Business Case for Pilot Project with Low ROI
May 27, 2021 at 9:05 am #254129
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By way of background – I work for a small but rapidly growing high-mix/low-volume equipment manufacturer. I am fairly new to the company in a newly created continuous improvement-focused role.
I am assisting a group of engineers on a project charter for a pilot project as a facilitator. I have been tasked with creating a project charter and helping them build their business case (as well as crafting a problem statement and establishing SMART goals, etc.) I will likely also help the project manager in a facilitator role if the project is approved.
The project deals with installing an automated data collection system at an equipment pump-out station. Currently any data collection at this station is recorded manually which has led to incomplete and unreliable results. This process is mirrored in several other areas of production. Basically, our data collection capabilities as a company are poor.
Their goal is to get approval to install this automated data collection system at this pump-out station as well as an automatic cutoff for when the pump-out is complete (this is currently done manually as well.)
While there are some hard and soft dollar savings to be had by improving the station itself, the major selling point is getting access to the data for various engineering and business decisions. Also, this pilot project would be used as a template for installation of similar systems across production (at a presumably lower cost since we will learn from this project).
To me this is an easy sell (better data = better decisions), but there has been some pushback from management as the company is in transition. I have all the boilerplate stuff about how “with real-time automated data capture we will improve the performance of our products, reduce testing time, decrease re-work, and improve process flow/throughput,” but am struggling to assign values. The challenge I am having is trying to determine hard and soft dollar savings this data access will provide in the future (with some appropriate discount rate applied). Has anyone had experience quantifying this kind of thing before? If so, what was your methodology?
Thanks so much for your help!
Bonus Question: How do I calculate the opportunity cost of machine time? Basically, the equipment at the pump-out station is monitored manually and sometimes does not get taken off when the pump out is complete (sometimes hours after). Is there a way to calculate the value of not getting the next piece of equipment hooked up to that pump-out station immediately after the pump-out is done?0May 31, 2021 at 1:15 am #254184
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