US 5,793,632 AGrant

Cost Estimating System Using Parametric Estimating and Providing a Split of Labor and Material Costs

Issue Date:1998-08-11

•27 Claims

•59 Drawing Sheets

Abstract

A parametric cost estimating model, which can be software-based, provides a capability for inputting specific labor rates and burdening or overhead information for a given installation. Other inputs are project-specific depending on whether a hardware or a software system is being estimated. The process and model provide estimating information as to costs to develop and produce specific hardware or software systems and also provide a split as to labor and material costs for such systems.

Metadata

Assignee

Lockheed Martin Corporation

Inventors

Bruce Fad
Roy Summers
Anthony DeMarco
Todd Geiser
James Walter
Ben Chackman
Earl King

Application Information

Application Number:US 6247172

Filing Date:1996-03-26

Priority Date:1996-03-26

Art Unit:244

Classifications

IPC:

G06F 1760

Field of Search:

364395400;464.01;464.1;468.03201;229

Patent Drawings (59 sheets)

Description

FIELD OF THE INVENTION

The invention pertains to parametric cost estimating systems and methods. More particularly, the invention pertains to systems which provide a labor and material cost split in response to user specified labor rates and burdening structures.

BACKGROUND OF THE INVENTION

Computer based cost estimating models have long been used in planning design and production costs for electronic and mechanical hardware assembly and systems. They have also been used for purposes of estimating avionics and space system costs. Early successes with those types of systems resulted in such models being adapted and expanded for use in deriving cost estimates for commercial, as opposed to military and government, hardware and systems. The models have also been expanded to be useable to derive cost estimates for the development of various types of software systems.

The advantages of such computerized models include reduction of manual errors, a decrease in turn-around time as well as extended capabilities beyond those which can be carried out on a manual or a semi-automated basis. The models implement a parametric approach which is derived from earlier experience and validated on an on-going basis using empirical evidence.

Such models make it possible to generate probable cost evaluations and estimates early on when a project is still at a very preliminary planning stage. Known models take into account operational and testing requirements and make allowance for technological growth and inflation factors.

Scheduling constraints can be incorporated into the respective models. Estimated costs can be adjusted to take into account various proposed schedules.

One such parametric estimating tool, useable with hardware systems is commercially marketed under the brand name PRICE-H by Price Systems Division of Lockheed Martin Corporation. Characteristics of this product are described in the PRICE-H Reference Manual, November, 1993. This manual is hereby incorporated herein by reference. It is useful for indicating the background of the invention and for illustrating the state of the art. Related products are also marketed by the same Division for producing cost estimates of software based systems.

The PRICE-H System produces a cost matrix as one form of output. Table 1 illustrates an exemplary output cost matrix of costs for the development and production of an electronic item of the type produced by the PRICE-H System.

Table 1 illustrates total costs for development and production of various stages in the production of an electronic item. Table 1 does not provide a split of labor, material, or other direct costs.

The PRICE-H System receives as inputs from a user values for various variables which specify the Equipment being modeled. One variable of particular significance which is input to such systems such as PRICE-H goes by the acronym "Platform" (PLFTM). This variable is an indicator of operational requirements in terms of specifications and testing reliability. It affects the computation of costs, indirect cost ratios and performance schedules.

Table 2 illustrates various values of the PLTFM variable for different operating environments.

Other input variables include Manufacturing Complexity of the Structure (MCPLXS) as well as Manufacturing Complexity of the Electronics (MCPLXE).

Additional variables include engineering complexity (ECMPLX). Maturity year for a specific complexity of system as well as technology is establishable in known models by means of an input variable whose magnitude is indicative of this factor, and is identified by the pneumonic YRTECH. The variable WE specifies the weight of the electronics. WS specifies the weight of structure. QTY signifies the number of production units to be produced. PROTOS signifies the quantity of deliverable prototype units. RATE specifies production rate. These and other input parameters for the PRICE-H System would be known to those of skill in the art given their description in the above noted Reference Manual.

