Improvement of cost estimating internal practice

This thesis is concerned with understanding the internal costing practices employed by commercial and engineering disciplines of cost estimating for generating estimates at the conceptual design stage of complex hardware products. It examines whether there is a formal structure in the interaction between the two groups that can be represented within a model. The aim is to develop a framework that will formalise and improve the communication of commercial and engineering disciplines in cost estimating. A literature review examines the role of different costing techniques and the information requirements for generating cost estimates. The review identifies that there is a lack of research in the information requirements for cost estimating of specific manufacturing industries, and that the interaction of commercial and engineering disciplines of cost estimating at conceptual design stage is hindered by the different focuses of these groups. By conducting a survey study the author identifies the internal practice in cost estimating for the automotive industry. The survey establishes that in order to improve the internal practice it is essential to establish a data infrastructure that formalises and enables the reuse of the cost estimates and improves the interaction between the two groups. The author identifies a common cost estimating process for the automotive industry. This study establishes the required data and information elements and information sources that need to be collected in order to have reliable data infrastructure. Using a case study approach, the author also establishes that it is essential to analyse the product functions in such a way that will enable the development of a detailed cost estimating model at the conceptual design stage, which will improve interaction between the commercial and engineering groups. The function-based cost estimating process becomes the focus of detailed studies using experts from the automotive industry. This results in a generic framework that provides a formalised structure to represent functional requirements in the form of a detailed cost estimating model. The thesis concludes that product functions need to be captured and analysed during the conceptual development of a product and be associated to cost estimates. The developed results provide both groups of cost estimating a structured, consistent approach to developing cost estimates at the conceptual design stage. The data infrastructure and the function-based cost estimating framework is validated through case studies and expert evaluation. The approach contributes towards improvement of the internal cost estimating practice with the automotive industry.