Purpose of Cost Estimating

There are numerous purposes behind cost estimating which include those below and others

1. A manufacturer can determine if the project or product is cost effective to manufacturer prior to the manufacturing process.

2. There are various alternatives to manufacturing and cost estimating can determine the economical feasibility of manufacturing the project or product by different methods

3. A manufacturer can determine the selling price before manufacturing begins.  This may or may not be a good idea because the product still needs to be priced at a value the consumer will purchase the item.

4. In software estimating packages like MIE QuoteIt you have the ability to create different quotes based on different manufacturing procedures.  This also carries through when you decide to purchase the item because its cheaper to purchase the item then to manufacturer it in-house.

5. Production cost estimator can set standards for production.  In ERP software, once a job is received it can be scheduled.  The scheduling standards start at the estimating stage of production.  The more accurate these estimates are the less effort has to be done during production scheduling.

6. In a production line the estimate can be used to plan the equipment required to manufacture and the what the capital requirements are.

7. Personal are a key factor and an estimate can determine the personal required to manufacture the item.

If the estimate is not accurate the above items as to the purpose of the cost estimate are not accurate.  If all your estimate bill of materials, labor, outsourcing and resource requirements are wrong you will not be successful.   Losing work to competitors is one thing but losing money on the job is another issue which costs more than you would losing the job to a competitor.

Try this estimating software.


Author: MIE Solutions

David Ferguson has over 20 years of experience in the manufacturing and fabrication industry. David Ferguson has been to over 100 manufacturing companies helping and guiding them to be more efficient and cost effective. As a child in Junior High School David Ferguson found a passion for the early computer systems, which would drive much of his future work. David Ferguson created and sold his first computer program, Arrow Data Systems, which was an early CAD/CAM system for the Apple 2e Computer. In the late 1980's after seeing his father (a sheet metal manufacturer) come home many nights estimating, David Ferguson saw an opportunity to optimize his effort through computer technology. Shortly thereafter the FabriTRAK Production Control package was developed. The Quote It! estimating package was developed out of the FabriTRAK system to become one of the leading sheet metal estimating packages in the world. David Ferguson has always had a passion for developing software to make the manufacturing process simpler, faster and more efficient. Prior to founding MIE Solutions David Ferguson worked with his father at Alco Sheet Metal, METALSOFT Inc. and was a consultant at Toyota Motors Sales. David Ferguson has his Masters in Computer Science and Mathematics from California State University, Long Beach.

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