ABSTRACT
PCE utilizes cost estimating relationships (CERs) and associated mathematical algorithms, logic, and processes to establish cost estimates. For example, detailed cost estimates for manufacturing and testing of an end item (e.g., a hardware assembly) can be developed using precise industrial engineering standards and analysis. Performed in this manner, the cost estimating process is laborious and time consuming. However, if, as history has demonstrated, that test (as the dependent variance) has normally been valued at about 25% of the manufacturing value (the independent variable), then a detailed test estimate need not be performed and can simply be computed at the 25% level (DoD, 1995). Figure 8.1 shows a process that can be used for developing CER for PCE. Like any mathematical model, it should be used only for the range described by the “relationship” data.
