Financial Report

I have collected together available costs for the materials involved with the crane. This includes the screws and bolts, the I-beam and the square bar stock. All cost estimates are approximate values applied to existing products with the nearest possible measurements.

• Stainless Steel M10 Bolts - £28.36 per 100 (ScrewFix)
  
  

• Stainless Steel M10 Nuts - £12.38 per 100 (ScrewFix)

• Aluminium Alloy Current Cost - $2005 / Tonne (London Metal Exchange)
  This aluminium alloy would be used for the connection block attaching the legs components together and the feet etc. The connection block would most likely be sand casted for the one-off batch of 100 whilst the other components could either be, again sand casted or machined from block or plate material.

• Aluminium Alloy I-Beam - $194.70 (Onlinemetals.com)
  The costs for this are in relation to an 84” aluminium alloy 6062 I-beam when in reality, our proposal beam is aluminium alloy 7075 at a length of 86.6”.

• Aluminium Square Bar Stock - £21.52 / 1000mm (Metals 4 U)
  The profile dimensions involved with this cost are similar. There is approximately 9500mm of bar stock needed per crane (excluding scrap needed for facing off ends etc). This equates to £215.20 per crane.

• Winch - £215
• Trolley - £60
  

When adding costs i considered labour:

• 2 Assembly/Test Technicians - £15000 - £18000 salary.


• 1 Manufacturing Engineer (initially) – They would be needed initially to set-up the production area and ensure that the assembly build process moves along quickly and efficiently with minimal scrap. The costs for this would be for depended on how many hours it takes for them to set-up the production area.


• Quality engineering – They would be needed to ensure a consistency of quality is achieved throughout the batch. I would estimate they would check the critical dimensions of 1 crane for every 10 cranes manufactured throughout the batch of 100.
  
• Stores and Goods In/Out – To help deliver the finished cranes and to store and catalogue the materials ready for manufacture and assembly.

Packaging and delivery is also taken into account.

I have also added a small profit and an extra cost to accomodate for any margin of error that may and will likely occur. It is always best to accomodate for this margin of error for such cases and a bad batch ths extra materials needed or if any raw materials/bought components go up in price.

When considering all these factors i would again have to say that my initial cost proposal of £2600 per crane if a safe estimate.

Background Costing Research

Whilst trying to figure out the rough cost i should be aiming for i considered several factors:

• The crane would need to be as cheap as possible without reducing the quality overmuch.
• The crane should be no more expensive than our competitors unless there are features on our crane that are specific to this design only and thus making it worth the extra money to the customers.
• Our main target audience is relief aid organisations and governments where there is a high risk of natural disasters such as earthquakes etc. Generally speaking, this type of customer will have minimal financial resources available and so the crane will need to be cheap enough to accomodate this.
• Whilst deciding the material, the costs involved will need to be considered as the better quality, stronger/lightweight materials will be more expensive.

With these sorts of factors in mind, i decided to research our competitors and see how much they are selling their cranes for. I managed to find 5 gantry crane companies both located in England and in America. Their selling prices ranged from £2000 to £3500 approximately (this does not include delivery costs). This tells me, that i would ideally be aiming to be in the cheaper half of this range but not the cheapest as we have an added market advantage of being one of the few cranes on the market that has a high level of portability.