Essay: The Costing Phase at Boeing

Sample Essay

The costing phase was carried out after the designing phase. The initial cost was mostly kept for the research and development purposes. The costs were estimated using a parametric estimating technique. This method allowed Boeing to weight the costs of the design characteristics such as weight etc and had to examine the historical relationships as well.

In order to make this calculation, the assembly hours had to be studied. In order to carry out this calculation, the managers took benchmarked data and for every major section of the plane the number of labor hours per pound of the plane was identified. The result was multiplied by the expected weight and than subsequently by the factor that showed the historical experience of the relationship between labor hours and weight.

At the end, a learning curve was applied to estimate the number of labor hours required to build the first 747. Parametric estimates could be used in accordance with differences in the plane programmes. In certain cases, fewer labor hours were required than predicted while in other cases more labor hours could be required than predicted.

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