An innovative cost engineering model for ETO companies

The new product cost estimation activity is considered by enterprises as a very critical issue. In our work we are going to analyse the situation of Engineering To Order (ETO) firms, i.e. of those firms in which design and production phases are pulled by a specific customer order. By the term designing phase we include also light or heacy customization of a specific product. One of the problems that those firms have to face during their activity is the correct economic evaluation of a job order. In this work we present an innovative cost engineering model to estimate customized product cost; based on the division of costs in two categories, “variant” (the dependent variable) and “invariant” (the independent variable), and the definition of a relationship between them. The paper is supported by a case study describing the implementation of the proposed model in an ETO company.

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