Known models of the above-described type do not provide a breakout of costs for labor and material based on specific user input labor rates as well as a user burdening structure. It would be desirable to provide a system whereby specific labor rates can be input along with specific burdening and overhead information. Further, it would be desirable to be able to use these inputs in combination with other information to provide a labor and material split for the development and/or production of a given. hardware or software system. Preferably, such additional capability could be provided without causing the user to carry out any manual operations other than entering the necessary parameter values.

SUMMARY OF THE INVENTION

A system and a process of cost estimating provides a split of labor and material expenses for a given project. Ar interface is provided to permit the entry of a user specific labor rates and burdening information such as direct overhead, overtime, and material burden. The entered financial information is in addition to information necessary to specify the project so as to generate an overall cost estimate thereof using a parametric modelling system generally of the type previously described.

A system in accordance with the present invention includes a programmable processor with associated read-write memory and appropriate input/output devices such as graphical displays and keyboards. Coupled to the processor is a magnetic storage unit for purposes of storing sets of instructions for carrying out a parametric modelling process, and for entering financial information such as direct labor rates, direct labor overhead rates, overtime rates, general and administrative and related expenses. Finally, the storage unit stores a set of programmed instructions, which conventionally would be linked to the instructions representative of the parametric estimating model, for purposes of producing a labor, material and direct cost break out.

A process in accordance with the present invention includes the steps of defining a system to be estimated as required by a selected parametric estimating model and entering the necessary values; the pertinent financial factors are then entered as noted above so as to implement a labor and material split; the parametric model is then executed to produce cost estimates and calculate appropriate output values, which might be usable to determine the labor cost and material cost; a determination is then made using the entered financial factors of the labor cost and the material cost; one or more output reports can be generated indicative of the labor, material, and other direct costs; finally, the parameters can be revised and the scheduling model can be reexecuted again as required.

The process can be used to determine production rate, and establish a learning curve as a function of unit production rate.

BRIEF DESCRIPTION OF THE DRAWING:

FIG. 1 is a block diagram of a system in accordance with the present invention;

FIG. 2 is an over-all flow diagram of a method in accordance with the present invention;

FIG. 3 is a screen illustrating various financial factors;

FIG. 4 is a screen illustrating the results of a labor/materials split in accordance with the present invention;

FIG. 5 is a flow diagram illustrating a determination of labor and material percentages in accordance with the present invention;

FIG. 6 is a flow diagram illustrating a determination of labor and material costs in accordance herewith;

FIG. 7 is a Plot of DevelPrjMgtODC% v. PLTFM;

FIG. 8 is a Plot of DevDataMat% v. PLTFM;

FIG. 9 is a Plot of ProtoElecAMSMat% v. MEPLXE;

FIG. 10 is a Plot of Material% v. PLTFM;

FIG. 11 is a Plot of MCPLXE v. PLTFM;

FIG. 12 is a Plot of ElectRate v. PLTFM;

FIG. 13 is a Plot of ElectWeight v. PLTFM;

FIG. 14 is a Plot of Protos v. PLTFM;

FIG. 15 is a Plot of Material% v. MCPLXE;

FIG. 16 is a Plot of Material% v. RATE;

FIG. 17 is a Plot of Material% v. WE;

FIG. 18 is a Plot of Material% v. PROTOS;

FIG. 19 is a Plot of ProtoStructAMSMat% v. MEPLXS;

FIG. 20 is a Plot of Material% v. PLTFM;

FIG. 21 is a Plot of MEPLXS v. PLTFM;

FIG. 22 is a Plot of SRate v. PLTFM;

FIG. 23 is a Plot of WS v. PLTFM;

FIG. 24 is a Plot of PROTOS v. PLTFM;

FIG. 25 is a Plot of %MXS.ADJ. v. MCPLXS;

FIG. 26 is a Plot of %SRateAdj v. SRate;

FIG. 27 is a Plot of Material% v. WS;

FIG. 28 is a Plot of Material% v. PROTOS;

FIG. 29 is a Plot of ProtoElecldat% v. MEPLXE;

