the use of heuristics
in ongoing NPD project managerial decision-making by conceptualizing and empirically testing the within-project NPD cost compensation heuristic.

This dissertation was supervised by Prof. Dr. Marc Wouters from KIT’s chair of Management Accounting at the Institute of Management. It is written in English language and the author aims to obtain the title of Dr. rer. pol.