University of Twente Student Theses
Reliable procurement cost estimation methodologies: A case study in complex environments
Perluka, B.Y. (2024) Reliable procurement cost estimation methodologies: A case study in complex environments.
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| Abstract: | Competitive bidding is being used to compare potential suppliers. For the supplier, it is important to have a competitive bid price. Otherwise, the supplier’s actual cost needs to stay below the bid price to avoid a cost overrun. Therefore, organisations can use qualitative and quantitative estimation methodologies to determine the cost. Thereby, in complex environments, you must deal with complicated products that consist of standard products in combination with new product development (NPD), which complicates the estimation process. Additionally, there are internal and external factors that may influence the accuracy of the cost estimation; as a result, the estimation will be less reliable. This research aims to investigate how cost estimation methodologies for procurement parts can be enhanced to become more reliable. It will examine which kinds of methodologies are effective for both standard products and NPD. Furthermore, factors that influence cost estimates will be explored. In addition, a framework will be developed to provide a representation of the coherence of methodologies and factors for organisations in complex environments. For the analysis of this research, a qualitative multiple-case study approach was used, focusing on organisations operating in complex environments. Data collection is done by semi-structured interviews (n = 12), which are held multidisciplinary in four different cases. The interviews were transcribed, coded, and analysed to identify themes and categories in the collected data. The results show that organisations in complex environments employ an analytical breakdown approach for the cost estimation of procurement parts for standard products. When organisations deal with NPD, the same approach is used, where estimations are made based on assumptions. It is, therefore, important to use multiple and appropriate estimation methods to strengthen estimation accuracy and to have the ability to challenge potential suppliers on their costs. Furthermore, the outcome has shown various internal factors, which are procurement-, technical-, or estimation-related factors. Regarding external factors, these are described as market-related factors. These factors need to be considered to enhance the reliability of cost estimations for procurement parts. |
| Item Type: | Essay (Master) |
| Faculty: | BMS: Behavioural, Management and Social Sciences |
| Subject: | 85 business administration, organizational science |
| Programme: | Business Administration MSc (60644) |
| Link to this item: | https://purl.utwente.nl/essays/99137 |
| Export this item as: | BibTeX EndNote HTML Citation Reference Manager |
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