Experimental development is systematic work, drawing on knowledge gained from research and practical experience and producing additional knowledge, which is directed to producing new products or processes or to improving existing products or processes.
The development of new products or processes qualifies as experimental development if it meets the criteria for identifying R&D activity. An example is uncertainty about the resources needed to achieve the goal of the R&D project in which the development activity is taking place.
Not “product development”
The concept of experimental development should not be confused with “product development”, which is the overall process – from the formulation of ideas and concepts to commercialisation – aimed at bringing a new product (good or service) to the market. Experimental development is just one possible stage in the product development process: that stage when generic knowledge is actually tested for the specific applications needed to bring such a process to a successful end. During the experimental development stage new knowledge is generated, and that stage comes to an end when the R&D criteria (novel, uncertain, creative, systematic, and transferable and/or reproducible) no longer apply.
As an example, in a process aimed at developing a new car, the option to adopt some technologies could be taken into consideration and tested for use in the car under development: this is the stage when experimental development is performed. It will lead to new results by dealing with new applications of some general knowledge; it will be uncertain, because testing could give rise to negative results; it will have to be creative, as the activity will focus on the adaptation of some technology to a new use; it will be formalised, by needing the commitment of a specialised workforce; and it will involve a codification, in order to translate the results of the tests into technical recommendations for the further stages of the product development process. However, there are cases of product development without R&D that are discussed in the economics literature, especially in the case of SMEs.
Not “pre-production development”
The concept of experimental development should not be confused with “pre-production development”, which is the term used to describe non-experimental work on a defence or aerospace product or system before it goes into production. Similar cases apply in other industries. It is difficult to define precisely the cut-off point between experimental development and preproduction development; the distinction between these two categories requires “engineering judgement” as to when the element of novelty ceases and the work
changes to routine development of an integrated system.
For example, once a fighter bomber has successfully passed through the stages of research, technology demonstration, project design and initial development to the flight-testing of a pre-production aircraft, up to ten additional airframes may be required in order to ensure full operational integration of the vehicle into air offence/defence systems. This would be a two-stage process. The first stage is the development of the integrated air offence/defence system, which involves bringing together developed components and subsystems that have not previously been integrated in this context. It requires a large flight test programme for the aircraft, which is potentially very expensive and the main cost element prior to production. While much of the work commissioned during this stage is
experimental development (R&D), some does not have the element of novelty necessary for classification as R&D and is instead pre-production development (non-R&D). The second stage covers trials of the integrated air offence/defence system. Once the system is proven to work at stage one, the development project may move on to produce a trial production batch for operational trials (low-rate initial production). The full production order depends on their success. According to the Frascati manual, this work is not R&D but pre-production development. However, problems may arise during the trials, and new experimental development may be needed to solve them. This work is described as “feedback R&D” and should be included as R&D.
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