Predicting the whole-life cost of a product at the conceptual design stage.

Traditionally companies have in-house spread sheets or impose tight control on costs during the build phase of the product. The problem cost estimation can be demonstrated with the way suppliers make most of their money. It is made during design specification change in product design phase. Such changes are quite common in large engineering design projects. Despite these challenges, customers are demanding good quality estimates of acquisition, maintenance, upgrading, refurbishment and disposal through the products lifecycle. Most of the designers focus on satisfying the specification and cost is not the main concern then. This is problematic, as most of the research has shown that 50 to 70% of avoidable costs of a product are in-built in the early concept design phase. These research studies shows that it is critical to get handle on cost in the early phases of design stage. This paper describes the process and importance of cost modeling of a product at the design stage. The authors evaluate the current trends in cost modeling research as it applies to whole-life cost estimate and compare some of the most common commercial systems such as SEER-H, Relex LCC, Vanguard Studio, Price-H and Cosysmo. Most of these packages allow users to use databases, to have a mix of parametrics and a detailed bottom-up design, and to undertake sensitivity analysis and risk analysis. Some of these packages are domain specific and consider the new business approaches of buying the services not the equipment. The study is geared for modeling low-volume, infrequent products such as complex electronic systems. The authors recommend a mutli-level hybrid of bottom-up and parametric approach to estimate the cost of product for its whole-life. References: 1. Newnes, L. B.; Mileham, A. R.; Cheung, W. M.; Marsh, R.; Lanham, J. D.; Saravi, M. E.; Bradbery, R. W. Predicting the whole-life cost of a product at the conceptual design stage.. Journal of Engineering Design, Apr2008, Vol. 19 Issue 2.