Journal of Materials Processing Technology 103 (2000) 141±148

A generic framework for cost estimation and

cost control in product design
I.F. Weustink, E. ten Brinke, A.H. Streppel*, H.J.J. Kals
Laboratory of Production and Design Engineering, University of Twente,
PO Box 217, 7500 AE Enschede, Netherlands

Abstract

Traditionally, cost estimation was performed after the design process, though most opportunities of cost reduction have already passed.
Therefore, it is advantageous to be able to estimate the product costs early in the product development cycle. By changing the way cost
estimation is dealt with, it is possible to utilise all opportunities of cost reduction. To be able to control the product costs, it is necessary to
estimate the costs adequately and to store the cost data in a generic way. A generic framework is developed to establish these requirements.
The framework, which is the basis for the control of the production costs, takes into account design, process planning and production
planning aspects. # 2000 Elsevier Science S.A. All rights reserved.

Keywords: Generic framework; Product design; Cost control; Cost estimation

1. Introduction been executed. Within the existing cost estimating

methods, two main approaches can be recognised (e.g.
A need exists for adequate cost estimation and cost [5]): variant based and generative cost estimating. Variant
control during the planning phases of the product develop- based cost estimating depends on the similarity between
ment cycle. Market demands have changed towards higher the product under consideration and previously manufac-
quality, shorter delivery times and lower product costs. To be tured products. The cost record of the previously manufac-
competitive, it is necessary to keep the production costs as tured products can be used as a template in the cost
low as possible, in order to keep the selling price low. This estimation process of the new products. This method is
can lead to an increasing amount of products sold. The larger useful in small and medium batch manufacturing of rela-
part (75%) of the product costs is committed during the tively standard products. Generative cost estimating is based
product design process. Consequently, after the design on the fact that the costs of manufacturing a product depend
process has been completed, most opportunities of cost on the required production operations. By determining the
reduction have passed. Therefore, it is necessary to have required operations it is therefore possible to estimate the
knowledge about the cost consequences of decisions during production costs. This method is closely related to process
the planning phases of the product development cycle. In planning and will usually be applied for new product ele-
these planning phases many decisions have to be made. Cost ments for which no variants exist. Generally, a product
estimates in the product design process can be used to consists of relatively standard elements and product ele-
choose between design alternatives in order to make cost ments that are completely new. Therefore, these two main
effective decisions. approaches are almost always applied at the same time to the
same product.
2. Cost estimation

Cost estimation is concerned with the prediction of the 3. Decision making processes in product design
costs related to a set of activities before they have actually
The product design process consists of a large number of
*
Corresponding author. decision making processes. These decision making pro-
E-mail address: [email protected] (A.H. Streppel) cesses ®nally lead to a complete product model, representing

0924-0136/00/$ ± see front matter # 2000 Elsevier Science S.A. All rights reserved.
PII: S 0 9 2 4 - 0 1 3 6 ( 0 0 ) 0 0 4 0 5 - 2
142 I.F. Weustink et al. / Journal of Materials Processing Technology 103 (2000) 141±148

a physical object that has to be made. During the subsequent

decision making processes the freedom for each decision is
restricted by the constraints imposed by preceding decisions.
In the embodiment design phase, these decisions are
concerned with the material selection, surface roughness,
tolerances, shape, dimensions, selection of production meth-
ods, etc. All these decisions are mutually dependent. For
instance, a decision about the type of material leads to a
reduction of the solution space concerning the production
methods and vice versa. From a cost point of view this means
that selecting a cheap material can lead to high production
costs, whereas selecting an expensive material can lead to Fig. 2. The three co-operating information structures as part of
lower fabrication costs. The consequences of all such deci- information management [6].
sions have to be taken into account.

