Justifying the expense of any business tool can only be accomplished by ensuring a return on your investment. If the product can save you time and money by giving you the ability to make faster, better decisions, then it is a valuable asset to your company.
The practice of cost estimating is predicated on the idea of having the right information to make sound business decisions. Traditional bottoms-up estimating requires an abundant amount of data in order to produce a valid estimate, which increases the process time. Current computer-based technology offers the capability of producing an estimate with limited project definition while having the speed and accuracy that will impact the profitability of the project.
PRICE Systems, L.L.C. is the world leader in computer aided parametric technology. Our suite of estimating tools can give you the necessary data needed to make business decisions. We have 25 years experience in helping our clients achieve a competitive advantage by providing solutions to their business problems.
Gulfstream Aerospace Corporation in Savannah, Georgia, the premier manufacturer of large business jets, illustrates one example of PRICE's ability to influence business decisions to ensure profitability.
Estimating at Gulfstream - Past and Present
According to Jeff Schubert, Senior Estimating Analyst with Gulfstream,
"Over the past 10 years at Gulfstream, we have been developing our estimat-ing
capabilities in aircraft and aircraft systems. We have done this by collecting
actuals and cataloging them in a library system. This data has proved to
be useful for preparing estimates for hardware that is similar to that produced
by Gulfstream in the past. As is typical of aircraft manu-facturers, Gulfstream
subcontracts a significant amount of structural components, assemblies,
and most equipment items. Because of this, we lacked sufficient historical
data on these types of items to do credible estimates."
Finding the Solution with the PRICE Hardware Estimating Model
One way Gulfstream has been able to estimate an in-house cost when there
is little if any experience building such items is through the use of the
PRICE Hardware model. We can use PRICE H with any level of product definition,
including a concept phase. PRICE H requires much less information to generate
cost estimates used:
"Gulfstream has made a good investment in the PRICE Model and expects to continue its use in the future." Jeff Schubert Senior Estimating Analyst
PRICE vs. Historical Actuals
Gulfstream found that PRICE H is much more sensitive to program inputs than
any parametric estimate that is solely based on company history. "When using
company historical data it is very hard to gauge how much the design cost
is increased by the schedule being shortened, the experience of the engineers
being less than in the past, or other items that are basic inputs to the
PRICE Model. Because of this Model sensitivity, it is much easier to do
design-to-cost studies that allow us to pinpoint the cost effective design
concept and determine the effects of various programmatics on the cost of
the project," says Schubert.
Schubert also stated, "Most of our historical data is at a higher level rather than the component level where you usually need the estimate. The Model can be used at the component level with relative ease.
Other components of the engineering function at Gulfstream, such as stress, performance, data, and 'other engineering' are usually charged at a very high level because in many instances they support the total aircraft and not any one specific component. Using actuals it is hard to estimate all of these 'other engineering' costs effectively at the component level. With the PRICE Estimating Suite, these costs as well as others can be estimated accurately.
Overall Value Added
"The annual license fee for PRICE H has been returned to us several hundred
fold. On just one occasion, partly because of a PRICE H Model estimate,
approximately $9,000,000 for 200 aircraft was saved through some design-to-cost
objectives on the Gulfstream V program. Many of the uses of the PRICE H
Model do not have any specific savings that are readily recognized, but
without the Model I know that many items we currently use in production
would have cost far more than they do now had the Model not been used to
help us establish cost goals," according to Mr. Schubert.
"The PRICE H Model has been effectively utilized in support of acquisition contracts from the U.S. Government. This is especially true in supporting negotiations of new modifications to the Gulfstream aircraft," says Floyd Washburn, Manager of Pricing and Estimating.
"We have received excellent training and support from PRICE Systems. They are continually researching and improving their products based on user concerns and industry driven technology changes."
More than 800 customers worldwide have used PRICE to make faster and better business decisions. Far more than just a tool used in reconciling bottom-up estimates, PRICE is essential in design-to-cost analyses, design evaluations, vendor negotiations, make or buy decisions, bid/no-bid decisions, and feasibility studies.