 Cost Benefit Analysis
Whenever we are considering a switch to a new
technology we are usually required to carry out a
cost-benefit analysis to quantify the potential savings.
The accuracy of these analyses depends on
Under funding from SERDP we have developed
C-MAT (Calculation for Material Alternative Technologies),
an Excel-based decision tool designed specifically for
evaluating the life-cycle costs (LCC) and benefits of
changing materials and coatings. Many simple cost-benefit
analyses merely compare the processing cost of the current
technology with that of the alternative. The better
analyses take into account other factors, such as capital
costs and improved performance.
The C-MAT Decision Tool
C-MAT is a detailed Excel-based Cost-Benefit
Decision Tool designed to take into account the full range
of costs and benefits of adopting new technologies. It
compares the total costs and benefits of adopting and
using a new technology versus staying with the existing
technology. It allows you to take into account all the
up-front costs, all the down-stream benefits, and how you
will go about making the changeover. Output includes Net
Present Value, Return on Investment, Internal Rate of Return
and Payback Period. Cost-based and Cash Flow-based
calculations make it useful to both DoD and commercial
organizations.
|
Examples
of costs |
Examples
of benefits/cost savings |
|
Process and environmental cost changes |
Waste reduction |
|
Development, from R&D through qualification |
Reduced repair
frequency and in-process time |
|
Specification development |
Reliability, on-wing
time improvement |
|
Drawing and contract modification |
Service failure and
collateral damage reduction |
|
New equipment and tooling |
Inventory reduction |
|
Decommissioning old
equipment, cleanup |
Warranty and
insurance cost reductions |
|
