What You Should Do

By Baselinemag Print this article 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:

  1. Accidents. Particularly in systems that control or monitor manufacturing lines; include savings from injuries or fatalities that will be reduced
  2. 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
  3. 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
  4. 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
  5. Productivity Losses. Ramping up your system will almost inevitably entail downtime and education that is not planned for. Include extra costs for this contingency

Source: Baseline

This article was originally published on 2002-05-15
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