“detailed” estimating

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“DETAILED” ESTIMATING

Dave Lewis

European Aerospace Cost Engineering Working Group 18th April 2002.


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.


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


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.


Types of Estimate

DetailedBottoms upPrime Cost EstimatingGrass RootsEngineering

ComparativeParametric


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


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.,)


Estimating Standards To cover individual operations

Types of activity or machiningSet-up times for individual machinesParting off allowancesCuts different depths and diametersRivetingWeldingComposite lay upTreatmentsScrap allowancesCleaning Time


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


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


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


Preparations for Estimating

Set of estimating standardsObtain drawings, schedules etc]What is the PurposeTimescaleLevel of confidence required


Process Outline

WBSWBS

Product TreeProduct Tree

Work PackageWork Package

Gantt +ResourcesGantt +

ResourcesTeam SizingTeam Sizing

Manufacture& Test

Manufacture& Test

Planning &Estimating Sheets

Planning &Estimating Sheets

Learning CurvesLearning Curves

Works CostWorks Cost

OBS

StandardsProceduresSpecs


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.”


Work Breakdown Structure 1 - Product Tree

A n ten n a R x/S ervo

B od y N eed le E TC

V a lve M C O etc

P ro jec t


Work Breakdown Structure 2 - Support Functions

A n ten n a R X /S ervo

D es ig n

B od y N eed le E tc

V a lve M C O etc

P ro jec t m an ag er S ch ed u lin g e tc

P ro jec t M an ag em en t

P ro jec t


Valve Assembly


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


Drawings/Schedules

Parts Listing Description of Materials Quantities Assembly Routing

ProcessDepartmentMachines


Estimating Sheets Separate sheet for each assembly/sub-assembly

Part/Item numbersQuantity per assemblyMaterial costDepartmental labour rateMachining group ratePart/Item hours and costBudget out costsScrap/Rework and yieldCover each operation


Operations SheetOp 1 Manual M/C Ops Prep Matl Run Total

Hrs £ Hrs Hrs

1Cut piece hex bar approx 20mm longer than required length 20 15 15

2 Put 3 jaw chuck on lathe 15 153 Fix Material into chuck 5 54 Using square L/H facing tool, face material off 15 155 Centre & Drill 15 15

6

Set up boring bar in tool post & bore each bore to size, use plug gauges to check sizes are correct on each bore 10 20 30

7Using profile turn tool, turn front of job to size. Check using vernier & micrometer 10 5 15

8Using die or screw cut bar, thread front end. Check using screw ring gauge 10 10 20

9 Part of job leaving 0.5mm on length. 5 5

Op 2 Mandrel for Holding Component Prep Matl Run Total

1 Place 1" mild steel bar in 3 jaw chuck 5 20 10 152 Drill & tap to required size 5 5

Op 3 Prep Matl Run Total

1 Screw component into mandrel 5 52 Use profile tool to face & turn job 5 10 153 Screw cut back end using a die 10 10

4Use groove tool to machine grooves, check all sizes using vernier & micrometer 5 10 15

5 Chamfer hole using centre 5 56 Unscrew component 5 5

Total 65 40 145 210


List Of Items/Quantities & Matl Estimates

ESTIMATE WORK-UP SHEET Page 1 of 1Part 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 /

Finishes Bought-out Subcontract Raw material

£ £ £ £

1 Valve Assembly 1 402 Needle 1 503 Valve Seat 1 254 Bush 1 105 Guide Bush 1 206 End Cap 1 137 BS 010 'O' Ring 1 608 BS 011 'O' Ring 1 609 BS 015 'O' Ring 1 6010 Skid Washer 1 2511 Conical Spring 1 15121314151617181920

Name of estimator and date

MaterialRemarksItem No.Drawing No. Description Quantity


Estimate By Cost Centre

ESTIMATE WORK-UP SHEET - Labour hours by cost centrePage 1 of 1

Enquiry or Order Number: Spare Part Number:Assembled on:

Description: Valve assembly

Estimate No.: Issue No: 3

Sheet No: 1

Section Number (Cost Centre)

Hrs Hrs Hrs Hrs Hrs Hrs Hrs Hrs Hrs Hrs Hrs Hrs Hrs Hrs Hrs £1 1 85 50 15 5 45 10 210 40234567891011121314151617181920

Totals 85 50 15 5 45 10 0 0 0 0 0 0 0 0 210 40


Tools

Item No. Quantity MaterialLabourSet-upProdSet-upProdSet-upProdSet-upProdSet-upProd ProdSet-upProdSet-up


Labour Cost Calculation

ESTIMATE WORK-UP SHEET Summary of Labour Charges

Enquiry or Order Number: Sheet 1 of Part Number: Needle Valve

Description: Assembled on:

Estimate No.: Order Quantity:

Production Hours & Labour Total cost Production Hours & Labour Total costSection minutes Hourly rate Section minutes Hourly rate

£ £ £ £1 85 20 1700 50 30 15002 15 30 450 5 30 1503 45 15 675 10 30 300456789101112131415161718192021

Production Labour: 145 2825

Amortised setting: 65 2095Total set-up = Set-up (each)

Quantity

Totals (carried forward to Fig. 4) 210 4920

Special Tooling (if required)

Material costSubcontract costLabour cost

Total special tooling


Set-upProduction

Line no.


Estimate SummaryEstimate Summary

Enquiry or Order Number: Spare Page 1 of 1Estimate Type: Part Number:Description: Needle Valve Assembled on:

Estimate No.: 1 Issue No:

Sheet No: 1 Order Quantity:

Direct Labour

Processes and Finishes 0 0 from Fig. 1

Sub-total Processes 0 0

Production Labour 2825 from Fig. 3

Amortised Set-up 2095 from Fig. 3

Subcontract

Sub-total Labour 4920

Materials

Raw materials 40 from Fig. 1Bought-out materials

Sub-total Materials 40

Notes:

Prime Cost (each)

Finishes 0

Labour and amortised set-up 4920

Material cost 40

Amortised special tooling total special tooling divided by batch quantity

Sub-total 4960

Test, etc. 100

Total prime cost 5960Name of estimator and date

£

£ £

Remarks DetailEstimated Cost (each)

Work-up Basic


Other Considerations

Learning CurvesAllowancesRisk Assessment


Gantt + Resources


Cost Engineering Solutions LtdPhone + 44 (0) 7739 559580

Fax + 44 (0) 1438 216254Email [email protected]

“detailed” estimating

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