Cost And Operations Modeling

Due to increasing demands on manufacturing organizations, the ability to accurately and efficiently model fabrication and assembly operations and their associated time and cost is becoming increasingly important.

While cost modeling systems can be implemented in many ways, two that are prevalent today in many engineering fields are Activity-Based and Cost Estimating Rules (CER) based.

Activity-based cost models take a bottom-up approach. All relevant resources (people and machinery) and materials (purchased components and raw materials) are assigned a cost per unit, and they are tracked through all of the operations required in order to create the end product. In the end, all of the costs are summed at each level of the product structure, from piece part fabrication to final assembly.

CER-based models implement a top-down approach. Cost estimating rules are usually based on historical data, such as “it costs $20,000 per pound to launch a payload into low earth orbit.”

Some cost modeling systems also provide the ability to run discrete event simulations in order to predict the probability distribution for cost and span time if there is randomness in the operations or surrounding conditions.

A unique capability of TechnoSoft’s cost and operations modeling tool is the ability to connect activity-based and/or CER-based cost models directly to geometry. For example, if a ship designer is modeling a hull welding operation, he can point to the edges of the actual hull part geometries so that the labor time and cost is dependent on the exact weld length.

Find out more about TechnoSoft’s cost and operations modeling capabilities: