Estimation Fundamentals

An estimate is an approximate judgment in engineering that blends inference, an informed guess, and experience to forecast costs for specified work.

Identify the qualities of a good estimator and how to assess estimation performance, including professional baselines, transparent processes, and revising estimates using the epsilon coefficient.

Practice four-step estimation: description and preparation, data collection, formulation of the estimate, and documentation; align with ground rules, team input, and quality assurance to support budgeting and forecasting.

Apply estimation across the product planning lifecycle to forecast costs, budgets, and profitability, from conceptual planning to product termination, with design, manufacturing, and documentation.

Identify data required for the data collection phase, including labor, machine, material costs, asset salvage value, consumption, setup time, overhead, and historical benchmarks to improve estimation accuracy.

Explore work study and method study as empirical tools to improve efficiency and standardize processes. Learn the seven stages, from selecting the work to implementing and monitoring improved methods.

Explore measurement of work performance using time study and work sampling to estimate task times and labor needs. Learn to compute normal time, standard time, and allowances for process improvement.

Master costing fundamentals by documenting component costs for products and projects, and using direct and indirect cost analysis to set sale prices and gauge profit margins.

Master cost estimation by analyzing context, identifying direct material, direct labor, direct other expenses, and overhead, and applying a ten-step process to forecast costs and set prices.

Examine overhead costs, including work, office, and sales overhead, and learn allocation by percentage, labor, material cost, machine hours, and per unit, to price products with overhead.

Explore cost estimation methods based on historical data and intuitive cost drivers, including the factum, material cost, and function methods, with validation for decision making.

Explore the work breakdown structure (WBS) as a hierarchical outline of project activities with a scope-defining dictionary, plus the cost element structure for operating and support costs.

Learn estimation fundamentals by exploring the core database and front end of estimation software, and build a simple Excel-based tool using materials and labor data.

Apply learned estimation concepts, data collection, and benchmarking to customize a simple estimation tool with labor, material, equipment, services, and cost allowances, and explore VBA and compatible units for applications.