Related Resources: management

Engineering Design Manufacturing Costs Calculator

Detailed Estimating Engineering Design and Manufacturing Costs Equations and Calculator

The resources (skills, calendar time, and labor-hours) required to prepare a cost estimate depend on a number of factors. One factor is the estimating method utilized. Another is the level of technology or state of the art involved in the job or task being estimated. A rule of thumb can be utilized to develop a rough idea of the estimating time required. The calendar time required to develop an accurate and credible estimate is usually about 8% of the calendar time required to accomplish a task involving existing technology and 18% for a task involving a high technology (i.e., nuclear plant construction, aerospace projects).

Estimating Engineering Design and Manufacturing Costs
Anatomy of an Estimate Flow Chart

Preview: Detailed Estimating Engineering Design and Manufacturing Costs Calculator (Membership Required: Premium).

T = { [ EH x ER ) x ( 1 + EO ) ] + [ ( Mh x MR ) x ( 1 + MO ) ] + [ ( TOH x TOR )
  x ( 1 + TOo ) ] + [ ( QH x WR ) x ( 1 + QO ) ] + [ ( TEH + TER ) x ( 1 + TEO ) ]
  + [ ( OH x OR ) x ( 1 + QO ) ] + SD + SO + [ MD x ( 1 + MOH ) ]
  + TD + CD + ODD } x {GA + 1.00 } x { F + 1.00 }

Where:

T = total cost
EH = engineering labor hours
ER = engineering composite labor rate in dollars per hour
EO = engineering overhead rate in decimal form (i.e., 1.15 = 115%)
MH= manufacturing labor hours
MR = manufacturing composite labor rate in dollars per hour
MO = manufacturing overhead rate in decimal form
TOH = tooling labor hours
TOR = tooling composite labor rate in dollars per hour
TOO = tooling overhead in decimal form
QH= quality, reliability, and safety labor hours
QR = quality, reliability, and safety composite labor rate in dollars per hour
QO = quality, reliability, and safety overhead rate in decimal form
TEH = testing labor hours
TER = testing composite labor rate in dollars per hour
TEO = testing overhead rate in decimal form
OH = other labor hours
OR = labor rate for other hours category in dollars per hour
OO = overhead rate for the hours category in decimal form
SD = major subcontract dollar
SO = other subcontract dollars
MD = material dollars
MOH = material overhead in decimal form (10% = 0.10)
TD = travel dollars
CD = computer dollars
ODD = other direct dollars
GA = general and administrative expense in decimal form (25% = 0.25)
F = fee in decimal form (0.10 = 10%)

Note that the largest percentage of the required estimating time is for defining the output. This area is most important because it establishes a good basis for estimate credibility and accuracy, as well as making it easier for the estimator to develop supportable labor-hour and material estimates. These percentages also assume that the individuals who are going to perform the task or who have intimate working knowledge of the task are going to assist in estimate preparation. Hence the skill mix for estimating is very similar to the skill mix required for actually performing the task.

Contribute Article
Spider Optimizer

© Copyright 2000 - 2020, by Engineers Edge, LLC www.engineersedge.com
All rights reserved
Disclaimer | Feedback | Advertising | Contact

Date/Time:


User Reviews/Comments:

There are currently no comments available.


Add a Comment (you must be logged in to post comment Register):
Name:
Email: (Optional)
Comment: