The graph shows that the project achieves payback by the third quarter. Over the six-quarter period, the payback ranges from a low of $4 million to a high of $5 million. This is a very respectable return on investment.
Crunching the financials is straightforward. Safety ROI is another challenge for many reasons. It is difficult to show that the actions above improved safety. Safety is often intangible and, as a result, it is hard to quantify. Safety is based on an integration of many activities, not on just individual actions and programs. While difficult to show the safety return, the FAA research team continues to work on the issue. Safety ROI will be based on reducing events while financial ROI must be based on the money. The intricacies of the safety calculation are described in the embedded user documentation and will be discussed in the final technical report.
Our example of 30 ground damage events is clearly an indication of existing safety hazards. Reducing ground events would help improve and ensure safety. In this case, having 30 aircraft ground damage incidents over the past 12 months and expecting the interventions will likely prevent 20 incidents over the same period will result in an estimated 10 events a year in the future. This is a likely safety improvement.
This reasonably straightforward solution may require a bit of training. By discussing these issues in a team setting, however, all employees can learn to understand the positive impact on safety derived from each intervention.
The FAA software provides more detail than this short explanation. It helps assign specific categories and values to returns and investments. As with any analytic program, the quality of diligence and data accuracy provided will affect the accuracy of the ROI analysis.
The tool is designed for operational managers in ramp or maintenance organizations. The developers suggest that you use the model on small interventions before you tackle large complex ROI. If you work in a large company, your own finance team may want to add additional factors into the equation. The demonstration shown here was done in advance of the project’s completion. The same model can be used after the fact, meaning that there is no need to estimate the probability of success.
To get started, go to www.mxfatigue.com. That will take you to the ROI software and associated additional guidance material. Once the software works for you, then you can write the next ROI article for Ground Support Worldwide.
About the Author: Dr. Bill Johnson is the chief scientific and technical advisor for Maintenance Human Factors at the FAA. He spent more than 25 years in the private sector as a scientist and engineering executive prior to joining the FAA.
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