BIZOMAT Tools · Improvement
Automation Business Case
Is this repetitive work worth automating?
Estimates the net annual benefit and payback of automating manual work.
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How this tool works
Inputs, units and where to find them
| Input | Unit | Typical source |
|---|---|---|
| Manual hours / week | hr | Manual hours per week on the task (time study) |
| Loaded labour rate | $/hr | Loaded labour rate |
| Working weeks | weeks | Working weeks per year |
| Automation investment | $ | Quoted installed cost of the automation |
| Annual automation cost | $ | Annual maintenance, support and licence cost |
| Expected manual effort reduction | % | Expected reduction in manual effort from the supplier or a pilot |
What each input means
Open an input to see what it is, its units, the worked example and the common mistakes, with a small diagram.
What this means: Manual hours / week
- What it is
- The hours people spend doing the task by hand in a typical week, measured by time study or work records.
- Units and format
- Enter a number in hr: hours. The form accepts 0 hr or more.
- Example
- The form opens with 20 hr as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Manual cost, and so the benefit, rise in proportion.
- Get it right
- Count only the hours the automation would actually take over.
What this means: Loaded labour rate
- What it is
- The full hourly cost of the people currently doing the task: wages plus on-costs such as superannuation, leave and payroll tax.
- Units and format
- Enter a number in $/hr: money per hour. The form accepts $0/hr or more.
- Example
- The form opens with $45/hr as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Manual cost and benefit rise in proportion.
- Get it right
- Use the loaded rate from finance.
What this means: Working weeks
- What it is
- The number of weeks a year the task is done, after shutdowns and holidays.
- Units and format
- Enter a number in weeks: weeks. The form accepts 1 weeks to 52 weeks.
- Example
- The form opens with 48 weeks as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Manual cost and benefit rise in proportion.
- Get it right
- Use working weeks, not 52, unless the task runs all year.
What this means: Automation investment
- What it is
- The one-off installed cost of the automation: equipment, software, integration, guarding, commissioning and training.
- Units and format
- Enter a number in $: an amount of money; use one currency for every money input. The form accepts $0 or more.
- Example
- The form opens with $40000 as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Payback rises in proportion; net annual benefit does not change.
- Get it right
- Use the full installed cost from quotations, including safety guarding and integration.
What this means: Annual automation cost
- What it is
- The yearly cost of keeping the automation running: maintenance, support contracts, licences, spares and energy.
- Units and format
- Enter a number in $: an amount of money; use one currency for every money input. The form accepts $0 or more.
- Example
- The form opens with $5000 as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Subtracted from the gross saving each year.
- Get it right
- Ask suppliers for annual service and licence costs; they are often missed.
What this means: Expected manual effort reduction
- What it is
- The share of the manual hours the automation is expected to remove, from a supplier estimate or, better, a pilot.
- Units and format
- Enter a number in %: percent: the number is read as a percentage, so type 8 for 8 %. The form accepts 0% to 100%.
- Example
- The form opens with 80% as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Gross saving rises in proportion.
- Get it right
- Allow for the people still needed to load, monitor and fix the automation.
Method and formulas
- Manual cost = hours per week × rate × weeks
- Net benefit = manual cost × reduction − annual automation cost
- Payback = investment ÷ net benefit
Limitations
- Excludes downtime of the automation, quality changes and redeployment costs
Typical uses
- Robot, jig or software automation proposals
Who it is for
- Engineering and operations managers
What you get
- AUTOMATION CASE EXISTS or WEAK AUTOMATION CASE
- Net annual benefit and payback
Interpreting the result
- Automate a stable process; check safety and change management first
References
- Safe Work Australia, Model Code of Practice: Managing the risks of plant in the workplace
Learn the Concepts Behind This Tool
These BIZOMAT Library readings explain the method this tool uses, with worked examples.
Useful alongside · BIZOMAT original book
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BIZOMAT tools are screening and decision-support utilities. Verify important financial, engineering, safety, legal or operational decisions using appropriate professional standards and your organisation’s approved data.