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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).

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
E_H = engineering labor hours
E_R = engineering composite labor rate in dollars per hour
E_O = engineering overhead rate in decimal form (i.e., 1.15 = 115%)
M_H= manufacturing labor hours
M_R = manufacturing composite labor rate in dollars per hour
M_O = manufacturing overhead rate in decimal form
TO_H = tooling labor hours
TO_R = tooling composite labor rate in dollars per hour
TO_O = tooling overhead in decimal form
Q_H= quality, reliability, and safety labor hours
Q_R = quality, reliability, and safety composite labor rate in dollars per hour
Q_O = quality, reliability, and safety overhead rate in decimal form
TE_H = testing labor hours
TE_R = testing composite labor rate in dollars per hour
TE_O = testing overhead rate in decimal form
O_H = other labor hours
O_R = labor rate for other hours category in dollars per hour
O_O = overhead rate for the hours category in decimal form
S_D = major subcontract dollar
S_O = other subcontract dollars
M_D = material dollars
M_OH = material overhead in decimal form (10% = 0.10)
T_D = travel dollars
C_D = computer dollars
OD_D = 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.