How Accurate Is Cost Estimating Software?

A Seasoned Expert Determines the Accuracy of Cost Estimating Software

As a Sales Director at a Cost Estimating Software company, I get the question, “How accurate is your cost estimating software?” quite often. The simple answer is that the software is always as accurate as the data that is imported into the software. Not every machining center machines at the same rate, not every laser cuts at the same rate, and not every press brake bends at the same rate. Since not every company has the exact same equipment, uses the same type of tooling, purchases raw material at the same price or has the same shop rate, no off the shelf cost estimating software will generate perfectly accurate cycle times and costs without some level of data configuration specific to the company using it.

Garbage In, Garbage Out  

The main benefits of utilizing cost estimating software are increased speed, accuracy and consistency of estimates. These benefits are achieved, in large part, through the use of standardized, formula-driven methods of calculating labor and machine cycle times (rather than relying solely on the opinion, or experience, of an estimator). The accuracy of a quote generated by estimating software is highly dependent on the back-end data and formulas that produce the results. If the raw data imported into the cost estimating software is garbage, a garbage estimate is what you can expect to receive in return.

Take For Example, Estimating Laser Cutting Times

Not every laser machine has the same characteristics or cut-rate capabilities. In order for any costing software to generate an accurate cycle time calculation, it first needs to be loaded with the cuts rates associated with the particular laser machine(s) that your shop owns.

Established cost estimating software companies have solutions that come with out-of-the-box data for the various manufacturing processes their system support. The better tools will make it easy to modify and add to the base data in an effort to dial in the numbers to better reflect a particular shop’s equipment and core competencies. The more advanced systems will enable companies to mass import raw material and purchased item pricing, work center shops rates and customer contact information, most of which is typically stored in their ERP system. The database configuration process is critical to having a software tool that will consistently generate an accurate cost estimate for your shop.

No Two Shops Are The Same

It’s simply not realistic to think that off the shelf cost estimating software will be able to generate an accurate estimate for YOUR SHOP until your shop’s data has been loaded into it. The process of doing that, if the software you choose comes with out-of-the-box data, is not necessarily that time consuming. In fact, some software companies provide the database configuration service as part of their overall offering.

The good news is, once the configuration process is complete your company now has an estimating system that will increase the speed, consistency and accuracy of its quotes. For most shops, the result is greater quoting throughput, higher RFQ win rates and increased sales and profits.

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