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Service Cost Estimation with Uncertainty Using Agent Based Simulation

Management Track

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This paper aims to contribute to the decision making in integrating uncertainty to service cost estimation by providing a novel approach through agent based modelling (ABM) for the early stage of bidding for Contracting for Availability. The paper presents the ABM architecture describing the agents that represent the customer and industry, which captures responsibilities in areas including failure, repair, supply and availability management. Furthermore, internal and external rules are defined to capture the interaction between the cost drivers. The major outcome relates to the robust and accurate “what-if” scenarios of the dynamic interplay among the many cost uncertain elements. The approach is a unique addition to the cost estimation literature by enabling to capture patterns and effects which have cost impacts during the service delivery. The developed approach has been validated through expert judgment. Also, a pilot case study is presented that reflects the increased understanding and precision in decision making regarding costs within a major company in the defence and aerospace industries.


John Erkoyuncu
Cranfield University
John Ahmet Erkoyuncu is a PhD researcher at the Decision Engineering Centre at Cranfield University. His research concentrates on integrating uncertainty into cost estimation at the bidding phase of availability type contracts within the defence and aerospace industries. Under availability contracting arrangements the mean time to repair (MTTR) or other performance criterion is made the essence of the contract. As a result this has shifted the types of uncertainties that manufacturers have typically faced in cost estimation. This sets the background to the research questions in his research. As well as integrating uncertainty to cost estimation, the scope of his research encompasses the identification, prioritisation and mitigation of uncertainties. The current focus of the researcher involves establishing links between uncertainties and cost drivers with a view to develop mathematical representations of cost drivers. John Ahmet Erkoyuncu completed an MSci degree in Econometrics and Applied Business Management from Imperial College, London. Subsequent to this degree he began his PhD at Cranfield University, which is funded by the EPSRC. The research is part of the PSS-Cost project, which ends in September 2010. The project aims to better understand whole life cycle cost and affordability management in availability type contracts in the defence and aerospace industries.

Rajkumar Roy
Cranfield University
Professor Rajkumar Roy led Competitive Design research at Cranfield for over ten years before promotion to Head of Manufacturing Department in 2009. Competitive Design is a fact based approach to study whole life of technology intensive products and services and optimise their design, along with efficient design information and knowledge management.
Professor Roy is known for his qualitative cost modelling, requirements management and design optimisation research and has published over 20 Journals and 100 conference papers. He is currently the Principal Investigator of three Product-Service System (PSS) projects (IMRC and EPSRC funded) in the areas of whole life cost and service knowledge capture. He is also the Principal Investigator of an IMRC funded Network of Excellence in Affordability Engineering. BAE Systems is a major sponsor of his research along with Airbus, Rolls Royce, MoD, BOC Edwards, Nissan and Ford Motor Company. He is currently leading the new initiative on Competitive Creative Design at Cranfield and collaboration with University of the Arts London, and has also developed an innovative PSS Futures Lab at Cranfield.
Professor Roy has a PhD in design optimisation using soft computing techniques. Before that he completed formal postgraduate education on intelligent systems and production engineering. He is a Chartered Engineer and the President of the Association of Cost Engineers (AcostE), a member of IEEE, IED and the Institution of Engineers (India). He has also been an Associate Member of CIRP over 3 years. Professor Roy is the Editor in Chief of the Applied Soft Computing journal from Elsevier.

Essam Shehab
Cranfield University
Dr. Essam Shehab is a Senior Lecturer in Decision Engineering and is leading cost engineering research at Cranfield University. Furthermore he has an academic, research and industrial background in product-service systems and knowledge-based decision support. Dr. Shehab is the Principal Investigator of four EPSRC/industry studentships for PhD and EngD and a Knowledge Transfer Partnership (KTP) project. He is co-investigator of whole life cost of product-service system (PSS-Cost), PSS-Service Delivery Systems and PSS-Design projects, EU FP7 project on lean product and process development and academic supervisor of e-service and service design projects. He has developed a strong track record of applied research with a number of companies including Airbus, Rolls-Royce, BAE SYSTEMS, Lockheed Martin, Lotus Cars and Cosworth. Dr. Shehab has also successfully completed the supervision of four PhD students and 50 MSc. Theses and one KTP project. He has published over 60 Journal and Conference papers in his areas of expertise. Dr. Shehab is a Fellow of the Higher Education Academy, a member of both the Engineering and Manufacture Committee (EMC) of ACostE and the Institute of Engineering and Technology (IET).

Kalyan Cheruvu
Cranfield University
Dr. Kalyan S Cheruvu is a Research Fellow and Project manager in Decision Engineering Center, Manufacturing Department at Cranfield University. Furthermore he has an academic, research and industrial background in product design and development. He is Project Manager of whole life cost of product-service system (PSS-Cost) project. He has developed good relations with BAE SYSTEMS, Rolls-Royce, Lockheed Martin, BVT fleet, Metronet, and Ministry of Defence, UK. Dr. Cheruvu is also supporting four PhD researchers in PSS-Cost project. He has published over 16 Journal and Conference papers in his areas of expertise. Dr. Cheruvu is an Associate Member of Association of Cost Engineers (ACostE).