Syllabus

COST ESTIMATING
IT 390 - ET 390 Download a hardcopy of this file

INSTRUCTOR:        Dr. Tomas Velasco, C.Q.E.
                                    112C Engineering Building D
                                     Carbondale, IL 62901-6603
         ( (618) 453-7842
         - VELASCO@engr.siu.edu
         : Http://www.siu.edu/~VELASCO

TEXTBOOK: ·Engineering Cost Estimating by Phillip F. Ostwald, Prentice-Hall, 3th Edition.
· Interest Tables

CLASS:                    Spring Semester 1999
                                   Monday - Wednesday - Friday
                                  12:00 m. – 12:50 pm.
                                   EGR A 111
OBJECTIVE:
The purpose of this course is to provide the student with a comprehensive coverage of the latest principles and techniques for the economic evaluation of a project and their applications in capital budgeting, as well as to develop the ability of the student to prepare accurate cost estimates and systematically allocate them and control them in manufacturing environments.

REQUIREMENTS:
Major emphasis will be placed on reading and understanding the material from the class, suggested books and reference material prior to class, and in homework assigned. I do require class attendance.

GRADES:

·4 Examinations, each of which counts 20% of your grade.

·Homework, Team Projects, and Quizzes which count 20% of your grade.

STANDARDS:
Letter grades are assigned based on the total number of points accumulated. ·A : 90% and higher

·B : 80% - 89.99%

·C : 70% - 79.99%

·D : 60% - 69.99%

·F : Less than 60%

GRADING POLICY:
Missed examinations and assignments have a 10% penalty per day, imposed when turned in, unless an appropriate, prior excuse is provided to the instructor. The missed examination must be completed on the make-up date set by the instructor.

ACADEMIC CONDUCT:
Cheating on examinations, submitting work of other students as your own, or plagiarism in any form will result in penalties ranging from an F on the assignment to expulsion from the university, depending on the seriousness of the offense.

OFFICE HOURS:
10:00 a.m. to 12:00 p.m. Monday, Wednesday & Friday; other hours by appointment.

EQUIPMENT AND SOFTWARE:
Hand-held calculator and any computer-based spreadsheet. Excel is available in all the P.C. laboratories in Engineering including Industrial Technology labs. and College of Engineering labs.

MINIMUM STUDENT COMPETENCIES:
I. Introduction

A. Definition of Coat Estimating
B. Why Profit is Necessary for Business Survival
C. Understand the Relationship between Estimating and Profit
D. Know some of the reasons for estimating
E. Know the stages of product design and Cost Estimating
F. Understand and define the four classification of estimates 1. Operation estimation
2. Product estimation
3. Project estimation
4. System estimation II. Direct Cost A. Labor Analysis 1. Understand measured times and the basics of time study.
2. Understand and calculate normal time and standard time from measured time.
3. Understand the basics of work sampling and perform simple calculations to obtain standard data, i.e. Min/Unit, Units/Hour, etc.
4. Understand and use wages and fringe rates to arrive at total direct labor cost.
5. Understand and calculate incentive pay.
6. Define Joint labor B. Material Analysis 1. Understand what is meant by shape.
2. Given part drawing and dimensions calculate total material cost. a. Calculate waste and scrap
b. Be able to determine economic yield of the design. 3. Understand joint material cost.
4. Be able to de-joint or distribute joint labor cost based on specified criterion, i.e. total material used, units per hour produced, etc. III. Accounting Analysis

A. Understand the fundamentals of accounting
                    1. Know the structure of accounts.
                    2. Know what is meant by credit and debit accounts.
                    3. Know the five types of accounts, assets, liabilities, owner equity, income and expense.
                    4. Understand and be able to construct accounting statements.
                                       a. Trial balance
                                       b. Income statement
                                       c. Balance sheet
                    5. Understand budgeting
                    6. Define depreciation and be able to calculate depreciation amounts and book value for each given the
                    salvage value and the life of the asset.
                    7. Know different types of depreciation.
                                        a. Straight line
                                        b. Sum-of-the-years digits.
                                        c. Units of production.
                                        d. Double declining balance.
                    8. Understand overhead and be able to calculate overhead rates given historical data.
                    9. Use overhead rates to calculate manufacturing cost.

IV. Forecasting A. Understand basic statistical techniques used to predict cost. 1. Understand the principles of data collection, organization, and presentation.
2. Graphical analysis of data using frequency polygon, histograms, and bar graphs.
3. Understand and calculate frequency, relative frequency, cumulative frequency, and relative cumulative frequency.
4. Understand and calculate averages. a. Simple moving average.
b. N-period moving average.
c. Weighted moving averages. 5. Understand and calculate regression line and use the model to predict future forecast. Understand and use cost indexes. V. Preliminary and Detail Methods of Estimating A. Know the difference between preliminary and detailed methods of estimating.
B. Know various methods of preliminary estimating. 1. Define opinion, conference, comparison, and unit method of estimating.
2. Have a basic understanding of the application of each method. C. Be able to calculate detail estimate of labor, material, and overhead.
D. Understand product cost model and given required data be able to calculate: 1. Manufacturing cost,
2. cost of goods sold,
3. and, the selling price. E. Fully understand the learning curve concept. 1. Be able to calculate the cost for each unit given the percent learning involved.
2. Be able to calculate the slope of the learning curve from historical data.
3. Be able to calculate the slope of the learning curve given the percent learning.
4. Be able to calculate the average and the total coot over an extended production run.
5. Be able to determine percent of the learning curve from historical data. F. Understand and be able to use power law and sizing model. 1. Understand the concept of the "economy" and "diseconomy" of scale. VI. Engineering Economics A. Engineering Economy Terminology and Cash-Flow Diagram l. Define the terms alternative, time value of money, interest, and principle.
2. Define interest rate and interest period and calculate accrued interest.
3. Define equivalence and calculate present and future equivalence.
4. Define simple and compound interest and calculate interest accrued by each method.
5. Define and recognize the symbols P, F, A, n, and i.
6. Define cash-flow and be able to construct a cash-flow diagram given the problem parameters. B. Engineering Economy Factors and Their Use 1. Understand the use of single-payment compound amount factor and single-payment present worth factor.
2. Understand the use of Uniform series present worth factor.
3. Calculate the present worth P, future worth F, or equivalent uniform series, A, of an investment, given the interest rate, number of interest periods, n, and the monetary values of on of the terms P, F, or A. SCHEDULE: WEEK TOPIC

1                       Introduction, Principles
2,3                    Labor Analysis
4,5                    Material Analysis
6,7                    Accounting Analysis
8,9                    Forecasting
10,11                Estimating
12,13,14            Principles of Engineering Economy
15,16                Analysis of Engineering Projects