Mining & Resources Case Study
Gigantor found that its reputation as the technology leader was coming under threat from imported technologies that offered comparable performance but at reduced cost points. Faced with the prospect of a loss of market share, the company determined that it needed to improve the performance of its flagship underground machine by enhancing the electronic, hydraulic and mechanical design to make it more modular and reliable in all mining conditions.
In the absence of any “out-of-the-box” technology offerings, Gigantor understood that it would face a number of technical challenges that would require experimentation. Specifically, making changes to the hydraulics and electrics was one thing but making these new components flameproof and intrinsically safe for use underground so as to comply with mining regulations was quite another proposition altogether. Moreover, these machine modifications and enhancements had to fit within the constraints of the existing design envelope which meant that the physical dimensions of the machine could not be increased and if anything would need to be reduced in order to meet expectations about a more modular design.
Gigantor sought to address the problem through clever design of the different components and modules. The project work would encompassed design and modelling activity as well as prototyping and testing and field trials. Gigantor was uncertain how to characterise these activities for R&D tax, in terms of identifying what were “core R&D activities” and what were “directly related supporting activities”.
Core R&D activities
NOAH worked with Gigantor to articulate the arguments that would enable the design, modelling, prototyping and testing to be characterised as core, experimental R&D activities. The hypotheses being tested were embodied in the conceptual design solutions that were modelled and iterated at first instance within the framework of the computer aided design tools. Beyond that the design proposition that was realised in the first physical experimental models or prototypes represented yet further examples of hypothesized design solutions that were to be validated through further testing and an analysis of results.
In this context, the new knowledge was associated with new insights into how the new components and modules could be configured and combined without any enlargement of the design envelope to deliver an intrinsically safe and flameproof product.
Gigantor also conducted a range of other activities in support of the project including an assessment of the state of the art, literature reviews, discussions with suppliers and project management more generally. With NOAH’s help, Gigantor came to an understanding as to how a there was a direct nexus between these activities and the core experimental activities that allowed them to be classified as “supporting” and hence claimed.
Gigantor found that NOAH’s advice was particularly helpful in respect of how to address the “dominant purpose” test in relation to activities conducted in a production or commercial context. This advice helped to resolve Gigantor’s uncertainty as to where to draw the line between “R&D” and “production” and the extent to which costs associated with the field trialling of the first production unit could be claimed.
What documentation did Gigantor have to keep?
Gigantor adhered to a project reporting system that required milestone reports to be generated in respect of:
• Initial design concepts and modelling
• Prototype build and testing and
• Field trials.
Through discussions with NOAH, Gigantor came to appreciate how other documents which were seemingly more business-as-usual (emails, management reports etc) could be modified or enriched to provide additional evidence of the experimental activity.