Cost Engineering Solutions Ltd 1 C€$ “DETAILED” ESTIMATING Dave Lewis European Aerospace Cost Engineering Working Group 18th April 2002.

Cost Engineering Solutions Ltd 2 C€$ Bottoms-up Estimating  A method of estimating characterised by a thorough, detailed analysis of all tasks, components and assemblies.  The results are rolled up to produce an estimate of the entire project.  Can be developed using a combination of many estimating methods.

Cost Engineering Solutions Ltd 3 C€$ Why Estimate  Price is a policy. Cost is a fact  To determine a cost basis upon which to negotiate a selling price  Long term financial planning  Control of manufacturing costs  Standard for measurement  To determine “most” economical method of manufacture  To choose alternatives

Cost Engineering Solutions Ltd 4 C€$ Why Estimate  Price is a policy. Cost is a fact  To determine a cost basis upon which to negotiate a selling price  Long term financial planning  Control of manufacturing costs  Standard for measurement  To determine “most” economical method of manufacture  To choose alternatives

Cost Engineering Solutions Ltd 5 C€$ Bottoms-up Estimating  A method of estimating characterised by a thorough, detailed analysis of all tasks, components and assemblies.  The results are rolled up to produce an estimate of the entire project.  Can be developed using a combination of many estimating methods.

Cost Engineering Solutions Ltd 6 C€$ Types of Estimate  Detailed  Bottoms up  Prime Cost Estimating  Grass Roots  Engineering  Comparative  Parametric

Cost Engineering Solutions Ltd 7 C€$ Estimating Standards (1)  Good understanding of the estimating & cost management system  Knowledge of how shop floor activities are recorded  Knowledge of incentive schemes  How direct labour rates are derived and overheads are recovered  How raw materials, bought-out parts, finished parts, and work in progress are issued and priced

Cost Engineering Solutions Ltd 8 C€$ Estimating Standards (2)  How to estimate including separate identification of allowances and contingencies  Estimates should be prepared in units of time  Definition of the task  Knowledge of costing system (job-costing, standard costing, process costing, etc.,)

Cost Engineering Solutions Ltd 9 C€$ Estimating Standards  To cover individual operations  Types of activity or machining  Set-up times for individual machines  Parting off allowances  Cuts different depths and diameters  Riveting  Welding  Composite lay up  Treatments  Scrap allowances  Cleaning Time

Cost Engineering Solutions Ltd 10 C€$ Data/Information (1)  Cost allocation sheet  List of manufacturing plant and equipment  Statement of work  Build standard  Test Specification  Type of estimate required  Detail drawings  Make and buy plan  Work breakdown structure  Batch sizes, quantities  Cost breakdown structure

Cost Engineering Solutions Ltd 11 C€$ Data/Information (2)  Specifications  Planned batch sizes, quantity required, delivery programme  In-house manufacturing plans  Main assumptions  Estimating allowances (e.g. scrap, rectification, learning, and the basis that these have been derived  Proposals for contingencies, risk, etc

Cost Engineering Solutions Ltd 12 C€$ Data/Information (3)  Proposals for tooling required  Take into account concurrent spares  Inspection requirements  Recorded cost on past products/batches, performance  Labour and overhead rates  Recorded data to justify allowances, e.g. learning rates achieved, scrap rates, rectification levels etc  Raw material and bought-out prices

Cost Engineering Solutions Ltd 13 C€$ Preparations for Estimating  Set of estimating standards  Obtain drawings, schedules etc]  What is the Purpose  Timescale  Level of confidence required

Cost Engineering Solutions Ltd 14 C€$ Process Outline WBS Product Tree Work Package Gantt + Resources Gantt + Resources Team Sizing Manufacture & Test Manufacture & Test Planning & Estimating Sheets Planning & Estimating Sheets Learning Curves Works Cost OBS Standards Procedures Specs

Cost Engineering Solutions Ltd 15 C€$ DESCRIPTION OF A WBS Work Breakdown Structure – Stage 1 “A deliverable- orientated grouping of project elements that organizes and defines the total work scope of the project. Each descending level represents an increasingly detailed definition of the project work.”

Cost Engineering Solutions Ltd 16 C€$ Work Breakdown Structure 1 - Product Tree

Cost Engineering Solutions Ltd 17 C€$ Work Breakdown Structure 2 - Support Functions

Cost Engineering Solutions Ltd 18 C€$ Valve Assembly

Cost Engineering Solutions Ltd 19 C€$ Valve Assembly 1.Needle valve body 2.Needle 3.Valve seat insert 4.Bush 5.Guide Bush 6.End cap 7.BS010 - ‘0’ ring 8.BS011 - ‘0’ ring 9.BS015 - ‘0’ ring 10.Skid washer 11.Conical Spring

Cost Engineering Solutions Ltd 20 C€$ Drawings/Schedules  Parts Listing  Description of Materials  Quantities  Assembly  Routing  Process  Department  Machines

Cost Engineering Solutions Ltd 21 C€$ Estimating Sheets  Separate sheet for each assembly/sub-assembly  Part/Item numbers  Quantity per assembly  Material cost  Departmental labour rate  Machining group rate  Part/Item hours and cost  Budget out costs  Scrap/Rework and yield  Cover each operation

Cost Engineering Solutions Ltd 22 C€$ Operations Sheet

Cost Engineering Solutions Ltd 23 C€$ List Of Items/Quantities & Matl Estimates ESTIMATE WORK-UP SHEET Page 1 of 1 Part Number: Enquiry or Order Number: Spare ABCD Assembled on: Description: Needle Valve Assembly Estimate No.: 1 (Materials) Issue No: 3 Order Quantity: Sheet No: 1 Processes / FinishesBought-outSubcontractRaw material ££££ 1Valve Assembly Needle150 3 Valve Seat125 4 Bush110 5 Guide Bush120 6 End Cap113 7 BS 010 'O' Ring160 8 BS 011 'O' Ring160 9 BS 015 'O' Ring Skid Washer Conical Spring Name of estimator and date Material RemarksItem No.Drawing No. Description Quantity

Cost Engineering Solutions Ltd 24 C€$ Estimate By Cost Centre

Cost Engineering Solutions Ltd 25 C€$ Labour Cost Calculation

Cost Engineering Solutions Ltd 26 C€$ Estimate Summary

Cost Engineering Solutions Ltd 27 C€$ Other Considerations  Learning Curves  Allowances  Risk Assessment

Cost Engineering Solutions Ltd 28 C€$ Gantt + Resources

Cost Engineering Solutions Ltd 29 C€$ Cost Engineering Solutions Ltd Phone + 44 (0) Fax + 44 (0)