What You Should DoBy Baselinemag | Posted 2002-05-15 Print
Technology is available to make railroads safer by using sensors, computers and digital communications to control trains. But is it worth $3 billion to $5 billion to save one or even a half-dozen lives?
What You Should Do: Calculating all costs of a project
You can make a faulty decision on whether to invest in a big system if you fail to consider costs of:
- Accidents. Particularly in systems that control or monitor manufacturing lines; include savings from injuries or fatalities that will be reduced
- Layoffs. If the system improves overall productivity and you can reduce head count, include both the up-front costs of trimming the work force, as well as the ongoing costs that get saved
- Scheduling. Determine productivity gains from more effective use of equipment or, in transportation, "rolling stock'' like trains, trucks and vans. Also, calculate improved use of personnel
- Customer Service Gains. If you know more about the location of your product in a factory or out in the field, you can reduce the number of high-cost interactions with customers. Include savings from online self-service
- Productivity Losses. Ramping up your system will almost inevitably entail downtime and education that is not planned for. Include extra costs for this contingency
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