Copyright 2010 – Bruce Madole

Complexity and SR&ED

Complexity and SR&ED Project complexity does not equate to technological uncertainty, nor does overcoming complexity translate to technological advancement. I’ve learned this from hard experience, and I will share why. From time to time, a company will find themselves wishing to claim work from a project that was very large and extremely complex. Often, such projects may involve systems integration and/or engineering activities embodying multiple technologies and even multiple locations, with stringent technical requirements. Standards or regulatory compliance may also be a factor. (Regardless of the size of the company or its project, you may recall projects of your own that involved highly complex problems. Complexity is not exclusively a problem for large companies.) It is not uncommon for the claimant to point to all of the contributing factors in a complex situation and to argue that the complexity is, in itself, evidence of technological uncertainty. That’s not really true, though. Complexity is evidence of business risk, and extreme complexity may contribute to extreme risk, but a reviewer will remind the claimant that engineers and systems developers are paid well to cope with complex challenges – it’s what they are paid to do, and is a part of the job. The reviewer’s second rebuttal flows from this observation, the argument that dealing with complexity is “business as usual” or “routine engineering”. And it is certainly true, though not necessary, that many complex problems may be overcome by employing purely routine approaches.

Copyright 2010 – Bruce Madole

Complexity and SR&ED

Once the “R” word has been uttered, you are on a slippery slope. It can prove really, really difficult to overcome a reviewer’s initial perception that the work performed was routine in nature. If you are truly lucky, the reviewer may ask the question that should have been asked beforehand, and answered in the claim itself, which is: “how did the complexity result in, or contribute to, technological uncertainty?” Were there areas, amid all of the complexity, where the problems encountered went beyond the standard approaches or generally available knowledge? Were there situations where you tried to overcome such problems systematically and experimentally? Complexity ought to be seen as an invitation to dig deeper into the work. Like novelty, complexity is an indicator of potential SR&ED, not a proof of its existence. It provides a context in which systems uncertainty, for example, may become possible. However, to prove that SR&ED work has actually occurred, you have to go beyond the complexity itself to identify and document the areas of technological uncertainty, and the experimental approaches that were employed to overcome those challenges. ( http://www.sredunlimited.com )

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