PD-Trak™ Financial Justification Worksheet

The Financial Justification Worksheet is used to develop the business case for undertaking the development of a new product. The Worksheet is used to determine the new product's financial return by estimating selling price, volume, manufacturing cost, profit and overall return factor.

The starting point is determining the market-driven target price or price-to-win based on voice of the customer investigation and competitive analysis. The target cost is derived from the Target Cost Calculation Worksheet or a cost buildup is developed directly on this worksheet or from the bill of materials. A sales forecast of up to ten years for the base product and any derivative products or options is used to calculate program profit. This forecast can be developed based on the estimated market share of an overall market forecast or as forecast of the company sales of the proposed product.

Project development expense, determined on the Budget and Schedule Worksheet, is used to calculate net program profit, a return factor, the break even after release (BEAR) period, net present value (NPV), internal rate of return (IIR), and the development productivity index (DPI). Other worksheets used by the company can be integrated into this business case calculation.

The calculations can be expanded to show the detail.

Terminology can be changed and the worksheet sections can be flexibly used to address different cost elements related to services and software (e.g., license fees, annual maintenance costs, software installation services.

A user-selectable and customizable subset summary financial data is automatically transferred to the Financial Goals and Metrics section of the Project Brief.

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