DFMA: SHOULD COSTING
DFMA: PRODUCT SIMPLIFICATION
What is cost engineering?
Cost engineering is the discipline of applying engineering analysis, manufacturing process knowledge, and quantitative methods to estimate, analyze, and control the cost of manufactured products. It encompasses everything from early-stage cost estimation to production cost management and supplier negotiation support.
Unlike financial accounting—which tracks what things did cost—cost engineering focuses on what things should cost, given their design, material, manufacturing process, and production volume. This forward-looking perspective makes cost engineering essential to product development, sourcing, and continuous improvement.
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What does a cost engineer do?
Cost engineers sit at the intersection of design, manufacturing, and procurement. Their job is to answer the question: "what should this cost, and why?"—with enough rigor and transparency that design teams can act on it and procurement teams can negotiate from it.
- Estimate manufacturing cost for new and existing parts
- Break down cost into material, labor, overhead, and tooling
- Identify the design decisions driving each cost component
- Evaluate process alternatives (machining vs. casting vs. molding)
- Support make-vs-buy and sourcing decisions with data
- Provide should-cost benchmarks for supplier negotiations
- Set and allocate cost targets for new product programs
- Work with designers to reduce cost through design changes
- Evaluate regional sourcing scenarios with global cost data
- Build and maintain cost models for product families
- Train design teams on cost-aware decision-making
- Track cost performance across programs and product lines
Core disciplines of cost engineering
Cost engineering is an umbrella that covers several interrelated disciplines. Each serves a different purpose in the product lifecycle:
| Discipline | Purpose | When it's used |
|---|---|---|
| Cost estimation | Predict what a part or assembly will cost to manufacture | Concept design, quoting, budgeting |
| Should-cost analysis | Determine what a part ought to cost based on its design and process | Supplier negotiation, design review, benchmarking |
| Design to cost | Treat target cost as a design constraint; iterate to meet it | New product development, value analysis |
| Value engineering | Achieve required function at lowest cost through systematic analysis | Existing products, redesign programs |
| Make-vs-buy analysis | Compare internal production cost to external supplier cost | Sourcing decisions, capacity planning |
| Cost control | Monitor and manage actual production cost against targets | Production, continuous improvement |
These disciplines share a common foundation: manufacturing process knowledge and the ability to translate design decisions into cost consequences. The tools and methods differ, but the core skill—understanding how design drives cost—is the same.
Cost estimation methods
Cost engineers choose estimation methods based on the level of design detail available and the accuracy required. Each method has strengths and limitations:
Compare to a similar part with known cost. Adjust for differences in size, complexity, or material. Fast but subjective; accuracy depends on how similar the comparison part really is.
Best for: early concept, when geometry isn't defined yet.
Cost as a function of measurable parameters—weight, volume, feature count, number of operations. Requires historical data to build the model. Good for families of similar parts.
Best for: budgeting, should-cost screening across large BOMs.
Model the actual manufacturing process: calculate material from geometry, cycle time from toolpaths and feeds/speeds, setup from operations, tooling from tool-life models. The most accurate and transparent method—and the most defensible in negotiation.
Best for: detail design, should-cost, supplier negotiation. This is what DFMA does.
Collect and compare supplier quotes. Use should-cost as a benchmark to evaluate whether quotes are reasonable and to identify where supplier assumptions may differ from yours.
Best for: sourcing, validating should-cost assumptions against market reality.
Cost engineering vs. cost accounting
Cost engineering and cost accounting both deal with product cost, but they serve different purposes, use different methods, and answer different questions:
| Dimension | Cost engineering | Cost accounting |
|---|---|---|
| Time orientation | Forward-looking: what should this cost? | Backward-looking: what did this cost? |
| Data source | Design geometry, process models, manufacturing parameters | Financial records, purchase orders, labor tracking |
| Granularity | Feature-level: which chamfer, tolerance, or wall adds cost | Account-level: labor, material, overhead buckets |
| Primary users | Design engineers, procurement, manufacturing engineering | Finance, management, compliance |
| Actionability | High: tells you which design decision to change | Limited: tells you totals but not root causes |
Both are necessary. Cost accounting tracks financial performance. Cost engineering drives cost improvement. The organizations that get the most value use both—accounting to measure, engineering to improve.