the engineering and planning processes, a resource informa-

4. Reference model tion structure comprising the information about the cap-
ability, capacity and life cycle aspects of the resources, and
In order to be able to deal with different views of a ®nally an order information structure concerned with the
manufacturing system, the system is introduced by means planning of the production activities, resulting in the in-time
of a reference model. A reference model represents a system execution of given production orders, regarding the capacity
as an organisation in terms of its structure of relatively of the resources.
independent, interacting components, and in terms of the
globally de®ned tasks of these components [1]. The man-
ufacturing engineering reference model (shown in Fig. 1), 5. Cost driving product characteristics
introduced by Lutters et al. [6] emphasises the equivalent
importance of products, orders and resources in the entire The existing cost estimating methods are able to estimate
manufacturing cycle. Product engineering is concerned with the product costs during the design process, but they are not
the design and development of a product and its variants, capable to analyse and control the product costs. These
starting from the functional requirements up to ®nal recy- methods are only applied to choose between design alter-
cling/disposal. natives or to evaluate the product costs. The least require-
ments for cost control are knowledge of the costs, based on
4.1. Information management cost estimations, and a generic storage of these costs. There-
fore, it is convenient to split up the costs into more con-
The kernel of the reference model described above is stituents. Obviously, it is advantageous to have a highly
information management. The management of information, differentiated view of the production costs [9].
concerning orders, resources and products, is organised in From an analysis of the product design process and its
information management which becomes the pivot of the decision making processes, based on the design models of
design, engineering and planning activities. Three informa- Pahl and Beitz [7] and Ullman [8], it can be concluded that
tion structures can be identi®ed (Fig. 2): a product informa- the committed product costs (the costs that are ®xed during
tion structure comprising product information generated in the product design process) are caused by the following cost
driving product characteristics.

5.1. Geometry

The geometry determines the material quantity and the

production processes that are required. The geometry
includes the shape, dimensions, accuracy, etc. The in¯uence
of the geometry on the product costs is obvious. For
instance, a higher level of accuracy requires more accurate
resources (e.g. machine tools, equipment) which results in
higher production costs. The shape can also cause increasing
production costs; a pocket with straight corners requires
generally a more expensive process (e.g. electrical discharge
machining) than a pocket with rounded corners (made by,
Fig. 1. The manufacturing engineering reference model [6]. e.g. milling).
 I.F. Weustink et al. / Journal of Materials Processing Technology 103 (2000) 141±148 143

5.2. Material

Material is one of the most obvious cost driving product

characteristics, because material costs constitute about 50%
of the total product costs [2±4].

5.3. Production process(es) Fig. 3. The fundamental structure.

Production processes are required to transform raw mate-

rial into a component or to assemble components and/or
6.1. Product structure
assemblies into higher level assemblies. Resources (e.g.
operators, machine tools, tool sets, ®xtures) are needed to
In the product design process the product structure is
perform the required production operations. The resources
determined. A product can be represented by means of
have a certain capability, which means that resources have
elements and relationships between those elements. Both
technical restrictions, concerning the power of the machine
elements and relations have attributes, for instance dimen-
tool, accuracy, maximum dimensions of the workpiece, etc.
sions, material type, colour, ®tting, etc. The fundamental
The limited capability of resources restricts the execution of
structure is given in Fig. 3. An element does not merely refer
certain operations. This has to be taken into account in the
to geometric entities; it can also be a (sub)function, concept,
planning phases of the product development cycle. The type
requirement, etc. No explicit hierarchy exists in this model.
of production method has a signi®cant in¯uence on the
Usually, this hierarchy is assumed in part-of relations.
production costs.
However, the part-of relation has the same status as any
other relation between the elements.
5.4. Production planning The generic framework is based on the four cost driving
product characteristics and the fundamental structure. It is
Besides the technical restrictions of resources, resources only useful to allocate costs to physical product elements.
have also logistic restrictions, which means that a resource This is obvious, in recognising that due to, e.g. function
will not always be available. With the knowledge of these integration, standardisation and modularisation it is hardly
restrictions, operations can be allocated to resources that are possible to allocate manufacturing costs to non-geometrical
available. It is necessary to ensure the due date, because elements. The four cost driving product characteristics are
otherwise a ®ne could be incurred. These time, and there- attributes of an element and can be labelled as the cost
fore, cost consequences must be regarded in the planning attributes of a physical element. The generic framework is
phases. presented in Fig. 4. The cost attributes are only related to the
As mentioned before, the four cost driving product char- physical product elements and not to the relations between
acteristics are interrelated. Material is in¯uenced by the the elements. If a relation between elements (e.g. a toler-
geometry (e.g. strength, stiffness) and the type of production ance) has certain cost consequences, these costs are related
process. The production process is in¯uenced by the geo- to a higher aggregation level.
metry (e.g. shape, accuracy) and the type of material. The physical product elements are: assemblies, compo-
Besides, the geometry is in¯uenced by the type of material nents, modules, faces and features (design/manufacturing
and the production process (possible dimensions, shape, features). In Fig. 5, the structure of these product elements is
accuracy). The selection of one of these aspects imposes given. A distinction exists between the objective and the
restrictions on the other aspects. The selection process subjective view.
depends on the type of production environment. In mass
production, e.g. the emphasis is usually on the appropriate
combination of process and material. Moreover, in this type
of environment more time is available to make a good
selection. In small batch manufacturing, material often is
selected ®rst, due to the general purpose machine tools that
constrain the available production processes.

