An interesting situation when doing estimates is which estimates do you spend time on and which estimates are too costly to put the effort into. In a tough economy its almost always the case you try to make something your company is not really able to make at a reasonable profit, but you still want to get the job just to keep your machines busy. This is a valid assumption in some cases but it should be looked at as a business direction and/or a case by case basis.
Estimating the costs of estimates is critical because you do not want 90% of your effort to quote the machining, sheet metal, tubing or any other type of job and only get 10% of those jobs. The other factor that is really important is your ROI (return on investment). Estimating is a “best” guess and you are competing against others who do their best to guess a reasonable price.
The more accurate the cost estimate, the higher the costs will be. The reason is the more accurate the job cost estimate is the longer it takes to produce, increased upfront design work, and details to prepare the estimate increase. Now when you are estimating in a job shop environment where parts are made to order and engineer to order the cost of the estimate is also based on the “value” of the product. If the product is a panel, cutting a small tube or small machined part the costs are not that high to estimate. One of the reasons is the engineering time to estimate is low, most of the job is done by machines and not manual labor, and its small. On the other if the job was a vehicle, machine, house, addition to a house, etc the cost to estimate is much higher. The reasons would include the bill of material requirements would be much greater and therefore require more effort to accumulate those costs. Assembly costs are the largest unknown portion because of unknown factors, employee performance which makes it very difficult to quote accurately.
I leave you with the thought that you should try to do a rough cut look at the part before expending a lot of wasteful hours trying to come up with a good estimate.
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