Estimating costs for an end-to-end project - Page 1
Forum section: electronics / general

author: electrotwelve
author_rank: Contributor
timestamp: November 05, 2020, 09:29:21 am
content: Hi, How would you estimate costs for an end-to-end low-volume production project (approximately 100 in quantity) ? It includes design, prototyping and then eventually manufacturing the batch too. What are the typical industry numbers for the design phase when done in countries such as US, Canada, UK and Europe vs in countries such as China, India, Taiwan, S. Korea etc?

author: RoadRunner
author_rank: Frequent Contributor
timestamp: November 05, 2020, 10:39:13 am
content: Same way you would estimate a how much a house cost.

author: Siwastaja
author_rank: Super Contributor
timestamp: November 05, 2020, 06:03:44 pm
content: Even for a very rough approximation, we would need to know what kind of product?Some LED blinker might be some tens of hours to design and get into manufacturing. A precision tool could be 1000s of hours.

author: olkipukki
author_rank: Frequent Contributor
timestamp: November 05, 2020, 07:00:17 pm
content: Quote from: RoadRunner on November 05, 2020, 10:39:13 amestimatedhouse cost x 2 =actualhouse cost?

author: Brumby
author_rank: Unknown
timestamp: November 05, 2020, 11:38:12 pm
content: Quote from: olkipukki on November 05, 2020, 07:00:17 pmFTFYI have found this to be so true in a lot of situations. It has one condition, though - your estimate must include everything you can think of to produce a number that can be defended from all criticism, so that everyone can agree it is valid and accurate.In reality, it will just be out by that factor of 2.

author: Brumby
author_rank: Unknown
timestamp: November 05, 2020, 11:42:23 pm
content: Quote from: Siwastaja on November 05, 2020, 06:03:44 pmThat, and a dozen other basic questions, followed by hundreds more.The question is unanswerable in its current form.

author: themadhippy
author_rank: Super Contributor
timestamp: November 05, 2020, 11:47:57 pm
content: Quoteunless its a government contract,for those Actual cost=estimated cost^(estimated completion date x actual date of completion)+ a bit more

author: srb1954
author_rank: Super Contributor
timestamp: November 07, 2020, 03:29:42 am
content: Quote from: Brumby on November 05, 2020, 11:38:12 pmAn estimation error factor of 2 or less is generally only achievable by someone who has had decades of experience in the electronics industry.If you are just starting in electronics then you should be looking at an error factor of 5 or, if it is primarily a S/W based product, then a factor of 10 is more appropriate when estimating the development time.

author: nctnico
author_rank: Super Contributor
timestamp: November 07, 2020, 03:49:39 pm
content: Actually it is not so difficult for as long as all the requirements are known. The trick is to split a project in many small chunks (including testing!) and do a solid (based on experience or research) time estimation for each chunk. For well defined projects I'm less than 10% off in most cases.

author: Siwastaja
author_rank: Super Contributor
timestamp: November 07, 2020, 05:04:54 pm
content: The fixed 2x error factor works for those who are experienced enough to be able to enumerateeverythingthat goes into project and avoid most surprises and problems (and predict the amount of time used to solve "surprising" issues).Then, obviously, the fact that there is this mystic 2x factor to begin with, is just ridiculous. But at least for me, itisthere; it's psychology! Even if we are experienced, we are not always fully sensible.In theory, if someone is able to estimate the time with such consistent 2x error factor, nothing prevents them from just making a correct estimate to begin with; just multiply by two. In theory. But psychology comes into play. Wethinkwe have already multiplied it by two, do we need to do it again?Clients also want to hear optimistic schedules. Many even understand andacceptthat project timelines stretch. If you give them the honest timeline,theyadd 2-3x on the top of it, and say "no" to the project. Yet as a designer, you need to behonestand cannot safelyassumesuch behavior. I have solved this by being more verbose about the timeline so that it's not a single number, but we reach at least some kind ofunderstandinghow the project actually works out.It's all psychology.