Cost Estimating System Boosts Efficiency And Profits

Modern Applications News
August, 2006

A Texas-based precision machine shop responds to about 150 RFQs a week with many customers demanding a response in two to three days. A computer-aided cost estimating system has increased speed by 50% – 80% (versus manual), boosting the company's ability to respond and its chances of winning jobs.

At Carroll Machine Works (Pasadena, TX), the ability to produce cost estimates quickly and accurately is a matter of survival. To win jobs from customers that include NASA, aerospace companies and a variety of petrochemical, oilfield and gas industries, a precision machine shop must respond to an average of 150 customer RFQs per week.

"We pretty much live and die by our quotes down here, competing for every job," says Carroll Machine Works' (CMW) owner and chief estimator, Wayne Carroll. "Some parts cost $10,000 or more. We had better be estimating accurately, or we lose, big time."

Realizing that manual cost estimating methods couldn’t match the incoming stream of RFQs – many with deadlines of two and three days – Carroll turned to a customized spreadsheet. The program helped the company to profit on 60% of its orders, while breaking even or losing money on 40%. Although profitable, the system didn’t satisfy Carroll.

After reviewing computer-aided cost estimating options, he purchased the Costimator System by MTI Systems, Inc. (W. Springfield, MA). The program includes a comprehensive database of proven manufacturing data and knowledge gleaned from a variety of sources.

Bidding With Confidence

Carroll says that the Costimator virtually eliminated "losers," jobs that cost more than estimated. The system’s speed – 50% to 80% faster than detailed manual estimating – also boosted estimating department output. The Costimator paid for itself in months, adds Carrol, who has tailored the system’s standards and machine times.

The company feels that it can now bid jobs with total confidence. "When customers come back and tell me they can get a better deal on a part from someone else, it's a lot easier to resist the temptation to re-bid the job lower," Carroll explains. He adds that machine times generated within the Costimator routings are electronically transferred to the shop's scheduling software, improving the management system's accuracy and further increasing company efficiency.

The Costimator enables Carroll – who is chief cost estimator – to spend more time on the shop floor resolving production issues. He plans to train others on this system and spend more time on manufacturing management. Employees with basic machining and estimating knowledge can quote accurately with this solution, he says.

Delivering Fast Estimates

Carroll describes quoting a 10-1/4" x 10-1/4" x 3-1/2" titanium part for a NASA contract to illustrate the high-stakes estimating process. Cutter paths totaled more than 1,500". "The part had seven irregular pockets, multiple bolt holes, an irregular fin configuration and other features that were very tough to machine," he says. "Just one operation had 20 separate features – 16 of these were pocket milling. It would have taken me a day and a half to quote if I were estimating manually – and that still would feel like a stab in the dark."

Using the Costimator, Carroll quoted the part in an afternoon, well in advance of a 48-hour deadline. Scanning the part drawing into the program, he created a raster pcx file. He then built his estimate, designating a Tree 1260 CNC machining center, choosing each operation and designating tool material and size for the various elements of each operation. Speeds and feeds for Carroll's tooling choices, calibrated to machine titanium, appeared in the on-screen estimate. As he measured dimensions and tool paths of the machining operations (by tracing his cursor over the on-screen drawing), the Costimator calculated machine time and cost. The program automatically allowed for labor rates, personal fatigue and delay and tool wear. The program also listed the times for inspection operations, as well as fixturing costs.

When all data had been entered, the Costimator produced an itemized estimate, process plan and routing. The total manufacturing cost per part was more than $11,000.

While Carroll tried other options, substituting certain tooling and manufacturing operations, the system automatically adjusted the quote's time and cost. He determined that by drilling pockets with an indexable, insertable drill prior to endmill operations (as opposed to removing all material with an endmill), manufacturing would cost about $1,200 less per part.

"When a customer sends us a part drawing, we can make an estimate with the Costimator, play ‘what if' and make appropriate recommendations on material and design," Carroll says. "We can show how engineering changes will affect cost. We are supportive as possible, acting almost like consultants. Customers come to rely on us for advice."

The Costimator formulates reports with detailed overviews of different manufacturing options. Currently working out of his own office, Carroll plans to take the system on-site in a laptop and produce process plans, routings and quotes for customers in their offices.

"A customer calls to talk about a part that would take him an hour to process plan and cost out," adds Carroll. "I can take information over the phone and produce a new estimate for him in just 10 minutes. That kind of speed, combined with the reliability of a computerized quote and personalized service to individual customers, makes the Costimator an important member of our sales team." MTI Systems