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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
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Affinity Diagrams
Brain storming
Case Base Reasoning
Consensus building.
Data mining.
Fishbone diagram.
Force field diagrams
Fuzzy logic
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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
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Operational Experiments
Outline Process Chart
Production Studies
Questionnaires
Records, Files and
Documents
• Time Study
• Video tape recording
• Patents
Data Collection Methods
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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
Process
Scoping
•define processes
& products that
need models
• define the
characteristics
of these cost
models
Data Collection
&
Model
Identification
Develop the
Cost
Estimating
Relationships
Selection of data sources and data
collection methods
Project Scoping – 1 of 6
Project Title:
Product / Process Name:
Current development state of the process is best described as:
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:
Project Scoping 3 of 6
Strategic
Tactical
Operational
Cost Reduction
Process Time Reduction
Process Evaluation
Process Improvement
Process Development
Product Evaluation
Product Improvement
Product Development
Standard 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
Time available to collect data:
Time available to input data:
1-4 Weeks
1-6 Months
>6 Months
Project Scoping 5 of 6
Model 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 6
Resource
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
Indirect Process Time
Process Activity
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
Dependant Variable and Level of Detail
Product Feature Level 2 Component Level
Product Feature
No
1
Top Skin
2
Bottom Skin
3
Front Spar
4
Rear Spar
5
Top Stringer
6
Bottom Stringer
7
Ribs
8
Manholes
1
x
x
3
3
x
4
x
5
x
6
x
x
8
Vote Matrix
x
x
4
3
x
x
5
4
3
3
x
x
4
4
x
x
x
5
8
x
x
8
Totals
x
5
x
6
3
x
x
8
x
6
x
7
x
8
x
7
x
8
x
8
7
8
2
3
4
5
6
1
Model identification process
1st Predictor Resource Paired Comparison
Product/Component
Wing Box
Process
Wing Box Fabrication
Resource Measure Type Variable
Recurring Process Time
1st Predictor Resource and Level of Detail
Process Activity Level 2 Process Operation Level
No
Process Activity
1
Routing
2
Drilling
3
Assembly
4
Treatment
5
Inspection
6
Machining
7
SPF
1
x
x
x
x
4
4
x
5
x
x
7
Vote Matrix
1
x
x
4
x
x
4
5
x
x
5
x
4
4
x
x
5
x
Totals
x
5
2
x
x
7
1
x
x
x
x
x
4
6
7
1
2
7
5
Model identification process
2nd Predictor Resource Paired Comparison
Product/Component
Wing Box
Process
Wing Box Fabrication
Resource Measure Type Variable
Recurring Process Time
2nd Predictor Resource and Level of Detail
Process Feature Level 2 Machine Assembly Level
No
Process Feature
1
Machining Cell
2
Fabricating Cell
3
Treatment Cell
4
Assembly Cell
x
2
2
x
x
4
Vote Matrix
x
x
3
4
2
x
Totals
4
1
3
2
Model identification process
Model identification process
Establishing Attributes of the Features and Activities
Resource Measure Type Variable
Product Feature Level 2 Component Level
Process Feature Level 2 Process Activity Level 2 Product Feature Level 2
Machine Assembly Level Process Operation Level
Component Level
Links
Attributes
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