Discussion Question: For what type of cost would it be best to apply which of the methods of estimating cost covered in Chapter 15, and why?

Provide a few specific examples.

Your initial post should include at least 200 words of substantive content

Book name : Blank, L.T. & Tarquin A. J. (2018), Engineering Economy, 8th edition, McGraw-Hill

Direct and Indirect Cost Estimates:

What Direct Cost Estimation Includes Direct costs are more commonly estimated than revenue in an engineering environment.

Preliminary decisions required are:

What cost components should be estimated?

What approach to estimation is best to apply?

How accurate should the estimates be?

What technique(s) will be applied to estimate costs?

Indirect Costs

Indirect costs (IDC) are incurred in production, processes and service delivery that are not easily tracked and assignable to a specific function.

Direct cost examples

Physical assets Maintenance and operating costs (M&O)

Materials Direct human labor (costs and benefits)

Scrapped and reworked product

Direct supervision of personnel

Indirect cost examples

Utilities

IT systems and networks

Purchasing Management

Taxes Legal functions

Warranty and guarantees

Quality assurance

Accounting functions

Marketing and publicity