Title

Top-Down Benchmarking Approach for Estimating Cost of Concept

Abstract

Due to the highly competitive nature of businesses today, cost estimation forms an important strategic process in making decisions about design and development of new products. The focus is on improving the quality and service of the product at ever reducing costs. In conceptual design phase, engineers need to estimate how much the final products developed from each concept may cost. Estimating cost of the final product is critical in selecting the optimal concept. Majority of the cost estimation techniques used in the industry today concentrate on the parametric estimation. Parametric estimation accurately predicts cost of the final product using historic data about cost drivers. However, if firms are developing new products different from their past product categories, historic data may not be a credible source for parametric cost estimation. In this paper, the authors proposed a top-down benchmarking approach in estimating cost of new products in conceptual design phase. The objective is to construct a cost distribution model for the final product developed from each concept.

Department(s)

Mechanical and Aerospace Engineering

Keywords and Phrases

Belief; Benchmarking; Concept; Cost Estimation; Distribution; Price; Profit Margin

Library of Congress Subject Headings

Target costing

Document Type

Article - Conference proceedings

Document Version

Citation

File Type

text

Language(s)

English

Rights

© 2006 American Society of Mechanical Engineers (ASME), All rights reserved.

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