“DETAILED” ESTIMATING

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

2. 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. 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. 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. 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. Types of Estimate • Detailed • Bottoms up • Prime Cost Estimating • Grass Roots • Engineering • Comparative • Parametric Cost Engineering Solutions Ltd

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

15. Work Breakdown Structure – Stage 1 • DESCRIPTION OF A WBS “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. Work Breakdown Structure 1 - Product Tree Cost Engineering Solutions Ltd

17. Work Breakdown Structure 2 - Support Functions Cost Engineering Solutions Ltd

18. Valve Assembly Cost Engineering Solutions Ltd

19. 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. Drawings/Schedules • Parts Listing • Description of Materials • Quantities • Assembly • Routing • Process • Department • Machines Cost Engineering Solutions Ltd

21. 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. Operations Sheet Cost Engineering Solutions Ltd

23. List Of Items/Quantities & Matl Estimates ESTIMATE WORK-UP SHEET Page 1 of 1 Part Number: Enquiry or Order Number: Assembled on: Spare ABCD Description: Needle Valve Assembly Estimate No.: Issue No: Order Quantity: 1 (Materials) 3 Sheet No: 1 Material Processes / Description Item No. Drawing No. Quantity Remarks Finishes Bought-out Subcontract Raw material £ £ £ £ 1 Valve Assembly 1 40 Needle 1 50 2 Valve Seat 1 25 3 Bush 1 10 4 Guide Bush 1 20 5 End Cap 1 13 6 BS 010 'O' Ring 1 60 7 BS 011 'O' Ring 1 60 8 BS 015 'O' Ring 1 60 9 Skid Washer 1 25 10 Conical Spring 1 15 11 12 13 14 15 16 17 18 19 20 Name of estimator and date Cost Engineering Solutions Ltd

24. Estimate By Cost Centre Cost Engineering Solutions Ltd

25. Labour Cost Calculation Cost Engineering Solutions Ltd

26. Estimate Summary Cost Engineering Solutions Ltd

27. Other Considerations • Learning Curves • Allowances • Risk Assessment Cost Engineering Solutions Ltd

28. Gantt + Resources Cost Engineering Solutions Ltd

29. Cost Engineering Solutions Ltd Phone + 44 (0) 7739 559580 Fax + 44 (0) 1438 216254 Email admin@costeng-solutions.com Cost Engineering Solutions Ltd