Cost Analysis Of Model T2 For The Ford Model-T Challenge

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Career Episode 2 details the work carried out during my winter holidays and a couple of months during my second semester over a period of 4 months from June 2008 till September 2008 at Deakin University, Waurn Ponds, Geelong campus, Victoria. I was working as the Costing and Manufacturing Engineer on the Ford Model-T challenge, where I had to carry out a detailed research on different costing methods adopted by major car manufacturing companies at different parts of the world. My supervisor for the whole project work was Dr. Bernard Rolfe who also was the project coordinator for the entire project.

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The project was carried out at the Geelong Technology Precinct (GTP) which provides a unique resource and facility for research aimed at industry co-operation and research application. Geelong Technological Precinct is home to the Institute for Technology Research and Innovation (ITRI) and Centre for Material and Fibre Innovation (CMFI), a multidisciplinary research group with over 100 research students and staff at Deakin University Waurn Ponds campus. As part of the project work I had to conduct an intensive research on different ways of manufacturing and cost reduction methods for the concept car. Regular meetings, updates and weekly presentation were held at Geelong Technological Precinct which is located at Deakin University Waurnponds.

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Dr. Bernard Rolfe was the project coordinator of the Ford Model-T challenge team which had many groups working under him simultaneously. Working as the costing and manufacturing engineer, I had to work hand in hand with the other departments such as design team, business case department and assembling department to understand the market trends and the innovative distribution strategy developed. The main objective for the Model-T challenge by Ford Motor Company was to develop an innovative design of a passenger vehicle which has the performance of USD $20,000 but for a price of USD $ 7000. This was achieved only coming up with a revolutionary concept which is robust and light weight along with a step change in manufacturing and assembly of the vehicle, by which the costs associated with the materials, manufacturing and assembly were reduced drastically. A wise selection of materials and manufacturing process was necessary at each stage.

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Many students from different disciplines were working as a team on various departments under this project. Each department had its own objective and had to work hand in hand to achieve the common goal. The concept car was considered as an entire assembly which was decomposed into sub-assemblies and parts. Each sub-assembly compiled of many individual components which has different functions in the car. The subjects like Automotive Engineering, Theory of Machines and Machines Production Process studied in my bachelors degree helped me to solve the problems encountered and to get a better understanding on the objectives of the project.

Rolls and responsibility of my Engineering job:

  • Thorough research on different costing techniques used by automobile companies.
  • To build up a detailed Bill of Materials.
  • To analyze the cost for Manufacturing and Assembling the concept car
  • Technical Presentation of the results

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Initially I was given a detailed orientation about the tasks and responsibilities as a Manufacturing and Costing Engineer. A project safety plan was conducted to recognize the potential hazards that may involve during the project work at GTP. The first task of the project was to understand the breakdown of the concept Model-T2 vehicle. Meetings were held regularly with the project coordinator, head of each department associated in this project and the employees at Ford Australia to understand the expectations and requirements of the project and my role as manufacturing and costing engineer.

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The concept car was considered as a system with many sub systems assembled together. Each sub-system is compiled of many individual parts which has different functions in the car. The initial task was to identify the sub assemblies and then to list every single parts in the subsystem. The main objective is to manufacture the car with light weight materials at the same time reduce the costs incurred. As the existing heavy metals were substituted by light weight plastics or equivalent materials to reduce the vehicle weight it also involved different manufacturing techniques so as to suit the new materials. A professional standard was maintained while selecting the manufacturing process and creating the bill of materials.

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The Model T2 comes with a power train that consists mainly of a Drive Train, Jet Burner and a HVAC unit. The main component of drive train is the Air Motor which is casted, forged and assembled using alloy steel. The jet burner unit consists of parts such as exhaust, burnet jet, base, burner housing, safety valve, diversion valve, silicon manifold and connection pipes which are not custom parts and can be manufactured by casting and forging or purchased from a potential supplier. Injection moulding process is used to manufacture the parts in the HVAC units mainly top and bottom housings, dividing valves, cabin air ducting and fan housing.

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A conventional disc brake system was preferred for the front tyres. The brake system being a conventional one could be outsourced and then assembled in the plant. The front and the rear wheels are manufactured using the 6061 alloy by casting process and then machined, slotted and drilled. The front wheel hub is manufactured using alloy steel by casting process and then machined. The material used for the rear wheel hub is 6061 alloy and manufactured using casting process. The tyres are purchased from a potential supplier. The suspension systems used in the front are independent double wishbone suspension system. The material used for the upper arm is 6061 alloy and manufactured by casting process. The lower arm is manufactured by roll forming with Martensitic steel. The major components of the rear suspension system are upper and lower telescopic forks and coil spring which can be outsourced. The front and rear suspension mounts are manufactured by casting with cast Aluminium and 6061 alloy respectively.

