Building product manufacturers produce materials, components, and systems used in construction — from siding and decking to insulation, fastening systems, weather barriers, and structural assemblies. The technical challenges can include developing new assemblies that improve durability or performance, engineering installation systems that reduce labor or improve reliability, improving moisture and thermal behavior, and combining materials for new performance targets. This page explains what development work may look like in a building product manufacturing business and how it relates to qualified research under Section 41. It is educational and is not individualized advice.
What R&D May Look Like in Building Product Manufacturing
Building product manufacturing involves material development, assembly engineering, installation system design, and performance testing. Technical development may arise when a manufacturer develops a new assembly for a performance target, engineers an installation system for improved reliability or efficiency, evaluates alternative materials for durability or moisture performance, or develops a new fastening or connection method. Work directed at resolving genuine technical uncertainty in these areas — through a structured evaluative process — may warrant review under the four-part test.
Industry-Specific Examples of Technical Development
- Developing new assemblies that improve durability, moisture, or thermal performance where the capability is uncertain.
- Engineering installation systems that reduce labor or improve reliability where the method performance is not established.
- Evaluating alternative materials for durability or moisture resistance where compatibility is uncertain.
- Developing new fastening or connection methods where the structural performance is uncertain.
- Improving production processes for new material combinations where the process capability is uncertain.
None of these constitutes qualified research by itself. Each depends on whether the work satisfies all four elements of the four-part test.
Technical Uncertainty Examples
- Whether a new assembly can achieve a specified durability or moisture-performance target under accelerated weathering.
- Whether a new installation system can achieve the specified reliability target across substrate variation.
- Whether an alternative material combination can achieve the specified structural and thermal targets without compatibility issues.
For more, see our page on elimination of uncertainty.
Process-of-Experimentation Examples
- Building test assemblies with alternative designs, subjecting them to accelerated weathering or structural testing, and comparing results.
- Installing test units using alternative methods, conducting performance testing, and evaluating results.
- Preparing material combination samples, conducting compatibility and performance testing, and evaluating results.
For more, see our page on process of experimentation.
Potential Business Components
Potential business components may include a new or improved product (a building product with improved durability or installation performance), a new or improved manufacturing process (a production method for new material combinations), or a new or improved technique (a fastening or assembly method).
Employee Work That May Warrant Analysis
Employees whose work may warrant analysis include materials engineers developing assemblies, design engineers evaluating installation systems, testing technicians conducting performance testing, and process engineers developing production methods tied to a development project. For more, see our page on R&D tax credit employee wages.
Contractor Work That May Warrant Analysis
Contractor work that may warrant analysis includes testing laboratories conducting weathering or structural testing, material suppliers co-developing formulations, and fastener vendors co-developing connection systems — where the manufacturer bears the economic risk and retains substantial rights. For more, see our page on R&D tax credit contractor costs.
Supplies and Materials That May Become Relevant
Supplies that may become relevant include material and assembly samples consumed in testing, fastener and connection test units, and consumable tooling used in production trials. For more, see our page on R&D tax credit supplies.
Activities That Generally Require Caution or May Not Qualify
- Routine production of standard building products using established methods.
- Ordinary color or finish selection for a customer.
- Standard installation using established methods.
- Copying an existing product design with a minor dimensional change.
- Normal quality control and inspection following established procedures.
Documentation That May Help
Records that may help include project descriptions, weathering and structural test results, installation trial records, material compatibility data, and records connecting personnel and materials to specific development projects. For more, see our page on R&D tax credit documentation.
Example Hypothetical Project
The following is a hypothetical example for illustration only. It does not represent any actual company and does not state that the work qualifies.
A building product manufacturer is developing a new siding assembly that must improve moisture drainage and thermal performance while maintaining a specified wind-load target. The technical uncertainty is whether a new profile geometry, an alternative backing material, and a modified fastening system can together achieve the drainage, thermal, and structural targets. The team builds test assemblies with three profile geometries and two backing materials, subjects them to wind-load, water-infiltration, and thermal testing, measures drainage performance, deflection, and thermal transmittance, and evaluates the results. Based on the findings, the team selects a profile and backing combination and refines the fastening system. Records of the alternatives, test conditions, and results may help support analysis — but professional review is still needed.
Questions to Ask Internally
- What specific business component was being developed or improved?
- What technical uncertainty existed at the outset?
- What alternatives were evaluated, and how were they tested?
- Who performed or directly supported the work?
- What materials were consumed in the testing?
- How does this differ from routine building product production?
Relationship to the Four-Part Test
The four-part test applies the same way it does in any industry. The work must be directed at developing or improving a business component (permitted purpose), must fundamentally rely on principles of the physical sciences or engineering (technological in nature), must be intended to eliminate a technical uncertainty (elimination of uncertainty), and must be conducted through a structured evaluative process (process of experimentation). Meeting one element is not enough.
Key Takeaway
Building product manufacturers may perform activities that warrant analysis under IRC §41 — particularly work involving new assemblies, installation systems, durability improvements, and material combinations. Standard building product production does not automatically qualify. Professional review is appropriate. For related industries, see our pages on wood product manufacturing and construction companies.