Predicting indirect process costs of engineering change based on a task characteristic perspective
Editor: Anja Maier, Stanko Škec, Harrison Kim, Michael Kokkolaras, Josef Oehmen, Georges Fadel, Filippo Salustri, Mike Van der Loos
Author: Gebhardt, Marcel
Institution: IPRI International Performance Research Institute, Germany
Section: Design Methods and Tools
Today companies are capable to make precise predictions of engineering change costs incurred in producing departments. But implementing engineering changes is a work-sharing task. Besides production and assembly also non-producing departments are involved in engineering change management (ECM) processes. Activities performed in those departments lead to indirect process costs of engineering change (IPC). These costs result from planning, coordinating and supervising activities in ECM-processes and make up a huge share of total project costs. Today, there are no valid methods for estimating IPC. In practice, IPC are predominantly estimated on the basis of overhead rates. However, this does not lead to satisfying results. Hence, there is no transparency regarding IPC and IPC are frequently not considered in project calculations which may result in inadequate pricing decisions. In this connection particular attention must be paid to IPC. Therefore, we develop a model for predicting IPC in order to improve information and support managerial decisions.