6. The generic framework

If a product structure is available, it is obviously advanta-

geous to relate the cost information of a product to the same
structure. Fig. 4. The generic framework.
144 I.F. Weustink et al. / Journal of Materials Processing Technology 103 (2000) 141±148

into consideration. In the manufacturing view, the module is

equal to a (sub)assembly. Therefore, it is ambiguous to relate
costs simultaneously to (sub)assemblies and modules.
A short explanation about the cost attributes on the
different product element levels is given below.

7.1. Feature level

The geometry is concerned with the feature's shape,

dimensions and tolerances and in¯uences the possible pro-
duction methods. The cost attribute `material' on feature
level can impose demands on the cost attribute material on
component level, because features can impose restrictions to
the type of material used. These restrictions have to be taken
into account and can lead to higher material costs. Produc-
tion processes are required to manufacture a feature. These
Fig. 5. Structure of the physical elements, with the distinction between the processes are in¯uenced or restricted by the other cost
objective and the subjective view.
attributes. The relations between the different features are
not part-of this level. They belong to the attribute geometry
6.2. Relation of the framework with the information on component level. In other words, when two features are
structures related to each other, the relations (e.g. tolerances) are
indicated at component level.
The cost attributes are related to information management
(the three information structures, see Fig. 2). The three 7.2. Component level
information structures deal with the information concerning
products, resources and orders. All cost attributes are related The geometry on component level consists of the global
to the product information structure. The value of the cost shape, dimensions and accuracy of the component. Also the
attribute `process' is in¯uenced by the resource information dimensions and tolerances between the features are part of
structure, because this structure deals amongst others with the geometry. The type of material is selected taking into
the information concerning the capability of the resources. account the requirements set on assembly and feature level.
Moreover, the cost attribute `production planning' is in¯u- The material costs are determined by the geometry (weight,
enced by the order information structure, because this dimensions) and the type of production process (milling,
information structure deals amongst others with the capacity casting). The processes on this level are for instance casting,
of the resources in a certain period of time. Due to the injection moulding or extrusion. The type of process can
interrelations between the three information structures, the in¯uence the costs considerably. The processes are also
information about the resources, orders and the product can concerned with changing tools and resources, transportation,
easily be used during the design decisions. For instance, etc. The amount of tool and resource change depends
information about the capability, capacity and costs of the amongst others on the different production methods used
resources is easily available and can be used in the decision to manufacture the features. These processes are amongst
making processes of the product design process. others in¯uenced by the geometry on this level and the
geometry and processes on feature level.
7. Levels of aggregation
7.3. Assembly level
It is not useful to allocate costs to the product elements
modules and faces. A face, which has to undergo any On this level, the cost attribute `geometry' consists of the
manufacturing operations due to tolerances on that surface global dimensions and the relations and tolerances between
becomes a manufacturing feature. From a cost point of view, the components and features. The cost attribute `material'
a face is a surface that does not undergo any production consists of the material requirements for the components.
operations. A module is a group of components, which is Ð The processes on assembly level are obvious; assembly
for reasons of convenience Ð considered to be a distinct processes are required to assemble components and/or
section of a product (a subjective view). Using this de®ni- (sub)assemblies. It is also possible that fabrication processes
tion, a module is seen as an assembly with a speci®c name are applied.
and can be different in different views. In other words, a At all levels, the cost attribute `production planning' is
module can be a different group of components in the design concerned with the in-time availability of the required
view than in the manufacturing view. When costs are related resources. In general, the in-time delivery is very important,
to the product elements, the manufacturing view is taken so expensive resources might be applied in order to deliver
 I.F. Weustink et al. / Journal of Materials Processing Technology 103 (2000) 141±148 145

