Process Planning and Cost Estimation

Abstract

Process Planning and Cost Estimation are two very important and vital parts of any industry or business, either for the public sector or private organization. A process is a set of activities that are carried out in a sequence to reach a goal or target or to obtain the desired product. Any miscalculation or unorganized planning of this process may lead to a loss in terms of money, manpower, time or sometimes even loss of life. Cost estimation is equally important as process planning. It is the initial step in any business or making a budget and also to calculate the profit and loss. Both process planning and cost estimation should go hand in hand for an operation to be executed successfully. And in this article will see the detailed description of both process planning and cost estimation and how they are related to each other.

Introduction

A process in a systemic and sequential path to achieve the desired output of an operation with the required specifications and effectiveness. This involves a lot of factors and elements which adhere to the process and also guides it. Process planning is a subsystem of the process which aids in initializing the process and also easing the mobility of it. Process planning helps in determining and describing the best possible process for a job to be performed. It also determines what all the types of equipment, manpower or facilities are required. Process planning has a number of steps: 1. Establishment of objectives. 2. Developing the premises. 3. Evaluating and selection of alternatives. 4. Formulating derivative plans. 5. Securing cooperation and participation. 6. Review and follow up.

Introduction

"Cost estimation may be defined as the process of forecasting the expenses that must be incurred to manufacture a product. These expenses take into consideration all expenditures involved in design and manufacturing with all the related service facilities such as pattern making, tool making as well as a portion of the general administrative and selling costs. Cost estimates are the joint product of the engineer and the cost accountant. Estimating is the calculation of the costs which are expected to be incurred in manufacturing a component in advance before the component is actually manufactured. Costing may be defined as a system of accounts which systematically and accurately records every expenditure in order to determine the cost of a product after knowing the different expenses incurred in various department."