Cost Estimation Method for Variation Management

Abstract Cost engineering key objectives is to ensure cost estimates’ accuracy and to avoid cost overruns. In such a global context, this paper focuses on the manner through which the uncertainties as well as variations, impact the cost dimensions during different phases of product lifecycle: Tolerance allocation, Process Planning, Inspection Planning. What is investigated is the adaptability of a modified Activity-Based Costing model in evaluation of cost regarding the activities in different stages of the product's life cycle. This effective model encloses the cost estimation of tolerancing, process and inspection planning, via the impact of variations and uncertainties (i.e. inspection risk). The aim is to take into account not only the cost but also the quality (quality-driven activity-based costing) of product.