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The body structure comprises of two major sections, the Lower section and the Exterior. For the lower section, the manufacturing processes involved are stamping, casting, resin transfer mounding, extrusion, quick step and roll forming. Firewall and bumper are stamped using dual phase steel and Martensitic steel respectively. The wheel arches, front access panel and front sub frame are manufactured using resin transfer moulding. The crash tubes are manufactured using carbon fibre epoxy composite by quick step process. Resin transfer moulding is used to manufacture glass reinforced thermoplastic resin floor. The manufacturing techniques were proposed to develop the vehicle body structure cost efficiently using unconventional methods. The exterior section consists of bumper, bonnet, doors, rear quarters, door ring reinforcement strip, front reinforcement strip, windows, and roof and rear quarters. The manufacturing processes used are resin transfer moulding and injection compression moulding.

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Some of the manufacturing process such as the Resin Transfer Moulding, Quick Step and Roll Forming are unconventional as they prove to be more economical and specific to the material selection done already. Resin transfer moulding gives an average cycle time of 10-15 minutes and the tooling cost can approximately be considered as USD $ 250,000. Due to volume of materials used is more, the material costs would be very low, ranging typically from 20-30% between two or three times that figure for a simple stamping or assembly. Quick Step showed a reduction of 50 to 90% over autoclave cycle times. The quick step evaluation, prototyping and developing facility approximately costs £ 2.1 million. Compared to the conventional autoclave process for the similar part, quick step process could make a saving of 65% on its tooling cost and thereby making an overall saving of 80%. Roll forming was considered as it's an efficient and economical way of making sections at high production rates. The cycle time can be approximately calculated as 80ft/min x 60 min, that would be 4800 ft/hr. The facility cost for the roll forming set can be approximately USD $4 million and the associated tooling cost is approximately USD $40,000. A comparative study was conducted to select the most economical and efficient manufacturing process related to the material selected and the number of components.

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The cost estimation technique used was the analogy based technique which uses quantitative estimation methods. The quantification of each resource particularly in the initial stages was extremely difficult because the amount of information provided was less and the low level definition of the project, help was acquired from the finance department of Ford Australia. The costs calculated along with other expenses were acquired from components manufactured in a similar way to get an approximate figure. The costs of the components that were outsourced are added along with the material cost of those manufactured to get the total material cost. The total variable cost of the vehicle is complied mainly by the material cost along with the warranty cost, freight and distribution cost, provision cost, marketing and sales cost. The fixed costs of the vehicle comprises mainly of the initial investments made for the plant layout, tooling cost, prototyping and all other development costs. All the other costs such as processing costs, engineering expense, administration expense, depreciation cost and selling expense adds to the fixed cost of the vehicle. The wholesale cost of the vehicle was calculated by adding up the variable cost and fixed costs. The dealer margin of 34% of the wholesale cost was added to get the final total cost of the vehicle.

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The materials used and the related manufacturing process in the concept differs from the conventional reducing weight and cost. The variable cost mainly consists of the material cost while the fixed cost is mainly constituted of the plant facility cost and other long term investments. Each system was revised to come up with an approximate material cost incurred in its manufacturing. The power train and the frame and body contributed to around half of the cost. Each making a contribution of 24 % the total material cost. The wheels and tyres constitute for only 9 % similar to the suspension system of 10 %. Since the suspension used is a conventional one and the total number of wheels is only three the cost is reduced when compared to a conventional vehicle as the parts and area used is less. The brake system make up only 4 % of the total cost incurred. The rest of the contribution of approximately around 30 % is made by the interiors, accessories and the instruments associated along with its wirings and other fit and finish. The total material cost only of the whole vehicle along with the parts that are purchased come up to around 58% of the total cost projected for the concept. This cost come around USD $ 3800. This was then to be added up along with other variable costs and the fixed costs and finally the dealer margin to make up the total selling price of the concept.

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Sequential engineering was the key aspect for the job profile of costing and manufacturing engineer as it made it essential to interact with professors, post doctorate research fellows, ford employees and technicians constantly. The job helped me learn a lot about costing techniques and the manufacturing procedures for each component of a vehicle. Team work was the cornerstone for the successful completion of the whole project on time. The project report and the presentation were submitted to the university as well as the industry people.

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The project called for high level technical engineering knowledge and enhanced my product development skills. The Model T2 of Deakin University won the first prize for the Ford Model-T challenge. The judicious choice of manufacturing and costing techniques helped keep the cost well below the set target. The experience gained out of this project has given me very useful understanding in manufacturing, assembling and costing techniques used in an automotive industry and challenged my engineering knowledge.