FIG. 30 is a Plot of ProtbStructMat% v. MEPLXS;

FIG. 31 is a Plot of ProtoMat% v. PROTOS;

FIG. 32 is a Plot of TTEMat% v. PROTOS;

FIG. 33 is a Plot of PrjMgtMat% v. PLTFM;

FIG. 34 is a Plot of DataMat% v. PLTFM;

FIG. 35 is a Plot of ProdElecAMSMat% v. MEPLXE;

FIG. 36 is a Plot of Mat%(Elect) v. PLTFM;

FIG. 37 is a Plot of MCPLXE v. PLTFM;

FIG. 38 is a Plot of ERate v. PLTFM;

FIG. 39 is a Plot of WE v. P:LTFM;

FIG. 40 is a Plot of QTY v. PLTFM;

FIG. 41 is a Plot of Mat%Adj v. MCPLXE;

FIG. 42 is a Plot of Mat% v. RATE;

FIG. 43 is a Plot of Mat% v. WE;

FIG. 44 is a Plot of %QTYAdj v. QTY;

FIG. 45 is a Plot of ProdStructAMSMat% v. MEPLXS;

FIG. 46 is a Plot of Mat% v. PLTFM;

FIG. 47 is a Plot of MCPLXS v. PLTFM;

FIG. 48 is a Plot of SRate v. PLTFM;

FIG. 49 is a Plot of WS v. PLTFM;

FIG. 50 is a Plot of QTY v. PLTFM;

FIG. 51 is a Plot of Mat% v. M:CPLXS;

FIG. 52 is a Plot of Mat% v. RATE;

FIG. 53 is a Plot of Mat% v. WS;

FIG. 54 is a Plot of Mat% v. QTY;

FIG. 55 is a Plot of ProdElecMat% v. MEPLXE;

FIG. 56 is a Plot of ProdStructlat% v. MEPLXS;

FIG. 57 is a Plot of TTEMat% v. QTY;

FIG. 58 is a Plot of ProdRate v. QTY; and

FIG. 59 is a Plot of ULC v. Rate.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENT

While this invention is susceptible of embodiment in many different forms, there are shown in the drawing, and will be described herein in detail, specific embodiments thereof with the understanding that the present disclosure is to be considered as an exemplification of the principles of the invention and is not intended to limit the invention to the specific embodiments illustrated.

FIG. 1 illustrates schematically a system 10 in accordance with the present invention. The system 10 includes a programmable processor 12, which could be a digital programmable processor such as a computer of a conventional variety.

The processor 12 includes read-write memory 14 which could be implemented as solid state, random access memory for the purpose of temporary storage of programs or data. The processor 12 could also include read-only memory 16 for programs or constants which are not intended to be changed.

Coupled to the processor 12 is a visual output device 20 which might include some form of a conventional display such as a monitor or a plasma panel. The input/output device 20 also includes a keyboard 22 for purposes of entry of parameter values by a user. A mouse could be used as an alternate form of an input device.

Also coupled to programmable processor 12 are one or more mass read-write storage units which might be implemented as magnetic disk drives 26. The storage unit 26 is intended to provide long-term, storage of programs and data which are loaded into the read-write memory 14 for purposes of execution or processing. The details of program storage, and execution along with data storage and processing thereof, could readily be determined by one of skill in the art in view of the present description.

Carried on the storage element 26 is a parametric cost estimating model 28a, such as the commercially available PRICE-H System previously discussed. Coupled to that model appropriately, and also stored on the unit 26 is an input/output processing system 28b which provides user-friendly functionality whereby a user can enter one or more parameters via keyboard 22, and receive feedback via the display 20, in connection with specific user-related labor rates and burdening information.

Further, stored on unit 26 is a set of instructions 28c. This set of instructions interacts with the prestored PRICE-H parametric model, output values generated thereby as well as parameters input via the keyboard 22. As a result, it is possible to produce as an output not only cost estimates for various aspects of system design and production, (as in Table 1), but also a labor and material split for a particular system or subassembly being estimated.

