AERO4460 - Lecture 11

Cost

Dr. Dries Verstraete

The University of Sydney

 Cost

– Engineering is a business
– Cost will always be the number 1 driver in aviation
– Your contribution will be evaluated in an economic context
– Somebody pays your salary
– You have to add value to a product
– There is an economic aspect to ALL engineering decisions
– You will have to account for every cent — increasingly true
– Make sure your bosses know what you are up to

 Cost and Profit

– Cost: the amount of expenditure needed to manufacture the

airplane

– Price: the amount paid for the airplane by the customer

– Profit: Price - Cost

– Life Cycle Cost: total cost of an airplane during its entire life cycle

 Different views on cost

– Manufacturer, personal or corporate owner, and the public all have

a different view on cost

From a NASA briefing, adopted from Mason

 Different phases in the aircraft’s life cycle
100 95% 5%
90 15%
85%
80
35%
LCC decision
70 65% leverage remaining
Percentage of LCC

60
50
40
30
These phases overlap
20
10
0
Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Phase 6
Calendar time ~ no scale
Planning and Detail Design Operation
Conceptual Preliminary and and Support
design Design and Development
System Integration Manufacturing
Disposal
and Acquisition
Adapted from Roskam
 Cost items

– Most of the cost is fixed early in the design, but the bulk of the
actual cost is incurred during later stages
– Preliminary cost definition
– Research development, test and evaluation cost (RDTE)
– Acquisition cost
– Manufacturing cost
– Manufacturing profit
– Operating cost
– Disposal Cost

– Life cycle cost is sum of all of the above

– Operating >> Acquisition >> RDTE

 Operating Cost

– Commercial aviation uses operating cost as the major decision factor

– Total operating cost = indirect operating cost (IOC) + direct
operating cost (DOC)
– Example

Adopted from Mason

 Operating Cost

– Commercial aviation uses operating cost as the major decision factor

– Ways to quote direct operating costs
– Dollars per block hour
– Dollars per statute mile
– Cents per ASM (available seat mile)
– Leasing is now a popular approach and alters the “typical” cost
breakdown structure
– Inflation: when comparing cost data from different years, you need
to include inflation adjustment factors to compare “apples with
apples”
– You should consider fuel cost variations

Operating Cost

Adopted from Mason

Operating Cost

From the NASA Scenario Based Strategic Planning Study -

Adopted from Mason
 How to reduce cost?

– The designer can reduce cost by

– Reducing fuel use (see Breguet equation: L/D, sfc, TOGW)
– Reducing the purchase price of the plane
– reduce TOGW
– reduce manufacturing cost (complexity)

How to report cost?

From a Virginia Tech Design Report (Miser Design Team)

- Adopted from Mason
 How to calculate cost?

– Roskam Vol. VIII presents a method to estimate each cost item

– use it as a guide
– contains ways to include advanced materials, …
– adjust Roskam’s method to reflect what you know about your
design!!

– Roskam also gives …

– 88 design guidelines for low cost (pp. 246-254)
– 17 lessons learned from past airplane programs (pp. 280-284)

 Why is it important?

– Cost estimation is one of the most important parts of “selling” an

aircraft
– any potential customers need to know exactly what owning the
aircraft will cost
– and they clearly need to know how much they will have to pay
for the aircraft
– Roskam Part VIII is an excellent reference with many examples -
VERY highly recommended

UAV Cost

From AIAA-2003-6535
UAV Cost

From AIAA-2003-6535
UAV Cost

From Valerdi
 UAV Cost

– Cost estimation for UAVs is hard - not much data around

– Use correlations from Cherwonik and check the numbers with me
– Account for use of materials !!! Carbon will be more
expensive than fibreglass
– Compare with Roskam’s methodology for operating cost
– Work out total “system” cost - how many vehicles, battery
packs,…
– Values should be around $1500/lb for the empty weight and
$8000/lb for Payload

– Roskam Part VIII is an excellent reference with many examples -

VERY highly recommended