Technical-economic cost modeling as a technology management tool

Abstract

Purpose – The purpose of this paper is to show how technical-economical cost modeling can help in steering research and development to target key production cost elements of new products based on emerging technologies. Design/methodology/approach – The authors demonstrate the development and use of a technical-economic cost model (TCM) of the proton exchange membrane (PEM) in fuel cells to steer research to produce more economical and reliable products. A TCM is developed to depict how the production cost per unit varies depending on the different fabrication methods, production rate limitations, material selection, labor distribution, energy consumption, financial parameters and the target production volume. By using such an approach in the design, research time and resources can be saved by prioritizing R&D and production scale-up options at an early stage. Findings – The results of this study show the importance of applying technical-economic cost model (TCM) techniques on early stage research projects to steer the development for resolving key problematic figures. As a case study, a cost analysis platform has been established to apply this technique by analyzing different manufacturing and R&D options for producing durable PEM fuel cells. The projected manufacturing cost of the PEM is found to be lower than previously estimated and the enhanced durability does not significantly impact this production cost. Originality/value – Production is an important factor in informing NPD targets and R&D direction. And yet it is difficult to estimate scaled up production cost for prototype products and components in the R&D lab. Technical-economic cost models (TCM) are a tool to assist decision-making in technology portfolio management and NPD.