on time. This is more likely than to produce with cheaper 9. Analysis and control of the product costs
resources and exceeding the delivery date.
It is obvious that the cost attributes `material' (on com- With the use of the generic framework, the costs can be
ponent level) and `process(es)' (on all aggregation levels) evaluated. In this way, it is possible to determine the origin
determine the production costs. The other two cost attributes of the possibly high product costs. The framework enables
`geometry' and `production planning' have restrictions to the control of the product costs. A systematic method, based
the attributes `material' and `process(es)'. These attributes on the values of the cost attributes of the generic framework,
have to be taken into account, because they in¯uence the is applied during the design process to control the costs.
cost attributes material and processes signi®cantly. By tak- Extensive cost driving elements are recognised and subse-
ing into account the geometry and production planning as quently, the exceptional cost attributes of those elements are
well, the origin of the product costs can be determined identi®ed. In the example of Fig. 6, the most cost extensive
easily. element is speci®ed in more detail. The costs of this element
can be divided in material costs and production costs of one
8. Calculating product costs speci®c feature.
The high value of the cost attribute material on component
After estimating the costs of the different elements, the level can be caused by the material requirements on feature
total costs of the product can easily be determined. The total and assembly level, but also by the selected processes. The
production costs can be determined by adding up the costs of value of the cost attribute processes on feature level is
every product element. The costs of a product element are a in¯uenced by the geometry of the feature or the material
summation of the values of the cost attributes. Thus, the total of the component. These causes can be traced using the
product costs can be determined by adding up all values of generic framework. With this cost information, the product
the cost attributes of all elements. For instance, the costs of a costs can be controlled and the product design can be
component are a summation of the costs of material (on adjusted effectively.
component level), costs of processes on component level and
the costs of producing the features. An advantage of this 9.1. Design alternatives
method is that the costs can be related to the desired
aggregation level. The costs of buy or semi-manufactured Using the generic framework, alternative designs can
parts can easily be integrated in the generic framework. The easily be compared. It is merely necessary to record the
costs of standard bolts and nuts are ascribed to the cost structures of the different alternatives in the framework. This
attribute material on component level. The lower aggrega- can be accomplished by using option points in the structure
tion level does not have to be taken into account. If a (see Fig. 7). At the option point a decision has to be made
standard assembly is supplied from others, the costs are about the element that will be used. The costs of the different
ascribed to the cost attribute material on assembly level. design alternatives can easily be compared.

Fig. 6. Application of the generic framework to a ®ctive product.

146 I.F. Weustink et al. / Journal of Materials Processing Technology 103 (2000) 141±148

Fig. 7. Using option points in order to choose between design alternatives.

