Abstract:

The activity of cost estimation plays an important role in making strategic and operational decisions in an organization. Over time, it has been shown that an organization that can estimate its costs more accurately than its competitors, enjoying a competitive advantage in the marketplace. This estimate is necessary for any purchasing department of an organization, because only in this way the real cost of the purchased product / service could be determined. Cost estimation represents a realistic forecast for manufactured or procured parts. The high importance of the cost estimation department can be observed in the stage of target setting, because is helping to set the right price for offer (BID). Another step from business flow where a cost estimation is totally necessary is the sourcing stage, because, an accurate cost analyze could help the buyer in negotiations to reach a better price. On average, the time required to make a cost estimation for a turbocharger is one day, and, for a material change update, should be allocate up to 4 hours. Lately, the number of requests for material change have started to increase, the workload increased, and cost estimation department can no longer cover all the requests.

The purpose of this paper is to document and implement the process which identifies responsibilities and reduces the risk of increase the standard time allocated to a cost estimation request. The scope of this paper is to identify and quantify a tool which will help to reduce the allocated time for material change estimation, up to 0.75 hours.