Cost Analysis and Estimating for Engineering and Management

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  • Edition: 1st
  • Format: Paperback
  • Copyright: 2003-08-25
  • Publisher: Pearson
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Supplemental Materials

What is included with this book?

  • The New copy of this book will include any supplemental materials advertised. Please check the title of the book to determine if it should include any access cards, study guides, lab manuals, CDs, etc.


This popular book supplies readers with the latest principles and techniques for the evaluation of engineering design. The emphasis is on analysis and estimating. Included in this new edition is a chapter that introduces principles that deal with bringing inventions to the marketplace. It analyzes labor, material, accounting, and forecasting; then the theme of estimating is developed, with a study of methods, operations, and products. A versatile and extremely usable book, it's the perfect resource for engineers, managers, and entrepreneurs.

Table of Contents

Prefacep. xv
Importancep. 1
Engineering and Designp. 1
Economic Evaluationp. 7
Who Uses Economic Evaluation?p. 8
Reasons for Economic Evaluationp. 9
Strategies for the Enterprisep. 10
Traditional Businessp. 13
High-Tech Businessp. 13
Informationp. 15
Domestic and International Businessp. 16
International System of Unitsp. 19
A Look at the Bookp. 21
Summaryp. 23
Questions for Discussionp. 24
Problemsp. 24
Challenge Problemsp. 26
Practical Applicationp. 27
Case Study: Professor Jairo Munozp. 28
Labor Analysisp. 29
Backgroundp. 29
The Mythical Man-Hourp. 36
Timep. 36
Ergonomicsp. 37
Fundamentals of Time Studyp. 37
Fundamentals of Work Samplingp. 46
Labor-Hour Reportsp. 52
Other Methods for Determining Timep. 54
Wage and Fringe Ratesp. 57
Wage-Only Methodp. 59
Gross Hourly Costp. 60
Joint Labor Cost (Optional)p. 64
Learningp. 66
Summaryp. 67
Questions for Discussionp. 67
Problemsp. 68
Challenge Problemsp. 74
Practical Applicationp. 75
Case Study: The Endicott Iron Foundryp. 76
Material Analysisp. 77
Backgroundp. 77
Materialp. 80
Shapep. 83
Costp. 92
Material Cost Policiesp. 93
Specificationp. 93
Policies for Evaluating Commodity Materialsp. 96
Policies for Evaluating Contractual Materialsp. 96
Policies for Evaluating Material from Inventoryp. 97
Joint Material Cost (Optional)p. 103
Summaryp. 108
Questions for Discussionp. 109
Problemsp. 110
Challenge Problemsp. 116
Practical Applicationp. 121
Case Study: Design for Runner Systemp. 121
Accounting Analysisp. 123
Business Transactionsp. 124
Conventionsp. 125
Chart of Accountsp. 129
Structure of Accountsp. 131
Understanding the Balance-Sheet Statementp. 135
Understanding the Profit-and-Loss Statementp. 136
Depreciationp. 138
Backgroundp. 139
Purpose of Depreciationp. 140
Property Classification for Depreciation Methodsp. 140
Methods of Calculating Annual Depreciation Amountp. 141
Budgetingp. 149
Types of Budgets and Relating Cost Accountsp. 149
Budgets for Overhead Calculationp. 151
Overheadp. 154
Importancep. 155
Traditional Methodsp. 155
Allocation Methodsp. 156
Methods of Direct Labor Hours and Dollarsp. 158
Productive Hour Cost Rate Principlesp. 160
Activity-Based Costing Principlesp. 163
Job and Process Accounting and Variance Procedures (Optional)p. 164
Summaryp. 169
Questions for Discussionp. 169
Problemsp. 170
Challenge Problemsp. 177
Practical Applicationp. 180
Case Study: Machine Shopp. 180
Forecastingp. 185
Graphic Analysis of Factsp. 185
Least-Squares and Regression (Optional)p. 193
Least-Squaresp. 193
Confidence Limits for Average Values and Prediction Limits for Individual Valuesp. 196
Curvilinear Regression and Transformationp. 201
Correlationp. 205
Multiple Linear Regressionp. 207
Time-Series Models (Optional)p. 210
Cost Indexesp. 215
Calculation, Interpretation, and Unintended Consequencesp. 221
Summaryp. 223
Questions for Discussionp. 223
Problemsp. 224
Challenge Problemsp. 232
Practical Applicationp. 235
Case Study: Forecasting Production Quantity and Budget Requirements for a Gas Enginep. 235
Estimating Methodsp. 239
Estimating for the Enterprisep. 239
Universal Methodsp. 242
Opinionp. 242
Conferencep. 242
Comparisonp. 243
Unitp. 245
Operation Methodsp. 247
Cost- and Time-Estimating Relationshipsp. 247
Performance Time Data Algorithmp. 249
