Under CopyrightSchmid, K.K.Schmid2022-03-0703.09.20032003https://publica.fraunhofer.de/handle/publica/29182610.24406/publica-fhg-291826Product family development focusses on systematically developing reusable assets over time that are used in later projects to achieve benefits in terms of development effort, time-to-market reduction, and quality improvement. Consequently, the costs from the initial development for reuse are more than compensated by the derived benefits. The initial costs of development for reuse thus take the role of an investment in later product line benefits [CN01]. Therefore it is key to successful product family engineering to identify costs and benefits that are associated with product family development. This provides the basis for the subsequent optimization of the investment. In this deliverable we focus on the relationship between costs and benefits and show the implications and constraints on the associated investment decisions. We present a basic economic model, which provides the necessary background for understanding the impact of investments in a product family. This model enables a systematic analysis of the product family situation and any consequences of product line investments. A key part of any investment decisions is to define the cost implications of these decisions. Unfortunately, there is no fixed model of product family development and consequently also no fixed model of product family development costs. Thus, we provide a reference model for product family costs in this deliverable together with a collection of the most important cost drivers that we could identify through expert interviews. This will support the organizations in systematically deriving product family cost models that are particularly adapted to their situation. In order to consistently and successfully evolve the product family infrastructure a strategy driven from a market point of view is required [KLD02]. This strategy is needed in order to decide on the appropriateness of an investment and to do so consistently over time. Thus product family strategy should be the basis for any product family investment. In this deliverable we show approaches to derive such a product family strategy and combine it with the most advanced techniques for evaluating the potential benefits of the product family even when facing considerable uncertainties. As a result, this deliverable provides a basis for analyzing costs and benefits of product family development and enables to connect these aspects through an appropriate strategy that is optimally aligned with the existing product family and the company objectives.Table of Contents S.vii-viii 1 Introduction S.1-2 2 An Economic Model for Product Lines S.3-23 - 2.1 Types of product line business S.3-6 - 2.2 An Economic Framework for Product Lines S.6-23 - 2.2.1 Product Line Economics Model S.6-17 - 2.2.2 Applying The Model S.17-19 - 2.2.3 An Illustrative Example S.19-20 - 2.2.4 Relation to other Models S.20-23 3 Defining Investment Strategies S.24-36 - 3.1 Classifications of Strategies S.24-27 - 3.2 Overview of Approaches to Strategy Definition S.28-29 - 3.3 Qualitative Approaches to Strategy Definition S.29-33 - 3.3.1 Portfolio Approaches S.29-32 - 3.3.2 Quality Function Deployment S.33 - 3.4 Quantitative Approaches to Strategy Definition S.33-36 - 3.4.1 Defining the Key Dimensions of A Product Line Strategy S.33-35 - 3.4.2 Optimizing the Return On Investment from a Product Line Portfolio S.35-36 4 Refinement and Control of Investment Strategies S.37-51 - 4.1 Measuring Strategic Success S.37-38 - 4.2 Controlling Product Line Results S.38-45 - 4.2.1 Decomposing Qualities S.40 - 4.2.2 Product Line Development Situations S.40-45 - 4.2.3 Cost Modelling S.45 - 4.3 A Framework for Strategy Control and Implementation S.45-51 - 4.3.1 Refinement of the Product Line Strategy S.46-49 - 4.3.2 Operationalization of the Strategy S.49-51 5 Evaluating the Future S.52-65 - 5.1 Overview of Approaches S.52-53 - 5.2 Decision Tree Analysis S.53-55 - 5.2.1 The Concepts of Decision Tree Analysis S.53-54 - 5.2.2 Applying Decision Tree Analysis to Product Line Strategies S.54-55 - 5.3 Options S.56-63 - 5.3.1 A Brief Overview of Options S.56-57 - 5.3.2 Options in a Product Line Situation S.57-59 - 5.3.3 The Option Formula S.59-61 - 5.3.4 Combining Options and Decision Trees S.61-62 - 5.3.5 Product Line Options from a Market Perspective S.63 - 5.4 Consequences of Option Creation for Strategy Implementation S.63-65 6 Conclusions S.66-81 - A Bibliography S.67-72 - B Identification of Quality Drivers S.73-81 - B.1 General Cost Factors S.73-74 - B.2 Adaptive Reuse Cost Drivers S.74-77 - B.3 Cost Drivers for Reusing S.78 - B.4 Cost Drivers for Development for Reuse S.78-81enITEA004005006report