Introduction to Budgets and Planning
Imagine you have a fantastic idea for a new ergonomic chair. You’ve designed it, and it looks amazing. But there’s a catch: if it costs you \(£500\) to make and people are only willing to pay \(£150\), your business won’t last long! This is where budgets, costing, and production planning come in. In this chapter, we explore how designers move from a great idea to a financially viable product by predicting costs and organising resources.
1. Budgets and Financial Forecasts
A budget is essentially a financial plan. It estimates how much money you will spend (expenditure) and how much you expect to make (income) over a specific period. In Product Design, modelling these costs early helps you decide if a project is worth pursuing.
What is a Financial Forecast?
A financial forecast is a "best guess" based on research. It predicts future financial outcomes. Designers use these to convince investors or managers that a product will be profitable. If the forecast shows the product will lose money, the designer might need to change the materials (Topic 1) or the manufacturing process (Topic 3) to save costs.
Quick Tip: Think of a budget as your limit and a forecast as your prediction.
Key Takeaway: Modelling costs allows designers to find the "optimum outcome"—the perfect balance between high quality and low cost.
2. Planning for Production: The Three Pillars
Once the budget is set, you need a plan to actually make the product. Effective planning focuses on three main areas: Employees, Materials, and Scale of Production.
A. Allocation of Employees
Who is going to make the product? Planning involves deciding how many workers are needed and what skills they must have.
• Skilled labour: Necessary for complex tasks or "one-off" production, but costs more per hour.
• Unskilled/Semi-skilled labour: Used for repetitive tasks in high-volume production, usually supported by automation or robotics (Topic 8.3).
B. Allocation of Materials
You must calculate exactly how much material is required to avoid waste and delays.
• Stock forms: Buying materials in standard sizes (like \(2440mm \times 1220mm\) sheets of MDF) helps keep costs down.
• Waste Management: You must account for "off-cuts." If you need 100 pieces, you might need to buy enough material for 110 pieces to cover the percentage waste.
• Formula for Costing: \( \text{Total Cost} = \text{Quantity} \times \text{Unit Cost} \)
C. Scale of Production
The way you plan depends entirely on how many items you are making:
• One-off: Low efficiency, high cost per item, highly skilled staff.
• Batch: Uses jigs and fixtures (Topic 3.2) to ensure consistency.
• High-volume (Mass): High initial cost for machinery, but the cost per item becomes very low.
Key Takeaway: Efficient planning ensures that the right people have the right materials at the right time.
3. Selecting Tools, Machines, and Processes
A major part of costing is choosing how to make the product. This is a trade-off between Time, Quality, and Cost.
Example: Making a prototype vs. 10,000 units
• For a prototype, you might use 3D printing (Rapid Prototyping) because it’s cheap for one item.
• For 10,000 units, you would use Injection Moulding. Even though the "mould" (tooling) costs thousands of pounds, the cost per plastic part might only be \(5p\).
Factors to consider:
1. Accuracy and Precision: Do you need Vernier callipers or Go/No-go gauges (Topic 3.2) to check quality?
2. Speed: Can CNC machinery (Topic 4) speed up the process to meet the budget?
3. Setup Costs: How much does it cost to "re-tool" a machine before production starts?
Key Takeaway: The "appropriate" tool isn't always the most advanced one; it’s the one that fits the scale of production and the budget.
4. Maths Skills: Calculating for Success
In the exam, you may be asked to perform calculations related to costing. Don't worry—just follow the steps!
Example 1: Material Costs
If you need 5 sheets of Oak for a batch of tables, and each sheet costs \(£85\), what is the total cost?
\( \text{Total Cost} = 5 \times 85 = £425 \)
Example 2: Percentage Waste
If you buy \(200kg\) of aluminium but \(20kg\) is cut away as scrap during milling, what is the percentage waste?
\( \text{Percentage Waste} = \left( \frac{\text{Waste}}{\text{Total Material}} \right) \times 100 \)
\( \text{Percentage Waste} = \left( \frac{20}{200} \right) \times 100 = 10\% \)
Example 3: Surface Area and Volume
You may need to calculate the volume of a part to find out how much raw material (like resin or molten metal) to buy.
• Volume of a cylinder: \( V = \pi r^2 h \)
• Volume of a cuboid: \( V = \text{length} \times \text{width} \times \text{height} \)
Common Mistake to Avoid: Always check your units! If the cost is per metre but your drawing is in millimetres, convert them before calculating.
Chapter Summary
• Budgets: The financial boundaries of a project.
• Forecasts: Predicting if the product will make money.
• Allocation: Getting the right mix of Employees, Materials, and Scale.
• Selection: Choosing tools and processes based on cost-efficiency and the number of items being made.
• Maths: Using formulas to accurately predict material needs and total costs.
Note: For more information on managing the timeline of these costs, see the chapter on Project Management (Critical Path Analysis). For details on different production volumes, see Features of Manufacturing Industries.