Here are some key aspects to quoting and estimating
1. Material costs
This includes both raw material and purchased components like nuts, bolts, screws, etc.
2. Tooling costs
3. Welding fixture costs and other fixture costs
4. Burden rate of the machine(s) the part runs on
5. Overhead (Indirect Labor)
10. Other consumables
12. Payment Terms
13. Complexity of the part and the tolerances to be held
14. Inspection Requirements
15. Documentation requirements
16. Other costs of quality
17. Other overhead (rent, etc)
18. Engineering Costs
19. Installation Costs
20. Administrative staff salaries and commissions
I’m sure I’m missing a few…..
Punch press estimating is a very common way to put wholes in sheet metal parts. Punch presses have been around since 1955. The Wiedemann Machine Company was established in Philadelphia, Pennsylvania in 1916 and over the years developed and produced a variety of machines. Wiedemann unveiled the world’s first NC turret punch press at a machine tools show in Chicago in 1955.
CNC punch presses are very common and still outperform laser in many scenarios in speed.
Punch press formulas for estimating usually ask for number of hits, tools and thickness of material. You can see a sample formula below which can be changed based on your machine capabilities.
Laser cutting sheet metal parts is very common in the industry. Not too many years ago laser cutting was new and estimating the costs was new. Now, laser cutting estimating has become much more accurate through software simulations.
The simplest way to estimate laser cutting time and material is using the actual laser programming software like Metacam by Metamation. A flat DXF file can be loaded into the software and the software will accurately estimate the laser time based on a simulation cutting the part. The part can actually be nested giving you a more accurate time cutting the parts from a nested sheet. Once the estimated time has been calculated you would enter that time into the cycle time of the nesting software to calculate your costs. The Gas, Depreciation, Utilities would be included in your overhead rate of the machine which in turn gives you the cost to run the part.
There are other situations where you do not have a good DXF file and you must estimate by estimating the number of inches, pierces, cut speed, etc. The screen shot below shows where you would create an a formula and use the formula to enter values. The formula would have to be customized for your specific machine and manufacturing process which in turn brings consistent estimates.
Lastly, a calculator can be created to assist you in calculating the number of linear inches of cutting as shown below.
There is a nice article here.
Quoting and estimating software can be found in many products. One of the industries that have the most estimating software packages is construction where you see a plethora of options available. Job shop estimating software is also common but it is usually tied directly into the companies ERP/MRP system. MIE QuoteIt from MIE Solutions has an estimating package available that can be linked to different ERP systems because it uses SQL Server which many systems can extra the data from.
MIE Solutions developed MIE QuoteIt as a system as a system specifically designed for sheet metal job shops but has now expanded into a wide variety of manufacturing plants because of the unique ability to create customized formula’s. Customizing your formulas for how you want to quote creates consistency within your company.
A simple example is countersinking. One way to create a consistent formula is using a formula like # Of Holes To Countersink divided by 3
(NUMBER OF COUNTER SINKS)/3
This is the exact formula you would create if you were wanting counter sinks to be costed at 20 seconds per countersink.
You can make a more complicated example which would be as shown below where we do not fix the number of seconds per minute but rather change it dynamically.
(NUMBER OF COUNTER SINKS)/(COUNTERS SINKS PER MINUTE)
The negative to the 2nd approach is you get back to the consistency of estimating where different people would not come up with the same figure.
Another more refined option is to not ask for the speed but ask for the size where the speed would be pre-populated based on the size of the countersink being created. MIE QuoteIt will actually allow you to create tables to create consistent quotes and estimates without opinion of the estimator because the thickness and size of the countersink is not a guess.
In the next few blogs I will go into detail on some different formulas and how to create them in order to not guess when estimating.
Overhead expenses are all the costs not directly associated with the manufacturing of a specific product. Raw material costs and direct labor are two examples which do not fall into the category of overhead expenses. These costs are incurred by the manufacturer but cannot identified as part of the direct product costs.
One of the goals in manufacturing or any business is to minimize the direct costs of manufacturing some product. If you are a made to order manufacturer you may find your overhead less then the actual direct manufacturing costs. The reason is your expenses to carry out the daily activities of the company are low compared to the labor and material costs directly associated to the manufacturing of a product. In other companies the overhead may be greater then the actual direct manufacturing costs. For any business the real goal to reach for is lowering your overhead rate while keeping product production at the same level or increased level.
There are three main categories that overhead can be subdivided into. The three would be Selling and administration, distribution and plant factory overhead costs. Each of these cost take away from the companies bottom line.
In the next section we will review each of these overhead categories in detail.
Please see MIE Solutions which offers ERP Software and Cost Estimating software for the manufacturing industry.