Detailed cost estimating in the automotive industry: Data and information requirements

Abstract

The automotive industry operates in a very competitive market which requires controlling product costs, improving the product quality and shortening the development lead time. Cost estimation requires quality data and information, therefore this research project identified several issues that hinder this activity, namely a lack of resources and information acquiring and validation difficulties. This research paper presents the various data and information requirements for detailed cost estimating in automotive industry. The research project has identified the common cost estimation process model within the identified industry sector. The study identified the types of data and information requirements for cost estimating. It has also constructed the relevant data infrastructure as the basis for a Web Portal, which is the physical presentation of the information infrastructure. Multiple sources of data collection techniques were employed to identify the types of data needed for detailed cost estimates within a manufacturing company. These techniques include participant observation, semi-structured interviews, process models and document analysis of six different UK based automotive companies. Methods of process modelling like IDEF3 and knowledge capture technique known as X-Pat (eXpert Process Knowledge Analysis Tool) were employed in this study. This study makes several contributions concerning both conceptual and practicable information issues that have long vexed detailed cost estimating practices in the automotive industry. The study conceptually defines the detailed bottom-up information (i.e., individual cost elements and the links between them) needed for an accurate estimate of cost, and shows why each element of information is needed and where it fits into the cost model. To respond to the practicable information vexations, the study shows where to find the necessary cost information and proposes a validation method. The research creates useful knowledge in the form of an improved understanding of information requirements for cost estimates. The benefits to the industry of better cost estimates based on this research at the conceptual design stage include improved cost control and enhanced ability to adjust to anticipated market trends. © 2011 Elsevier B.V. All right reserved.