Skills and knowledge required
Effective cost engineering requires a blend of manufacturing knowledge, analytical ability, and communication skills. Here's what distinguishes strong cost engineers:
- How parts are actually made (machining, molding, casting, forming, etc.)
- What drives cycle time, scrap, and yield for each process
- Tooling design, life, and amortization
- Secondary operations and their cost structure
- Engineering drawing and GD&T interpretation
- Material science fundamentals
- Cost-modeling methodology and tools
- Statistical analysis and sensitivity testing
- Translating cost data into design recommendations
- Supporting supplier negotiations with defensible analysis
- Working across design, manufacturing, and procurement teams
- Presenting cost trade-offs to program management
Many cost engineers come from manufacturing engineering, industrial engineering, or mechanical engineering backgrounds. The combination of shop-floor knowledge and analytical rigor is what makes the discipline effective.
How DFMA supports cost engineering
DFMA provides the process-based cost models that cost engineers rely on for their most critical work. Rather than building cost estimates from scratch for each part, cost engineers use DFMA to model the manufacturing process and generate transparent, auditable cost breakdowns:
- DFM models: material, cycle time, setup, tooling, and secondary ops calculated from geometry and process parameters
- DFA analysis: part-count evaluation, assembly-time estimation, and design-efficiency metrics
- Process comparison: run the same part through multiple processes to find the lowest-cost option
- Global cost data: regional labor, overhead, and energy inputs for 22+ countries
- Volume sensitivity: see how cost structure shifts with production volume changes
- Should-cost: generate defensible per-part cost breakdowns for supplier negotiation
- Design-to-cost: provide iterative cost feedback as designers change geometry and specs
- Make-vs-buy: compare internal production cost to supplier quotes with the same model
- Benchmarking: cost competitor products from teardown data
- Sourcing scenarios: model the same part across different regions and suppliers
Common challenges
Cost engineers are often brought in after the design is done—to validate, not to influence. By then, 80% of cost is locked in. The fix: embed cost engineering in the design process from concept through detail design.
Cost estimates based on "what we paid last time" don't account for design changes, volume shifts, or regional cost differences. Process-based models provide more accurate and forward-looking estimates.
Cost estimates are only as good as the process understanding behind them. Cost engineers need to understand how parts are actually made—not just what they're made of.
Cost estimates that can't be audited or explained are hard to act on and impossible to negotiate from. Transparent, assumption-visible cost models build trust with both design teams and suppliers.
Frequently asked questions
What is cost engineering?
Cost engineering is the application of engineering principles, manufacturing process knowledge, and analytical methods to predict, analyze, and control product cost. It spans the full product lifecycle—from early cost estimation through production cost management and supplier negotiation.
What does a cost engineer do?
A cost engineer estimates manufacturing cost for parts and assemblies, identifies cost drivers in designs, supports make-vs-buy and sourcing decisions, provides should-cost benchmarks for supplier negotiations, and works with design teams to reduce cost through design changes. The role combines manufacturing process expertise with analytical rigor.
What is the difference between cost engineering and cost estimating?
Cost estimating is one activity within cost engineering. Cost engineering is broader—it includes estimating, but also cost analysis, cost control, value engineering, should-cost analysis, design-to-cost support, and supplier cost management. Cost engineers use estimates as inputs to broader decision-making.
What methods do cost engineers use?
Cost engineers use several methods depending on available information: analogous estimation (comparison to similar parts), parametric models (cost as a function of weight, complexity, or features), bottom-up process-based models (calculating material, cycle time, setup, and tooling from geometry and process parameters), and supplier-quote analysis. Bottom-up models are the most accurate and defensible.
How does DFMA support cost engineering?
DFMA provides the process-based cost models that cost engineers rely on for should-cost analysis. For each part, DFMA calculates material cost, process time, setup, tooling, and secondary operations from first principles—based on geometry, process parameters, and production assumptions. This gives cost engineers transparent, auditable cost breakdowns rather than black-box estimates.
What skills does a cost engineer need?
Cost engineers need a combination of manufacturing process knowledge (how parts are actually made), engineering drawing interpretation, material science fundamentals, analytical and quantitative skills, familiarity with cost-estimation tools and methods, and strong communication skills to work across design, procurement, and manufacturing teams.
See transparent cost engineering in action
Bring a cost-critical part. We'll walk through the should-cost breakdown—material, process time, setup, tooling, secondary ops—and show exactly which design decisions are driving each cost component.
