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Managing affordability in concept development of complex product systems (CoPS)

ABSTRACT This study originates in a recognised unsustainable cost escalation for complex defence equipment. In order to understand how such cost escalation for complex product systems (CoPS) can be avoided, this study comparatively explores four different industrial sectors – energy, transportation, healthcare and defence – with and without intergenerational increasing costs, represented by four international companies. The results, collected from studying the development of one of each company’s products, reveal some characteristic differences in market factors between those sectors and companies having problems with intergenerational escalating costs and customer affordability, as compared to other sectors and companies. It is suggested that dependent on market characteristics, it might be necessary to actively manage affordability when CoPS are developed. Efforts made by the companies to make products more affordable were identified, and several factors enabling and disabling the development of less costly products without compromising customer needs were explored. Further, the implications of affordability management in a CoPS setting are elaborated on.