Parametric estimation of supplier's plant construction costs

Cost engineers of buying enterprises perform detailed product cost calculations externally manufactured components. The aim these is to determine what a should and support purchasing functions in fact-based negotiations. While have deep knowledge the calculation direct cost, they need supplier´s indirect categories. industrial rent, which expressed annual per m² occupied plant building floor space can be improved by providing accurate construction estimates. Construction costs are strongly impacting depreciation, crucial driver for determination rent. Academic literature actually not an suitable model engineers, estimating depending on different categories alternative supplier locations. paper aims close this gap applying linear regression analysis set European data considering two categories: “warehouses/basic factory units” “high-tech factories”. By regressing against labor rates within locations it was possible form parametric with R² values between 0.74 0.88. Next high acceptable mean average percentage errors 7.45% 11.77% could realized comparing estimated observed cost. estimation based paper´s results used improve one element, that has covered engineer´s Should Calculations.