FIG. 2 illustrates in an overall sense the process being carried out by the system 10. In an initial step 100, a user enters the necessary parametric information, via keyboard 22, to define a project for which cost estimates are required. In a step 102, financial factors are entered which are required to implement the labor and material cost split hereof. The particular financial factors of interest are discussed in more detail subsequently.

In a step 104 the parametric cost estimating model such as the PRICE-H System is executed to produce an overall cost matrix, such as Table 1, and to calculate various intermediate parameter values. In a step 106, a determination is then made (based on entered financial factors as well as the calculated cost matrix, prestored tabular values, and any necessary results of the execution of the parametric model) of the labor cost and material cost of the system defined in the step 100.

In a step 108 one or more output reports can be either displayed visually on the unit 20 or printed in the form of hard copy for subsequent review. In a step 110, one or more of the parameters can be adjusted for purposes of examining sensitivity of cost to various alternate parameter values or to determine the effect on cost of scheduling revisions. The parametric model is then re-executed in the step 104 to produce updated cost estimates and updated calculated parameter values. Subsequently, the labor costs and material costs are again updated.

The above process can be carried out repeatedly with variations in parameter values in an attempt to explore consequences of parameter alteration.

Table 3 identifies various input fields of a financial factors screen, of a type illustrated in FIG. 3. This table contains direct labor rates, overheads to the direct rates, overtime percentages, material burden percentages, designation of the direct rate time units, number of hours in the standard work month, additional cost percentages and the economic base year to which these rates apply. A user can alter any of these inputs from this screen and alter the preset values, by use of the reset button. This thus provides a user an ability to provide actual data for labor rate values per month or per hour. Additionally, as illustrated in Table 3, general and administrative expenses can be specified by using the screen of FIG. 3.

Financial Factors Input Fields

FIG. 4 is an output screen showing a labor and a material breakdown for an exemplary antenna structure. Columns are provided for percentages of other direct costs (ODC %), material costs (Mat'l %) and labor costs (Lab %). The following values can be automatically determined:

Development

OCD%--Project Management

Material %--Data

Prototype

T & TE

Production

ODC%--Project Management

Material %--Data

Production

T & TE

Development and production allocation factors are used for allocating labor, material and other direct costs. The user can change any of the inputs from the screen of FIG. 4, or select preset values by using the reset button. Some of the values as those noted above, can be calculated by the system and are indicated by a check box immediately to the left of the corresponding element. Once a calculation has been made which results in a value, an X appears in the check box and the displayed value becomes gray on the screen. Additionally, the displayed calculated value may not be altered by the user.

In the lower or right-hand corner of the screen of FIG. 4 are two lines specifying percentages for an after-market supplier (AMS) as well as an original equipment manufacturer (OEM). The sum of these two values adds up to 100%.

These settings help define the material content of the production and prototype production of cost elements. Hence, the relative values as a percentage of material to be supplied by the user versus that which is supplied by someone else can be established or varied to determine what the effect of various splits might be in these two values.

FIG. 5 illustrates in more detail the process of producing on a percentage basis, the calculatable development factors and production factors illustrated in the screen of FIG. 4. In a Step 120, an appropriate set of parameters is entered to specify a project to be estimated. In a Step 122, a parametric modeling process is carried out, for example, by using the PRICE-H parametric modeling system discussed previously. An output from the Step 122 is a cost matrix, of the type illustrated in Table 1, which specifies development and production costs. In a Step 126, the information from the cost matrix, along with other parametric information from the modeling process is used to determine those developmental factors and production factors described above. The equations specifying this process are presented subsequently.

FIG. 6 illustrates the further steps of taking the total cost of a selected item, combining that cost with a material index percent from the labor and material break out, as illustrated in FIG. 4, and in a Step 140, producing an estimated material cost for the selected line item. To determine an estimated labor cost, in a Step 142, a labor percentage is multiplied by the line item cost to produce an estimated labor cost.

