Decision-making and cost deviation in new product development projects

Abstract

PurposeEmphasizing the importance of product cost deviation; the purpose of this paper is to contribute to the new product development (NPD) literature and research on decision making by discussing: How are decisions related to product cost deviations made during a product development project?Design/methodology/approachAn in-depth single case study approach studying the decision-making process of Volvo Cars Cooperation during a car development project is applied.FindingsThe paper suggests that factors influencing how decisions related to cost deviations are made during a NPD are not limited to the classic trade-offs among time, cost and scope, but include managers’ complex cause-and-effect analysis under the influence of values, behaviors and norms. Furthermore, the context is not limited to NPD projects; rather the frame for the decisions and its influencers is at least as wide as the corporate context.Research limitations/implicationsThe common limitations of a single case study apply.Practical implicationsThe study emphasizes the importance of clearly defined targets during a NPD project that need to well communicated, acknowledged and understood by all involved to serve as true business levers. A poor target is likely better than no target. Furthermore, lack of overview or responsibility for the success of the projects, increase the risk for sub-optimization and silo thinking.Originality/valueThe study is pioneering by highlighting the importance of and explaining the implications of decision making related to cost deviations during a NPD project.