To answer the simplest question first...
For measuring basic specifications like S/N, frequency response, and distortion, we use Audio Precision model 585 testers.
(It's a ridiculously expensive, very cool, computer controlled test set that does a whole bunch of standard tests, and can be run off a test script; we have several.)
Many companies like to pretend that they have some esoteric design process... we really don't.
First we decide what the product should do.
If we want to build a product that supports DSDx2 and PCM up to 384k, we'd better choose a DAC chip that can do it.
(We find that there are plenty of commercial DAC chips available that perform very well, and sound very good, so we're going to pick one to use.)
To be completely honest, we often base our operational parameters on the hardware that's available.
(For example, in terms of the market, support for 192k is absolutely required, 384k is strongly desired, and 768k will impress a few people.)
The latest chips by the major vendors all pretty much have the features that the market is looking for this year (they've already sorted that all out).
We may choose which particular chip based on specific features, cost, availability, or even simply which brand the design engineer prefers.
Then, based on that requirement, we have our engineers come up with a prototype that offers the features we want.
For example, our new DC-2 will do PCM and DSD, will have a WiFi input, and will have a subwoofer output.
We run it through the basic scripted test to confirm that the standard measurements are all "really good"...
And, if anything sticks out as bad, we go back to the drawing board, figure out why, and fix it.
Then a bunch of us LISTEN to it, with a variety of material, and see if we all agree that it sounds good.
(If anyone thinks that it sounds "off" - then back to that drawing board to figure out why.)
This step is usually somewhat informal...
We set it up in one of our home theater systems and listen to it... then we pass it around.
I may listen to it in my office, or at home with headphones, or both...
Someone else may listen to it on their office system...
We compare it directly to at least a few of our previous products...
And usually compare it to a few competitors' products...
We always design our products to sound neutral, so we do not compare them to dozens of competitors' products...
Our goal is to design a product that performs well and sounds good... and not to "beat" anyone else.
Depending on the circumstances, we may invite some members of the public, or some of our insiders, to audition them.
(We had the prototype of our DC-2 available for people to listen to, and compare to the old model, at our Emofest public event; most people preferred the new model.)
To be quite honest, all of our DAC products sound more similar than different.
Our more expensive products generally have more impressive specifications than our lower-cost products.
(The DC-1 has much better measurable specs than the Little Ego.)
And, based on our listening tests, we generally find the DC-1 to sound slightly better than the Little Ego (but it also has a lot more features).
(Most people agree that they hear a difference; most prefer the DC-1; a few prefer the Ego; and, yes, they do use different DAC chips.)
If, by "operating parameters", you mean things like THD and S/N, then the design goal is really simple.
Pick a good DAC chip with good specs from the manufacturer...
Build it into a competent design (following the manufacturer's suggestions and certain well known "best practices").
If you haven't screwed something up then it will perform at or near the manufacturer's specifications.
And, if so, then it should sound both "neutral" and "good".
Those "best practices" include
- providing well-regulated and isolated power supplies for certain parts of the circuit
- laying out the circuitry properly, with proper grounds, and proper care in foil layout
The details can be quite complex... but they aren't especially exciting.
And I mentioned, our DACs tend to sound more similar than different...
There are some really subtle differences...
For example, the DC-1 sounded exceptionally clear and detailed (quite possibly because it had a very sophisticated multi-section power supply).
And, if you switch filters on the Ego DACs, most people hear a subtle differencebetween the various settings (but I wouldn't venture to say which one is "better"; I prefer #2).
On some of our higher-end uints, every unit is tested (using one of those AP 585 testers).
On others, after we confirm that the production units consistently pass, we may simply spot check them.
In general, we do not see "variations" in performance, or minor variations in sound; either they perform to spec - or they're broken (and need to be repaired).
The design sets both the measurable performance and the sound.
(There's no point in confirming that a certain filter on a certain chip delivers the exact waveform the manufacturer says it does.... it will.)