Before we begin this article, we believe that it is important to first understand the difference between Research and Development as defined by the FRS 102 Glossary.

Research – Original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding.

Development – The application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services before the start of commercial production or use.

Examples of research activities include:

• Activities aimed at obtaining new knowledge
• The search for, evaluation and final selection of, applications of research findings and other knowledge
• The search for alternatives for materials, devices, products, processes, systems or services
• The formulation, design, evaluation and final selection of possible alternatives for new or improved material, devices, projects, processes, systems or services

Examples of development activities include:

• The design, construction and testing of pre-production or pre-use prototypes and models
• The design of tools, jogs, moulds and dies involving new technology
• The design, construction and operation or a pilot plant that is not of a scale economically feasible for commercial production
• The design construction and testing of a chosen alternative for new or improved materials, devices, products, processes, systems or services.

From those definitions and activities we can immediately see that the development stage takes place after research. It occurs when one has already discovered through research that developing a product will be profitable. In the development stage it is about determining how this product is going to be brought to market, how it is going to be mass produced and how are we going to provide a product that is useful for our customers. It is a far more structured part of the process.

Development costs can be capitalised, whereas research costs can not. Research costs must always be expensed. That is why it is crucial to have an understanding of the difference between the two steps before embarking on the process.