Product Methodsp. 256
Learningp. 256
Project Methodsp. 262
Power-Law-and-Sizing CERsp. 262
Other CERs (Optional)p. 264
Factor Methodp. 266
Advanced Approaches (Optional)p. 273
Expected Valuep. 273
Rangep. 276
Percentilep. 279
Monte Carlo Simulationp. 281
Single-Value or Probability-Distribution Comparisons?p. 284
Summaryp. 285
Questions for Discussionp. 286
Problemsp. 287
Challenge Problemsp. 293
Practical Applicationp. 296
Case Study: Industrial Process Plant Project Costp. 296
Operation Estimatingp. 297
Backgroundp. 298
Manufacturing: What It Is, What It Does, and What It Is Notp. 300
Classic Operations Analysis (Option 1)p. 304
Contemporary Operations Analysis (Option 2)p. 312
Pinion Operation 10p. 320
Length of Cut Calculationp. 321
Pinion Operation 20p. 323
Pinion Operation 30p. 324
Pinion Operation 40p. 327
Tool Costp. 329
Operation Costp. 334
Batch Manufacturingp. 334
Flow-Line Manufacturing (Optional)p. 335
Summaryp. 340
Questions for Discussionp. 340
Problemsp. 341
Challenge Problemsp. 345
Practical Applicationp. 349
Case Study: Estimating a Stainless-Steel Partp. 349
Product Estimatingp. 351
Backgroundp. 351
Estimating Engineering Costsp. 356
Information Required for Product Estimatingp. 358
Bill of Material (BOM)p. 359
The Product Estimatep. 361
Productive Hour Cost Modelp. 362
Activity-Based Costing Model (Optional)p. 365
Learning Model (Optional)p. 368
Extensions for Learning Model (Optional)p. 371
Follow-On Productionp. 371
Engineering Change Orderp. 374
Break-Even Analysisp. 377
Pricing Principlesp. 378
Opinion, Conference, and Comparisonp. 380
Markup on Costp. 380
Contributionp. 382
Price-Estimating Relationshipsp. 382
Basic Contract Types (Optional)p. 384
Fixed-Price Arrangementsp. 385
Cost-Reimbursable Arrangementsp. 386
Benchmarking and Competitive Analysisp. 387
Trends in Product Cost Estimating (Optional)p. 394
Designing, Estimating, and Producing in a Global Economyp. 394
Summaryp. 395
Questions for Discussionp. 396
Problemsp. 397
Challenge Problemsp. 402
Practical Applicationp. 405
Case Study: Unijunction Electronic Metronomep. 406
Cost Analysisp. 409
First Principles for Tradeoff Studiesp. 409
Cash Flowp. 413
Taxation Effects on Cash Flowp. 414
Inflation or Deflation Effects on Cash Flowp. 416
Break-Even Modelsp. 420
Linear Cost Casep. 422
Semifixed Cost Case (Optional)p. 426
Nonlinear Cost Casep. 428
Life Cycle Cost (Optional)p. 438
Summaryp. 444
Questions for Discussionp. 445
Problemsp. 445
Challenge Problemsp. 452
Practical Applicationp. 454
Case Study: Optimal Injection-Molding Tool Costp. 454
Engineering Economyp. 457
Importancep. 457
Average Annual Rate-of-Return Methodsp. 459
Payback-Period Methodp. 460
Time-Value-of-Money Methodsp. 462
Net-Present-Worth Methodp. 464
Net-Future-Worth Methodp. 465
Net-Equivalent-Annual-Worth Methodp. 465
Rate-of-Return Methodp. 466
Comparison of Methodsp. 468
Standard Approaches to Engineering-Economy Methodsp. 469
Advanced Applications (Optional)p. 471
Contexts of "Interest" in Engineering Economyp. 471
Minimum Attractive Rate of Returnp. 474
Comparison of Alternativesp. 474
Replacementp. 479
Taxation Effects of Engineering Projectsp. 484
Summaryp. 489
Questions for Discussionp. 490
Problemsp. 490
Challenge Problemsp. 499
Practical Applicationp. 500
Case Study: Seasonal Productionp. 500
The Enterprise, Entrepreneurship, and Imaginamachinap. 503
The Enterprisep. 504
Entrepreneurshipp. 505
Inventors and Innovatorsp. 506
Designing for Profitp. 508
Designing for Manufacturep. 511
Self-Manufacture or Purchase?p. 513
Enterprise Planningp. 516
Assessment and Due Diligencep. 522
Financing and Enterprise Funding (Optional)p. 523
Raising Moneyp. 523
Stockp. 524
Debtp. 527
Bondsp. 528
Alliancesp. 532
Offeringp. 533
Legal Reminders (Optional)p. 534
Ethics and Engineeringp. 535
Summaryp. 536
Questions for Discussionp. 536
Problemsp. 537
Challenge Problemsp. 541
Practical Applicationp. 545
Case Study: Round Plate Inc.p. 545
Values of the Standard Normal Distribution Functionp. 549
Values of the Student t Distributionp. 550
10% Interest Factors for Annual Compounding Interestp. 551
20% Interest Factors for Annual Compounding Interestp. 552
Values of Learning Theoryp. 553
Selected Answersp. 555
Bibliographyp. 561
Indexp. 563
Table of Contents provided by Ingram. All Rights Reserved.


