COST ESTIMATION OF DESIGN & DEVELOPMENT

OF PROJECT
 MHR FOR DURATION OF PROJECT
2019 2020
DEPARTMENT
AMOUNT IN RUPEES (10 % MHR YEARLY ESCALATION)

DESIGN 2500 2750

DESIGN OUTSOURCING 1700 1870
SHOP 1700 1870
ASSEMBLY 1700 1870
TESTING 2200 2420

AIR COMPRESSOR UNIT

DESIGN & DEVELOPMENT SCHEDULE & MANPOWER REQUIREMNT

TOTAL DURATION NO. OF ENGINEERS YEAR1 YEAR2

SL.NO. ACTIVITY
IN MONTHS INVOLVED MONTHS MONTHS

1 PRELIMINARY DESIGN 4 12 4
2 DETAIL DESIGN 10 16 10
3 PURCHASING 8 6 6 2
4 PROTOTYPE MANUFACTURING 6 5 4 2
5 ASSEMBLY 5 5 2 3
6 TESTING & CERTIFICATION 4 5 4
NOTE: AERDC WORKS FOR 7.5 HRS/DAY AND 25 DAYS/MONTH
 AIR COMPRESSOR UNIT DESIGN AND DEVELOPMENT EXPENDITURE (Rs. IN CRORES)
LABOUR COST IN CRORES
OTHER
YEAR2 FACILITY TOTAL
SL. YEAR1 2019 DESIGN SHOP TOTAL MATERIAL DIRECT
MAJOR ACTIVITIES 2020 DESIGN PURCAHSE PURCAHSE SHOP TESTING TESTING TOTAL COST COST
NO MONTHS COST COST COST COST (Rs.) EXPENSES
MONTHS HOURS HOURS COST (Rs.) HOURS HOURS COST (Rs.) HOURS (Rs.) (Rs.)
(Rs.) (Rs.) (Rs.) (Rs.)

PRELIMINARY
1 4 9000 2.25 9000 2.25 0.30 0.10 0.75 3.40
DESIGN

2 DETAIL DESIGN 10 30000 5.1 30000 5.10 0.60 0.20 0.75 6.65

3 PURCHASING 6 2 9000 1.57 9000 1.57 3.50 0.20 0.00 5.27

PROTOTYPE
4 2 4 5625 1.02 5625 1.02 5.20 0.70 0.75 7.67
MANUFACTURING

5 ASSEMBLY 1 5 5625 1.04 5625 1.04 0.25 0.40 0.30 1.99

TESTING &
6 4 3750 0.91 3750 0.91 0.15 0.40 1.25 2.71
CERTIFICATION

7 TOTAL 23 15 39000 7.35 9000 1.57 11250 2.06 3750 0.91 63000 11.88 10.00 2.00 3.80 27.68

PERCENTAGE 43% 36% 7% 14% 100%

 UNIT COST ESTIMATION
(Rs. IN CRORES)
SL.NO. PARTICULARS 2019 PL %
MATERIAL COST
RAW MATERIALS 0.20
1 STANDARD PARTS & CONSUMABLES 0.15
ACCESSORIES 0.32
MATERIAL COST 0.67 51%
2 LABOUR COST (2200 HRS; MHR=Rs.1800) 0.40 30%
3 TOTAL (MATERIAL COST+LABOUR COST) 1.07
4 PROFIT @10% 0.11
5 BASIC PRICE EXCLUDING AMORTISATION 1.17
6 AMORTIZATION OF: TOTAL NO.OF ACU
D&D COST 27.68 500 0.06 4%
7 PRICE INCUDING AMORTIZATION 1.23
8 PROFIT @7.5% ON D&D COST 0.09
UNIT SELLING PRICE (2019 PL) 1.32

UNIT SELLING PRICE (2021)

ESTIMATED PRICE @ 10% ESCALATION P.A. 1.58

DELIVERY SCHEDULE (SALES PROJECTIONS)

T0+3 T0+4 T0+5 T0+6 T0+7 T0+8 T0+9 T0+10
NO. OF AIR COMPRESSOR UNITS 20 30 50 80 100 80 80 60
CUMULATIVE 20 50 100 180 280 360 440 500
 FINANCIAL PROJECTIONS
2021 2022 2023 2024 2025 2026 2027 2028

ESTIMATED NOS. OF SELLING LRU 20 30 50 80 100 80 80 60

SELLING PRICE 1.58 1.74 1.92 2.11 2.32 2.55 2.81 3.09

REVENUE 31.68 52.27 95.84 168.67 231.92 204.09 224.50 185.21

LESS:
LABOUR COST(32% OF REVENUE) 10.14 16.73 30.67 53.98 74.22 65.31 71.84 59.27

MATERIAL COST(48% OF REVENUE) 15.21 25.09 46.00 80.96 111.32 97.96 107.76 88.90

DEPRECIATION & AMORTIZATION (4% OF

1.27 2.09 3.83 6.75 9.28 8.16 8.98 7.41
REVENUE)

TOTAL COST 26.61 43.91 80.50 141.68 194.82 171.44 188.58 155.58

PROFIT BEFORE TAX (PBT) 5.07 8.36 15.33 26.99 37.11 32.65 35.92 29.63

TAX @22% 1.12 1.84 3.37 5.94 8.16 7.18 7.90 6.52

PROFIT AFTER TAX (PBT) 3.95 6.52 11.96 21.05 28.94 25.47 28.02 23.11

ADD: DEPRECIATION & AMORTIZATION

1.27 2.09 3.83 6.75 9.28 8.16 8.98 7.41
(4% OF REVENUE)

OPERATING CASH FLOW 5.22 8.61 15.79 27.80 38.22 33.63 37.00 30.52

CUMULATIVE 5.22 13.84 29.63 57.43 95.65 129.28 166.28 196.80