The decisions about producing in-house or buying stan- will not be treated entirely; only a number of aspects will be
dard or semi-manufactured products can be made more elaborated upon. The power unit assembly consists of a base
easily using the values of the cost attributes. The costs of component, consisting of a lot of holes and slots, a small
standard buy parts or semi-manufactured parts are ascribed strip, consisting of two holes and a form feature, and a cap to
to the cost attribute material. This value must be evaluated seal up the electrical components inside. The base and the
against the sum of the cost attribute values if the part is cap possess a lot of holes, which are necessary for cooling.
produced in-house. The number of holes depends upon the amount of heath
produced inside the unit.
9.2. Product con®guration The global structure of the power unit assembly is given in
Fig. 9. As shown, the cost attributes are allocated to assem-
The generic framework is also applicable regarding pro- bly, component and feature level. For reasons of readability,
duct con®guration. Using option points in the product the cost attributes are not ®lled in. The costs of the features
structure (see Fig. 7), all possible product variants of a are determined by the value of the cost attribute process(es).
product family can be represented. The costs of these By adding the values of the cost attributes material and
product variants are known. During product con®guration, process(es) of component level, the costs of the component
negotiations with the customer result in the establishment of are obtained. Finally, by adding the costs of all components
one speci®c product variant. The costs of this product variant and the values of the cost attributes on assembly level, the
can easily be determined by adding up all the element costs costs of the complete assembly are obtained.
of the selected variants. The structure of the upper face of the cap component is
given in Fig. 10. The grey regions around one or more white
rectangles represent the features of the upper face. The cost
10. Example attributes are allocated to these features and to the compo-
nent itself. The mutual relations between the faces are not
The generic framework will be illustrated by the example represented in this ®gure. Two bending lines are shown in
of a computer power unit as shown in Fig. 8. The product this ®gure. In case the radii of these bends are not equal, a

Fig. 8. The computer power unit.

 I.F. Weustink et al. / Journal of Materials Processing Technology 103 (2000) 141±148 147

Fig. 9. The cost attributes related to the different aggregation levels of the power unit.

tool change has to take place. The costs of this tool change and the accompanying costs are speci®ed on component
are allocated to a higher level, i.e. component level. The slot level.
(represented by three faces) can be produced using a nibble On this same level, the bending sequence determines the
or laser cutting process. The choice depends on the available feasible tolerances. Furthermore, collisions can be avoided
resources and the costs of the operations. The material type using certain bending sequences. For example, in the base

Fig. 10. The cost attributes ®lled in for a number of features and for the complete component.
148 I.F. Weustink et al. / Journal of Materials Processing Technology 103 (2000) 141±148

Fig. 11. The cost attributes of the strip; difference between small batch and mass production.

component, the small faces have to be bent ®rst, otherwise  The costs can be determined on every desired aggregation
collisions occur. level; the costs of standard parts can be allocated to the
The strip can be manufactured in two different ways, appropriate aggregation level.
depending on the type of production environment. The strip  The origin of the product costs can be identified; the
consists of three features: two holes and one form feature extensive cost driving product elements can be found.
made by a punch operation. These three features can be  After identification of the most cost driving elements, the
produced separately, but they can also be produced in one causes of the costs can be identified; the causes can be
operation. Producing these features in one set-up requires found more accurately due to the differentiated view of
special tooling, which leads to higher costs. Producing the the product costs.
features separately leads to the need of changing resources.  The cost consequences are available immediately; a
Fig. 11 shows that in a small batch environment the cost modification of an element has certain consequences
attributes are allocated to the three features and to the for the related elements. By means of the relations
component. In a mass production environment, the costs between the elements (in the generic framework) the
are allocated to one manufacturing feature (representing consequences are directly known.
three design features) and to the component. A cost effective  Design alternatives can easily be compared regarding the
decision can be made using this structure by taking into production costs and in this way the most cost effective
account the amount of components that has to be produced. alternative can be selected.
Finally, the assembly level is explained shortly. The
assembly operations are relatively simple. The small strip
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