What is the effect of designing a prototype on the overall cost of the project?

In general the large portion of the costs of a project goes into the design and engineering work, the tooling and equipment and product testing. Prototyping in many companies today represents a small amount of the overall costs (well below 5–10% in most cases) but the effects are huge. In particular, the effects of NOT doing enough prototyping to validate the main or riskiest aspects of your product can lead to severe design and tooling modifications (if not complete retooling), repetitions of tests and increase in engineering hours. That could easily make the project go 2 or 3 times over the initial budget, not to mention delays to market that can be catastrophic in some cases.