From Lean Maintenance

Overview

The most powerful argument in favor of pursuing a project is that it will save real money (unless of course it will also save lives).

In taking on such a challenge, make sure you have a good understanding of the requirements of how your company calculates savings, and at what rate they will green light a project. Learn the ROI and payback requirements, and how they will be calculated.

Return on Investment (ROI) is the most commonly-used measure for investments. ROI is expressed as the percentage of return earned per year. If the yearly income varies, each year can be evaluated separately, or the years can be averaged together (see ARR below).

ROI of common investments:

Savings account

3%

Money Market

5%

Mutual Fund

12%

Small corporate investment

50%

Capital improvements

30%


Example: Replacing 2000 old-style fluorescent fixtures in a school with new technology and electronic ballasts requires an investment of $150 per fixture, or $300,000. The reduction in energy, and costs of ballast replacement and lamp replacement, will yield a savings of $75,000 per year. The ROI calculation is:


Based on these numbers, the school could not justify the investment until it contacted the utility company, which offered a rebate of $45 per fixture or


Recalculation taking the rebate into account results in a new ROI calculation of:


33% = $75,000 / $210,000 The school was able to make this investment because, with the rebate, the ROI met the guideline.

Average Rate of...


Products & Services
Noise Standards
Noise standards are used to calibrate other noise instruments.
Ceiling Fans
Ceiling fans are suspended from the ceiling of a room to provide a cooling or de-stratification effect. To circulate the air, they employ hub-mounted, rotating paddles that are made of metal or plastic.
Direct Mail and Fulfillment Services
Direct mail and fulfillment services are specialized contract services that broadcast mailed marketing materials to target audiences who are usually identified by databases, provided by a direct mail company or the client.
Laser Repair Services
Laser repair services provide a cost-effective solution for refurbishment and repair for all types of lasers and laser system components.
Education Management Software
Education management software is used by teachers, students, and school administrators for organization and collaboration, and to facilitate learning.

Topics of Interest

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The monetary values for program benefits, developed in Chapter 6, are combined with program cost data, developed in Chapter 7, to calculate the return on investment. This chapter explores approaches...

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