Costing commonality: Investigating the impact of platform divergence

Commonality strategies have become an important means of cost-sharing across systems, particularly in long lifecycle aerospace applications such as the Joint Strike Fighter. However, decreases in realized commonality (divergence) have important implications for the cost-sharing effects of commonality. We review the results of a recent study at the Massachusetts Institute of Technology (MIT) of 16 firms and 8 Government organization, which was chartered to evaluate the costing of commonality benefits. We conclude that the size of commonality investments has been underestimated - our data reveal the cost of developing common systems is 12%-50% above the unique design cost. We find evidence to suggest that divergence has cost consequences, notability creating higher quality expenses and requiring additional manufacturing coordination. We examine in detail the potential use of development cost allocation as a management practice for incentivizing commonality. We show that lead variants bearing platform costs achieved weaker investment returns and re-captured few benefits from later variants. We propose a framework for evaluating the consequences of each cost allocation, which explicitly captures the impact of individual variant decisions on the platform's cost structure, building on existing work used in decision-making in the Joint Strike Fighter program. We conclude with management guidance gathered from the case studies for reinforcing commonality incentives.