Cost / Benefits Analysis

So, you are ready to embark on an improvement initiative to create a proactive reliability-centered culture but you can't seem to convince Senior Management to invest in the effort? Every change initiative should begin with an understanding of the potential Return on Investment (ROI) for the effort undertaken. Have you performed the cost and benefit analysis for the initiative? How are you going to sell the idea if a cost and benefit analysis has not been performed?

In the simplest terms, Senior Management must choose between competing objectives with respect to funding efforts. In today's economy with limited funds, this decision is even more critical. Many people are surprised at the real dollar amounts that can be gained by investing in proactive reliability practices.

It is not uncommon to see returns of 10 to 20 times the investment, sometimes seeing the start of those returns within 6 months of beginning the investment. But as the famous saying goes ... "Show me the money", this is where most improvement initiatives stop. Without performing cost and benefit analysis that compelling reason to change isn't there.

Most organizations struggle with performing a cost and benefits analysis, they understand the cost typically because it is provided in the proposal, but is that all the cost or only the cost associated with external assistance? What about additional internal costs, business interruptions, training, etc.? What benefits could be gained in executing the initiative, such as increased capacity, increased reliability, reduced materials expenditures, or labor savings? Through a detailed cost and benefits analysis these critical questions can be answered and move your initiative from it's a good idea but ... to look at the Return on Investment (ROI), we have to do it.

Let People and Processes show your organization how to perform cost and benefit analysis to get your improvement initiative moving. We'll show you how to "Show them the money" ...