Budgeting Basics and Beyond

11.2. R&D Planning

In R&D, individual projects have to be planned, appraised, and controlled. Any project limitations have to be noted. These items should be considered:

• Progress of research efforts

• New and better products developed over the last 10 years

• The percentage of new products to total sales

• Average time required to proceed from the initial research stage (e.g., laboratory) to commercial production

• Cost/benefit of research

• Relationship between research and sales; comparison should be made to success of competition in research (e.g., industry norms)

Exhibit 11.1 depicts the product life cycle.