Cost of development

The wells provide the conduit for production from the reservoir to the surface, and are therefore the key link between the reservoir and surface facilities. The type and number of wells required for development will dictate the drilling facilities needed, and the operating pressures of the wells will influence the design of the production facilities. The application of horizontal or multi-lateral wells may where appropriate greatly reduce the number of wells required, which in time will have an impact on the cost of development. 

The cost of developing a new active ingredient, however, is much more cosdy than the basic costs involved in toxicology studies, as shown in Table 3, and is likely to be 35 X 10 (13). 

Any major materials development programme, such as that on the eutectic superalloys, can only be undertaken if a successful outcome would be cost effective. As Fig. 20.10 shows, the costs of development can be colossal. Even before a new material is out of the laboratory, 5 to 10 million pounds (8 to 15 million dollars) can have been spent, and failure in an engine test can be expensive. Because the performance of a new alloy cannot finally be verified until it has been extensively flight-tested, at each stage of development risk decisions have to be taken whether to press ahead, or cut losses and abandon the programme. 

Your general aim should be to improve product quality, increase productivity, and reduce the cost of development and manufacture. However, productivity is not easy to measure with multiple products on multiple lines, each at a different stage of maturity. This makes comparisons to detect changes in productivity difficult, if not impossible. However there may be factors common to all product lines, such as labor costs. Merely outsourcing manufacture to developing countries may not improve your productivity. The labor costs may reduce but rework and warranty claims increase. Productivity is only improved if product quality has been maintained. Certain processes may also be common to more than one product line and hence improving productivity of common processes can have wide-ranging impact. 

Producers of electricity from nuclear power plants are assessed a fee of 0.1 cent per kilowatt-hour to pay for future storage of spent nuclear fuel at a federal facility. Receipts from this fee are allocated to the Nuclear Waste Trust Fund and arc appropriated by Congress to cover the costs of developing and constructing a permanent storage facility. 

An overall economic evaluation must be made to ensure that the contemplated project for petroleum development will recover sufficient capital to pay for the total cost of development, installation and assembly effort of the company. Further, the capital return must yield a financial return consistent with the overall company risk involved. Thus, it is very important that the petroleum engineer designing a recovery system understand the company s evaluation criteria that will be used by management in judging whether a new project is to go forward. Chapter 7 (Petroleum Economics) has detailed discussions of general engineering economics and product (or project) evaluation criteria. 

Establishing a budget is simpler in a testing laboratory. When the cost of a certain analysis is calculated, however, some items are often overlooked. Of course, it will include man-hours needed. If an instrument is used, the cost of its amortization and maintenance must be figured. If the analysis is non-standard, there is the cost of developing the proper method. The cost of... 

The need to improve the efficiency of the discovery and development process is reflected most visibly by the high cost of developing new drugs and the pace at which those costs have outstripped inflation. Between 1987 and 2001, the cost of developing a single new drug increased from 138 million to 802... 

Integration of disparate systems involves a lot of infrastructure support communication, coordinating distributed transactions, load distribution, and shared resource management. The costs of developing infrastructure components of high quality would dominate a typical large business project compared with that of the actual business logic involved. 

The cost of developing a new chemical will not be spread over the manufacturer s product line. As a general rule, no company will intentionally begin a venture unless it believes that the venture will recover its investment and make a profit. If a manufacturer does not believe that the product will generate an acceptable return on investment, the company will invest its funds elsewhere. Any other approach would be uneconomic and would eventually harm the company. 

The move to fuel cells may not be pushed by declining oil supplies. The cost of developing new oil discoveries continues to fall and we may not see a forced drop in productivity. It was thought that there was 1.5 billion barrels of oil in the North Sea, but now there appears to be 6 billion barrels. We may not begin to reach the physical limits of oil production until mid-century. Supplies could tighten quickly from natural or manmade disasters and recent price rises are driven by increasing worldwide demands. Older oil fields are being pursued to meet this demand, but full development is expected to take years. 

While the market for intense sweeteners is substantial it seems questionable whether a newcomer could expand the total market size instead of cannibalising markets of existing sweeteners. Similar considerations apply for bulk sweeteners with their specific fields of applications and higher cost than carbohydrates. Any new development would have to compete with the established sweeteners and new products would have to earn the substantial cost of development first which would be very difficult. It seems therefore unlikely that more than very few new developments, if any more than those mentioned before, will be seen in the foreseeable future. 

The cost of developing and producing certified reference materials, especially matrix materials, is high. Researchers should realize, however, that in most cases the true cost of a certified reference material is never fully charged to the customer. For example, the costs of the research required to demonstrate the feasibility of producing a certified reference material are usually not incorporated into the final cost. As a result, a commercial organization may never want to undertake this initial research, since profits would often not be realized. 

Drug development in the United States is both risky and expensive. The cost of developing a drug introduced in 1990 was approximately 500 million. During the past decade, the research and development (R D) costs of the pharmaceuhcal industry have doubled from approximately 12% of sales to 21%. Interestingly, the average number of clinical trials required for a New Dmg Applicahon (NDA) has also doubled in the last decade to 68 per NDA. 

Landers, R, Cost of developing a new drug increases to about 1.7 billion. Wall Street., December 8, 2003. 

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