Ensuring that wireless systems satisfy engineering requirements and meet budgetary constraints is a challenge even the best in the business contend with. Our team works to provide clients with quality information that cuts through the technical fog and makes sure our clients are spending money in the right places.
Providing project advice is not simply an academic decision based on a fixed set of parameters and it often involves developing a complex hybrid of evaluating criteria unique to the project including factors such as: product performance, quality and reliability, associated risks, delivery to schedule, capitalised cost, cost to benefit vs alternate option, etc. Our Project Management team is comprised of a small number industry experts with personal experience in both engineering and finance.
R-Spectrum are available to lead a diverse range of RF projects, including on-site projects in mining and industrial automation, through to research and design, and commercial analyses.
Conducting project supply chain analysis relieves the complexity involved in the vendor selection process. The following is a simplified example of how just two select factors (cost + performance) overlap and combine. For this scenario, we assume that we have tested and certified that the performance of the equipment matches what is claimed on the manufacturer’s datasheet, a crucial first step to ensure like-for-like comparisons.
What products, suitable for this application, will provide the client with the best performance for the financial outlay?
This can be answered by displaying a product’s performance compared against the item’s total lifecycle cost and then plotted alongside alternate options. With enough data points, what is developed is an efficient frontier charting the position of different products relative to each other and establishing a distinct curve as shown. The frontier that emerges indicates products that provide the best performance and most efficient investment.
Selected equipment should sit somewhere on the efficient frontier. It can be seen here that for the exact same financial outlay as product X, product Y will deliver far superior performance.
What product best suits the client’s budgetary constraints?
If product selection was based on performance alone this constraint would not exist as the client would simply procure the products with best performance regardless of the price. However, with the knowledge that a product is sitting on the efficient frontier, financial limitations still dictate that it must be evaluated against the project’s budget. In this circumstance, a modified version of diminishing returns can be applied. Performance is not linear to cost, compare Y and Z, although both meet the application’s minimum performance requirements the significantly greater cost of Z for only slightly better performance than Y is hard to justify.
Although product performance continues to improve as more is invested into the product, performance gains reduce with each successive iteration. Larger improvements are easier and cheaper when starting with a simple product and become harder and more expensive to achieve as it becomes more developed. What must be determined is what the practical amount to invest in a product is before incurring an unnecessarily high capex.
What can be taken from the above is that a balance must be struck between the engineering department (application specific requirements) and the finance department (budgetary constraints) by selecting the best performing product in its class at the best cost per unit.