Cost Analysis and Estimating for Engineering and Management

Transcription

1 Cost Analysis and Estimating for Engineering and Management Chapter 1 Importance Ch 1-1

2 Overview The Design Process Economic Evaluations Users Results Reasons Business Strategies Information International Business Ch 1-2

3 Reasons for Study The Goal of Business Is to Make Money Desire to Know Outcome Before Making a Commitment Need for Cost and Price Estimates Ch 1-3

4 Design Every Design Is a New Combination of Pre-Existing Knowledge that Satisfies an Economic Want New Combination Creativity Economic Want Driver Ch 1-4

5 Elements of Design Identification and Definition of Problem Development of Concepts Engineering Models Evaluation Design Implementation Ch 1-5

6 Engineering Design Process Ch 1-6

7 Problem Recognize a Need Economic Want Good Description = Good Solution Detailed Specification of Requirements Ch 1-7

8 Concept New Combinations of Existing Knowledge Need to Collect a Lot of Knowledge Relative to the Problem Unrestricted Generation of Concepts Then Select and Refine Ch 1-8

9 Engineering Models Representation to Explain an Aspect Prediction Discover Pertinent Parameters Flexibility Simplistic Ch 1-9

10 Evaluation Compromise Iterative Process with Modeling Satisfies Requirements? Cost Profit Fit with Capabilities Ch 1-10

11 Sources of Cost Largely Determined by Design 50% Purchased Material / Parts 30% Overhead 15% Factory Labor Ch 1-11

12 Design Addresses All Requirements through Computing Drafting Checking Answers What It Looks Like How Shall It Be Built How Will It Work Ch 1-12

13 Implementation Requires a Decision to Proceed Must Be Assured: It Satisfies All Requirements It Will Yield a Profit Needs an Economic Evaluation Ch 1-13

14 Economic Evaluation Market Defines Economic Want Cost Needs to Satisfy Cost Model Should Parallel the Design Detail and Accuracy of Estimate Depends on Amount of Info Available Depends on the Time for the Estimate Ch 1-14

15 Users Economic Evaluation Produces: Dollar Estimates Labor Hour Estimates Material Requirements Used By: Engineering Manufacturing Marketing Materials Mgmt. Accounting/Financial Planning Ch 1-15

16 Results from Economic Evaluation Requires Answers to 2 Questions What Does It Look Like? How Many? Selects from Design Alternatives Determines Manufacturing Methods Decisions to Proceed Ch 1-16

17 Other Reasons Cost to Manufacture Profit Prediction Labor Requirements Time (Scheduling) Control of Operations Improvement Budgets Equipment Justification Ch 1-17

18 Strategies Mass Production Large Quantities / Little Variation Batch Production Smaller Quantities / Large Variation Similar Processes Projects Very Small Quantities / Specialized Ch 1-18

19 Strategies Ch 1-19

20 What Determines Cost and When Ch 1-20

21 Modes of Competition Design Uniqueness or Superiority Price and Cost Quality Reliability Innovation / First to Market Customer Support Custom Design / Manufacturing Commodity Products Ch 1-21

22 Business Classification Traditional Established Products Slow Evolution Incremental Changes History of Costs High-Tech Rapid Changes Short Cost Recovery Period Fast Time to Market Flexibility Concurrent Engineering Challenging Cost Analysis Ch 1-22

23 Information Available Information Varies By Point in the Development Amount of Uniqueness of Product Historical Data (Accounting Records) Measured Data Policy Data Ch 1-23

24 Sources of Information Accounting Personnel Department Operating Departments Purchasing Sales/Marketing Supervisors/Managers Trade Associations / Media Ch 1-24

25 About the Estimate Amount of Information Available Time Allotted to Make the Estimate Overall Size (Amount) of the Estimate Intended Use for the Estimate All Impact the Quality and Accuracy of the Estimate Ch 1-25

26 International Business Global Economy Competitors Markets Measurements in SI Units Monetary Transactions in Multiple Currencies Ch 1-26

27 Currency Exchange Exchange Rates Conversion Factors Constantly Varying Spot and Future Rates Rates Obtained from: Banks, Newspapers, Internet Ch 1-27

28 Effects of Exchange Rates Strong Dollar Import Goods Cost Less Export Goods Cost More Lose to Foreign Competition Requires Price Cuts Weak Dollar Expensive Imports Exports Are More Competitive Higher Trade and Budget Deficits Overall Worse for the U.S. Economy Ch 1-28

29 Significant Digits Addition and Subtraction Round to 1 Significant Digit to the Right of the Number with the Least Significant Digits Multiplication and Division No More Significant Digits than the Number with the Least Significant Digits Ch 1-29

30 Layout of the Book Ch 1-30

31 The Book Chapter 1 Introduction Chapter 2 Labor Calculations Chapter 3 Material Calculations Chapter 4 Accounting Practice Chapter 5 Statistics and Indexing for Forecasting Ch 1-31

32 The Book Chapter 6 Estimating Methods Chapter 7 Operation Estimating Chapter 8 Product Estimating Chapter 9 Cost Analysis Chapter 10 Engineering Economy Chapter 11 Enterprise and Entrepreneurship Ch 1-32

33 Summary How the Design Process Works Where Economic Analyses Fit How Businesses Are Organized and Compete The Role of Information Global Aspects Ch 1-33