In a Step 144, local default labor rates can be used to establish estimated labor hours in a Step 146. Previously entered actual user labor rates can then be combined in a Step 148 with estimated labor hours to produce updated labor costs for the selected item. Both the estimated material cost and the updated labor cost can then be provided in the form of a report.

The process for determining the labor and material break out where those items can be calculated (Step 126) is implemented as follows. In the development phase, project management, other direct cost percentages (ODC %) can be determined. The data material percent, can then be determined. The prototype material percent can be determined. The tooling and test equipment (T & TE), material percent, can then be determined. In each of the above instances, the corresponding labor percentage is 100% minus the respective direct cost percentage or material percentage.

In the production phase, the project management, other direct cost percent (ODC %) can be established. Subsequently, a determination can be made of the data, material percent (MAT%). The production material percent (MAT%) can then be determined. Finally, the tooling and test equipment material percent (MAT%) can be determined. In each instance, the corresponding labor percentage can be established by subtracting the respective direct cost percent or material percent from 100%.

In addition, production rate can be established and a unit learning curve can be developed.

The above process is carried out by the subsequently disclosed set of equations which are illustrated in FIGS. 7-59. The equations illustrated in FIGS. 7-59, are provided for various types of line items such as electronic and electro/mechanical systems, mechanical systems, integration and test functions, modifications, and the like. Type designations are indicated by both a textual description of the type as well as a mode number. The mode designation merely identifies the particular type of item. Additionally, in any given category, a disclosed equation may or may not be use in each instance with an indicated line item. If an equation is used with an indicated line item, that usage is shown by a note such as, #1, adjacent to a corresponding mode number. The note indicates that the mode 1 equation is to be used with the subsequent respective mode as indicated.

While the above process has been disclosed in conjunction with use of a particular form of a parametric modeling system, the PRICE-H System, it will be understood that the invention is not so limited. Other parametric modeling systems could be used without departing from the spirit and scope of the present invention. One of skill in the art will understand from a review of the above set of equations how that set of equations could be used with other parametric modeling systems.

From the foregoing, it will be observed that numerous variations and modifications may be effected without departing from the spirit and scope of the invention. It is to be understood that no limitation with respect to the specific apparatus illustrated herein in tended or should be inferred. It is, of course, intended to cover by the appended claims all such modifications as fall within the scope of the claims.

Claims

We claim:

1. An estimating system for providing a user estimates of labor costs and material costs needed to implement a predetermined, unbuilt project in the absence of information of a type needed to create bills of materials, the method comprising: storage means; means for entering at least one unit labor cost value, at least one overhead parameter value and at least one material cost parameter value and for writing said entered values into said storage means; means, coupled to said storage means, for processing said entered values and for providing total estimated cost as well as separate percentage estimates of project labor and material.

2. A system as in claim 1 wherein at least said means for entering includes a keyboard.

3. A system as in claim 1 wherein said processing means includes a digital processor and wherein said storage means includes a parametric cost estimating engine stored in the form of executable instructions.

4. A system as in claim 1 which includes a display and means for presenting on said display said separate estimated percentages of project labor and material.

5. A system as in claim 1 which includes further means for combining said percentage estimate of material with a local labor cost rate so as to produce an estimated updated labor cost.

6. A system as in claim 5 which includes means for establishing a material cost.

7. A method of cost estimating comprising: providing a selected set of parameter values exclusive of a bill of materials or labor hour estimates; providing a parametric-type cost estimating engine; providing a total output cost using the engine; providing a software element for establishing a breakout of labor and material costs wherein the element, using the total cost information establishes at least one material percent parameter and at least one labor percent parameter.

8. A method as in claim 7 which includes converting the percent of material parameter to a currency based material cost.

9. A method as in claim 8 which includes converting the percent of material to a currency based labor cost.

10. A method as in claim 9 which includes providing a selected labor rate and determining a corresponding labor cost.

11. A method as in claim 10 which includes determining project management direct costs.

12. A method as in claim 10 which includes entering actual unit labor costs and making an updated labor cost determination based thereon.

