SR&ED Case Study: Technical problem versus technological uncertainty


There is a difference between a technical problem and technological uncertainty. We cannot determine eligibility without understanding the work performed and evaluating it using the five questions. In this example, there are indicators that suggest there may be uncertainty but they do not point to any specific uncertainty.


Scenario 1 – Technical problem

You are a chemical company and you are developing a new process for a chemical product. Part of the process involves a series of pumps. The pumps started to corrode after six months, even though they had an expected lifespan of 10 years. Surprised to see corrosion so soon, you contacted the pump supplier. After looking at the pumps, the pump supplier found that there was a corrosive liquid in them. The pumps were not designed to come into regular contact with a corrosive liquid. So you looked at your whole process, including the parts involving the pumps.

You found that there were low levels of a corrosive liquid in the streams entering the pumps from time to time. After many weeks, you were able to trace the source of the corrosive liquid back to a sporadic leak in a filter system upstream of the pumps. You also found that the leak was likely caused by the filter system operating at a higher temperature than it was designed for. You replaced the filter system with a new high-temperature filtration unit. This appears to have resolved the problem of the corrosive liquid getting into the pumps.

In this scenario, the problem with the pumps in the new process was technical and not technological. You resolved the technical problem—corroding pumps—by identifying the true source of the problem and fixing it with an existing solution.

Scenario 2 – Technological uncertainty

This time you are the pump supplier. A series of pumps supplied by you started to corrode after six months of operation rather than after the expected lifespan of 10 years. You were asked to investigate the problem. You found that the pumps were corroding because of a leak in the seal on their shaft, which allowed a corrosive liquid into the units. In this case, the pumps were designed to operate in a corrosive environment. You replaced the seals in the pumps, but the pumps again showed signs of corrosion after six months. Again the cause was a leak in the seal on their shaft.

You investigated further and found that the temperature of the shafts of the pumps after they had been working for a long time, was above the maximum recommended an operating temperature of the seal material. After prolonged operation, the seal failed, letting corrosive liquid leak into the units.

Once you discovered the cause of the problem, you started working on understanding the relationship between the sealing material and the seal profiles in a high-temperature, corrosive environment. You wanted to figure out the most suitable seal profile and seal material to achieve a 10-year lifespan. The manufacturers had data on the behavior and physical properties of the seal materials at much lower temperature ranges, but there was no information or data on their corrosion resistance and physical properties at higher temperatures and in that specific type of environment. Nor was there any information on the profile that would be suitable for the high-temperature, corrosive environment the pumps were going to be used in.

In this scenario, you likely faced technological uncertainty which prevented you from choosing a combination of seal profile and sealing material that would offer long-term performance in a high-temperature, corrosive environment. That technological uncertainty could be related to the properties of the materials in the corrosive conditions as well as to the effect of seal profile on performance.


There is a difference between a technological uncertainty and a technical problem that can be resolved by applying practices, techniques, or methodologies that are known or that are openly available.

Source: CRA (Canada Revenue Agency)


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