DTM-001 ASSIGNMENT
Cost Estimation
Name : T .B .Harsha Vardhan
Regd No : 2021BCSE07AED197
[Link] is product cost estimation technique?
Basically 2 types : [Link]
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Qualitative techniques :
Qualitative techniques in product cost estimation focus on non
numeric or subjective factor that can influence the cost of product.
These techniques rely on expert judgement, experience, and
qualitative assessment to estimate costs. Here are a few qualitative
techniques commonly used in product cost estimation they are expert
opinion, Delphi Method, comparative analysis, Historical data
analysis, Reference Class Forecasting.
Quantitative techniques :
In product cost estimation involves using numerical data and
mathematical models to estimate the cost of a product. These
techniques rely on quantitative analysis, historical data, and
mathematical calculations to derive cost estimates. Here are some
common techniques. They are parametric estimation, bottom up
estimation, analogous estimation, three-points estimation. Vendor
quotes and market research and cost estimation software and tools.
Intuitive Techniques :
In product cost estimation rely on the experience , judgement and
intuition of experts or practitioners to estimate costs . These
techniques are subjective in nature & often based on personal
expertise and knowledge . While they may lack precision and
objectivity , they can be valuable for quick estimation or when data is
limited . Some examples are expert judgement , comparative
estimation , chunking , analogy estimation and gut feeling.
Analogy Techniques :
In product cost estimation involve using historical data or analogies
from similar projects or products to estimate the cost of new product .
These techniques rely on the assumptions that past experiences can
serve as a reference of benchmark for estimation costs . Some
example techniques are analogy-based estimation , parametric
estimation , reference class forecasting , expert judgement & lessons
learned , case-based reasoning.
Parametric Techniques :
In product cost estimation involve using mathematical models or
formulas to estimate costs based on specific parameters or variables.
These techniques rely on establishing relationships between cost
drivers and the cost of product. Here are some example techniques
they are Cost Estimating relationship , Function Point Analysis,
Estimation by Analogy, Learning curve theory, Cost Indices .
Analytical Techniques :
In product cost estimation involve using rigorous quantitative
methods, data analysis and statistical tools to estimate the cost of a
product. These techniques rely on data-driven analysis and
mathematical models to derive accurate cost estimates. Here are some
example techniques. They are Regression Analysis , Monte Carlo
Simulation , Activity-based casting , Earned value management ,
Cost-Estimation software and tools , Cost-Benefit Analysis.
Cased-Based Techniques :
In product cost estimation involve using past projects or cases as a
reference to estimate the cost of a new product . These techniques rely
on the assumptions that historical cost data can serve as a valuable
guide for estimating costs in similar situations . Here are some ex’s
techniques case-based reasoning , Historical cost comparison , cost
Benchmarks , lesson learned and best practices.
Decision support techniques:
In product cost estimation involve using analytical tools ,models and
software to assist decision making in estimating product costs. These
techniques provide quantitative .Analysis ,scenario evaluation and
optimization capabilities to support cost estimation decision. Here are
some example techniques they are lost estimation software,sensitivity
analysis ,optimization models ,monte Carlo simulation, multi-criteria
decision analysis.
Regression analysis model:
It is a statistical modelling technique commonly used in product cost
estimation. It involves establishing a relationship between
independent variables and the dependent variable. By analysing
historical data and fitting a regression model, estimators can
estimators can be estimate the cost of a new product based on the
values of the cost drivers some example on how regression analysis
applied in that they are identity variable collect data analyse data ,fit
regression model ,Estimate coefficients ,validate model estimate
product cost.
Back propagation neural network model:
It is a type of artificial neural network commonly used for modelling
complex relationship and making predictions. It is particularly
effective in solving problem related to pattern recognition,
classification and regression .The back propagation algorithm is used
to train the network and adjust the weights between neurons to
minimize prediction errors. Here on overview of network architecture
forward propagation, activate propagation ,back propagation,
prediction .
Operation based approach:
In product cost estimation focuses on breaking down the
manufacturing process into individual operation and estimating the
costs associated with each operation . this approach allows for a
detailed analysis of cost drivers at the operation level providing a
more granular understanding of the factors influencing the overall
product cost here an overview of identity operation ,determine cost
drivers, collect .data ,estimate cost aggregate costs, validate and refine
sensitivity analysis.
Break down approach:
In product cost estimation involves breaking down the cost of a
product into its constituent elements. This approach provides a
detailed analysis of the various cost elements , allowing for a more
accurate estimation of the overall product cost. Here an overview of
identity cost elements ,break down cost element ,estimate component
costs, calculate total cost ,validate and refine, aggregated analyse.
Tolerance based cost models:
Tolerance-based cost models assess the impact of variations in
product design and manufacturing processes on overall costs. By
accounting for uncertainties and deviations, these models help
identify potential cost overruns and optimize production processes to
ensure higher quality and lower expenses. By integrating tolerance
analysis into cost estimation, manufacturers can make informed
decisions to strike the right balance between product performance,
precision, and cost-effectiveness, resulting in improved efficiency and
customer satisfaction.
Featured based cost estimation :
It is a technique used to estimate the cost of a product based on its
features or characteristics. It involves identifying the key features of
a product and assigning cost to each feature based on their
complexity, materials required, manufacturing process , or other
relevant factors. Feature-based cost estimation allows for a more
detailed and accurate estimation of product costs by considering the
specific features that contribute to the overall cost. Here’s an
overview of Future-Identification, Future Cost Assignment,
Complexity factors, Materials and Components, Manufacturing
Process Analysis, Cost Aggregation ,Validation and Refinement .
Activity based cost estimation:
It is a technique used to estimate the cost of a product by analysing
the activities or tasks involved in the production process. It involves
identifying the key attributes, determining their cost drivers and
allocating costs based on the resources consumed by each activity.
Here’s an overview of Identifying Activities , Determine Cost
Drivers, Collect data and Calculate Activity costs , Allocate costs,
Validate & Refine , Cost Aggregation.
Rule-Based System :
In product cost estimation techniques involves using a set of
predefined rules and logical reasoning to estimate the cost of product.
It relies on a knowledge base that contains a collection of rules &
facts related to cost estimation. These rules are created based on
expert knowledge, industry standards, historical data & cost
estimation guidelines. Here’s an overview of Rule Development, Rule
Base Creation, Rule Evaluation, Rule Execution, Logical Reasoning,
Rule Maintenance and Refinement, Explanation & Transparency .
Fuzzy Logic system :
In product cost estimation techniques use fuzzy logic to handle
uncertainty and imprecision in Cost estimation. Fuzzy logic allows for
the representation of Vogue or qualitative information & provides a
flexible framework to make cost estimations based on subjective or
uncertain inputs . Here’s an overview of linguistic variables, fuzzy
sets, fuzzy rules, fuzzy inference , Defuzzification , Rule based
refinement and evaluation and validation .
Expert system :
In product cost estimation techniques is a computer-based system that
emulates the knowledge & decision-making compatibilities of a
human expert in the field of cost estimation. It utilises a knowledge
base , Inference engine and user interface to provide accurate and
consistent cost estimations. Here’s an overview of knowledge base ,
Inference Engine, User Interface, Knowledge Acquisition, Knowledge
Representation, Cost Estimation process, Explanation & Validation .