Should we fund a value programme? Three years of savings against what the programme costs to run, with every assumption on show.
| Assumption | Year 1 | Year 2 | Year 3 | Source |
|---|---|---|---|---|
| Product cost base in scope (£ a year) | ||||
| Share of it studied (coverage) | ||||
| Saving found on the cost studied | ||||
| Share of found savings that reach production | ||||
| Share of the first year's saving that lands in that year | ||||
| Programme running cost (£): facilitators, training, study time |
Typical ranges from the course: a first proper study finds 8–15% of the cost studied, established programmes 3–5% a year. Use your own evidence where you have it, and say where each number came from.
| Result | Year 1 | Year 2 | Year 3 | 3 years |
|---|---|---|---|---|
| Cost studied = cost base × coverage | ||||
| Savings found = cost studied × saving rate | ||||
| Savings implemented = found × share implemented | ||||
| Savings this year = new savings × in-year share + earlier years' savings | ||||
| Net benefit = savings this year − running cost | ||||
| Cumulative net benefit |
| Return over three years (savings ÷ running cost) | |
|---|---|
| Payback: when cumulative net benefit turns positive | |
| The biggest risk to these numbers, and what would show it early |
Implementation costs such as tooling and testing belong in each idea's own business case. Here, use the saving after those costs.