Chapter 44Costing Design Changes

Purpose

  • To outline the changes that must have their total cost calculated, the responsibility for calculating the cost, to indicate those costs that must be included, specify the form used, furnish form instructions and additional change approvals required based upon the cost.

Applicability

  • Certain design changes to be processed by this CM function.
  • Changes which must have their total cost calculated prior to approval or release are those made to “reduce costs” and to “improve performance” and others as directed by the Request Review Team or the Change Team.
  • Changes that are totally or partly “to meet specification” need not have the cost calculated unless the team requests it or unless the cognizant design engineer has alternative designs to cost.
  • Document Only changes shall not be cost calculated.

Policy/Practice

  • The team can decide not to approve a change until the cost has been calculated. The team may also decide to approve a change subject to completion of the cost calculation / payback prior to release.
  • Cost calculating will be done by CM (Industrial Engineering/Cost Accounting are alternates – see the EDC Handbook for a discussion of alternatives).
  • All the cost directly associated with a given change shall be included in the cost — by Activity Based Cost (ABC). Costs/savings to be included (but not necessarily limited to):

Unit Costs:

    • Old part/new part standard material and labor cost/savings – at IE/Accounting standard cost. ...

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