The construction and operation of a pilot plant is a part of R&D as long as the principal purposes are to obtain experience and to compile engineering and other data to be used in:
● evaluating hypotheses
● writing new product formulas
● establishing new finished product specifications
● designing special equipment and structures required by a new process
● preparing operating instructions or manuals on the process.
If, as soon as this experimental phase is over, a pilot plant switches to operating as a normal commercial production unit, the activity can no longer be considered R&D even though it may still be described as a pilot plant. As long as the primary purpose in operating a pilot plant is non-commercial, it makes no difference in principle if part or all of the output is sold. Such receipts should not be deducted from the cost of R&D activity.
Comments