Cost Model Development using Costmod

Dave Stockton Taqui Shaik

Contents

Basics of the cost model development process

Basics of Costmod – project scoping and the model identification process

Exercise: Developing cost models using Costmod

Costmod – EPSRC Funded research project. Collaborators included: Airbus, Rolls-Royce & Cognition

Identified Existing Methods

• Data Identification - methods for identifying variables required to generate models

• Data Collection - methods by which the data required to generate models could be collected

• Data Analysis - methods by which the cost estimating relationships could be determined

Data Identification Methods

• Affinity Diagrams• Brain storming• Case Base Reasoning• Consensus building.• Data mining.• Fishbone diagram.• Force field diagrams• Fuzzy logic

• Heuristics.• Histogram.• Normal test plot.• Radar chart.• Relationship diagrams• Repertory grids• Scatter plot.• Simulation

Data Collection Methods• 2-D & 3-D Flow

Diagrams• Activity Sampling• Analytical Estimating• Checklists• Direct observation• Film analysis sheet.• Flow Process Charting• Interview• Methods Time

Measurement

• Operational Experiments

• Outline Process Chart

• Production Studies

• Questionnaires

• Records, Files and Documents

• Time Study

• Video tape recording

• Patents

Data Collection Methods

• Neural networks• Factorial Analysis• Fuzzy logic• Genetic Algorithm• Least Squares• Linear Programming• Multiple Linear

Regression• Multiple Non Linear

Regression

• Pareto Analysis (80-20 rule)

• Queueing Models• Simultaneous

Equations• Stepwise Regression

Analysis• System Pyramid.• Taguchi Methods

Data Sources

COSTMOD Cost Model Development Process

Selection of data sources and data collection methods

ProcessScoping•define processes & products that

need models• define the characteristics of these cost models

Data Collection &

ModelIdentification

Develop the Cost

Estimating Relationships

Project Scoping – 1 of 6

Project Title:

Product / Process Name:

Current development state of the process is best described as:

ConceptDetail DesignPrototypeCommercial

New Product / Process

Modified Product / Process

Project Scoping 2 of 6

The volume of production is best described as:

The type of production process is best described as:

Identify the product / process experts:

Low Volume / One OffMedium VolumeHigh Volume

Project

Job Shop

BatchFlow

Project Scoping 3 of 6Strategic Tactical Operational

Cost ReductionProcess Time ReductionProcess EvaluationProcess ImprovementProcess DevelopmentProduct EvaluationProduct ImprovementProduct DevelopmentStandard Data Generation

Business Objective and Decision Levels applicable to the cost model

Project Scoping 4 of 6

Discipline / Function Experience (Years)

Model Owner:

Model Developer:

Model User:

Model Function:

< 1 Week 1-4 Weeks 1-6 Months >6 Months

Time available to collect data:

Time available to input data:

Project Scoping 5 of 6Model use start date:

Model use end date:

Man/Hours Available to Collect Data:

Man/Hours Available to Input Data:

Man/Hours Available to Develop CER:

Enter required Estimating Accuracy <5%, 5%-10%, 10%-15% ….. >25%

Project Scoping 6 of 6Resource Level of Detail

Product Feature

Direct Material Cost Level 1 Product Level

Indirect Material Cost Level 2 Component Level

Level 3 Component Feature Level

Direct Equipment Cost

Indirect Equipment Cost Process Feature

Level 1 Machine Level

Direct Labour Cost Level 2 Machine Assembly Level

Indirect Labour Cost Level 3 Machine Sub-Assembly Level

Direct Process Time Process Activity

Indirect Process Time Level 1 Process Level

Level 2 Process Operation Level

Level 3 Operational Activity Level

Model identification process

Model identification process

Dependant Resource Paired Comparison

Product/Component Wing Box

Process Wing Box Fabrication

Resource Measure Type Variable Recurring Process Time

Product Feature Level 2 Component Level

No Product Feature Vote Matrix Totals1 x x x x x xx 3 4 5 6 7 8x x x x x x3 4 5 6 7 83 3 3 3 xx x x x 84 4 4 xx x x 85 5 xx x 86 xx 8x8

4

6 Bottom Stringer 5

Dependant Variable and Level of Detail

6

1

5 Top Stringer

2

4 Rear Spar 3

3 Front Spar

7

2 Bottom Skin 8

1 Top Skin

7 Ribs

8 Manholes

Model identification process

1st Predictor Resource Paired Comparison

Product/Component Wing Box

Process Wing Box Fabrication

Resource Measure Type Variable Recurring Process Time

Process Activity Level 2 Process Operation Level

No Process Activity Vote Matrix Totals1 1 x x 1 xx x 4 5 x xx x x 2 xx 4 5 x xx x x x4 5 x 74 4 4x x x5 5x xx7

7

2

1st Predictor Resource and Level of Detail

4

6

1 Routing

7

4 Treatment

6 Machining

5

5

1

Drilling

Inspection

3 Assembly

2

7 SPF

Model identification process

2nd Predictor Resource Paired Comparison

Product/Component Wing Box

Process Wing Box Fabrication

Resource Measure Type Variable Recurring Process Time

Process Feature Level 2 Machine Assembly Level

No Process Feature Vote Matrix Totalsx x x2 3 42 2x xx4

2

2nd Predictor Resource and Level of Detail

3 Treatment Cell

2

1 Machining Cell

4 Assembly Cell

3

1

4

Fabricating Cell

Model identification process

Model identification processEstablishing Attributes of the Features and Activities

Resource Measure Type Variable

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Product Feature Level 2 Component Level

Exercise: Develop a cost model

Form groups of 3-4 Use the Costmod

process to develop a suitable model for estimating the time required to sharpen a pencil within a medium volume production environment