13. A cost estimating apparatus comprising: a parametric cost estimating element; an input device coupled to said element; and means for producing a material and a labor breakout in response to an estimated total project cost from the element in the absence of labor hour estimates.

14. An apparatus as in claim 13 wherein said element includes a software based cost estimating engine.

15. An apparatus as in claim 13 which includes a programmable processor coupled to said input device.

16. An apparatus as in claim 13 which includes means for storing entered, actual labor rates and for storing default labor rates.

17. An apparatus as in claim 13 wherein said producing means includes software for establishing a percent of material as an output.

18. An apparatus as in claim 17 wherein said software provides a cost of material as an output.

19. An apparatus as in claim 18 wherein said software provides a percent of labor as an output.

20. An apparatus as in claim 19 wherein said software provides a cost of labor as an output.

21. A method of estimating labor and material costs for a new project without using either bill of material-type information or estimated hours of labor, the method comprising: providing project input information, including operating environment, manufacturing complexity, production quantity parameters exclusive of bill of material-type information and labor hour estimates, carrying out a parametric cost estimating project to estimate product cost; establishing a material percent parameter for the project using project cost estimates and the input information; establishing a labor percent parameter for the project using the estimated cost information and the material percent parameter.

22. A method as in claim 21 wherein the value of the material percent parameter is reduced by an increasing value of the operating environment parameter.

23. An apparatus for estimating labor and material costs for a project in the absence of detailed manufacturing-type information comprising: circuitry for storing project specifying parameters including type of environment, manufacturing complexity, labor rates and overhead expense; a first processing element coupled to the storing circuitry for generating a total cost estimate for the project in response to the stored parameters; a further processing element, coupled to the storing circuitry, for generating a percent of labor parameter in response to at least the environmental parameter and the total cost estimate.

24. A control element for estimating labor costs for a selected project based on parametric information and in the absence of total labor hour estimates, the element comprising: a first plurality of commands for enabling a user to enter at least an environmental specification parameter and a labor rate parameter; pre-established relationship information defining a relationship between percent of total cost of the project associated with project material as a function, at least in part, of the entered environmental parameter; a second plurality of commands coupled to the first plurality and the relationship information for forming an estimate of total project cost using entered project parameters in the absence of project labor hour estimates; a third plurality of commands, coupled to the second plurality for determining a percent of total cost for material for the project in response to at least total cost and the relationship information; and a fourth plurality of commands for establishing a percent of total cost for labor for the project in response to at least the percent of material cost.

25. An element as in claim 24 wherein the pluralities of commands and the relationship information can be stored on a movable medium.

26. An element as in claim 24 which includes additional commands for estimating total labor hours as a function of the estimated total cost, the labor rate parameter and the percent of labor cost for the project.

27. An element as in claim 26 which includes further commands enabling a user to adjust the labor rate parameter and to generate updated estimated total cost and total labor hours in response thereto.

Patent Citations (10)

Patent	Date	Inventor
US3703725	1972-11-01	Gomersall et al.
US4875162	1989-10-01	Ferriter et al.
US4885694	1989-12-01	Pray et al.
US5189606	1993-02-01	Burns et al.
US5249120	1993-09-01	Foley
US5255207	1993-10-01	Cornwell
US5377098	1994-12-01	Sakai
US5504674	1996-04-01	Chen et al.
US5515269	1996-05-01	Willis et al.
US5570291	1996-10-01	Dudle et al.

Non-Patent Literature (4)

Price S .TM. Reference Manual, Third Edition, Oct. 1993, published by Price Systems, Moorsetown, New Jersey.
Price HL .TM. Reference Manual, First Edition, Nov. 1993, published by Price Systems, Moorsetown, New Jersey.
Price H .TM. Reference Manual, First Edition, Nov. 1993, published by Price Systems, Moorsetown, New Jersey.
Price M Reference Manual, First Edition, Oct. 1994, published by Price Systems, Moorsetown, New Jersey.

Abstract

Patent Drawings (59 sheets)