This first edition ofCost Analysis and Estimating for Engineering and Managementprovides the latest principles and techniques for the evaluation of engineering design. The theme for the book begins with four chapters devoted to an analysis of labor, material, accounting, and forecasting. In the next four chapters estimating is developed, and methods, operations, and product chapters are given. With those chapters understood, attention moves to Chapters 9 and 10, "Cost Analysis and Engineering Economy." Chapter 11, "The Enterprise, Entrepreneurship, and Imaginamachina," concludes the book, and it introduces principles that deal with bringing inventions to the marketplace. Wise and calculated risk taking for the entrepreneur (read engineer and manager) are important to the broader understanding of engineering for students. The organization of this book develops these principles in a systematic way. With increasing importance of design over rote skills in contemporary engineering courses, this book can be used for a variety of teaching situations: for lecture only, for lecture with a laboratory menu, or for professional mentoring with business, and developed field trips. Courses that connect to on-line live or delayed video instruction can use this book, as the authors have personal experience with these delivery modes. Furthermore, lifelong learning programs for the professional in either formal or informal settings can use the book. Academic requirements for this book/course may vary, and we believe that the book is suitable for a number of teaching approaches. The book has been written to appeal to engineering/management/technology settings. The student needs a mathematical maturity of algebra and introductory calculus. Typically, this book is used in the later college periods, and sometimes it coincides with the capstone course or other summary courses that occur in the final semesters. It is also suitable for graduate level courses in engineering/technology and management. The instructor will notice Internet requirements that search for information and apply it in practical context. We provide Internet addresses for numerous assignments. (Regrettably, these addresses may change from time to time. Fortunately, many students are adept at finding their own way around the Internet.) In the interactive environment of teaching, this book is a part of modern courseware. Word processing and spreadsheet skills are assumed, and some CAD ability is always helpful. The student must have access to a computer, and system requirements would be typical of more advanced personal or college Pentium computers. Various academic levels, either undergraduate or graduate, and backgrounds are appropriate and the instructor will find that this book is fitting for a variety of teaching styles. The authors have attempted to involve the instructor in the leadership of many exercises, calling on you, the instructor, to localize the assignments to your needs. The book has more material than can be covered in one semester or quarter, and thus chapters can be chosen to meet the objectives of each class. Chapter order can be adjusted. For example, if the students already have an understanding of statistics, then Chapter 5 material can be excluded. Other sections can be dropped depending on student preparation and course objectives. Now and then the term "optional" is used with sectional material, and the instructor can either appropriately overlook that section or include it for enriching purposes. The instructor will find that the book is versatile. This book has a range of difficulty for Questions for Discussion, Problems, Challenge Problems, Practical Applications, and Case Studies. Throughout the book, the authors have attempted to give the instructor the opportunity for outcomes-evaluation of student work with these many exercises. There are 128 Questions for Discussion in the 11 chapters. They are qu

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