Management

Show Me the Money

20 Jun, 2011 By: Robert Green

Gain management support for your ideas by presenting them in terms of the dollars they'll save.


Editor's Note: This article originally appeared in the Winter/Spring 2011 issue of Cadalyst magazine.


Good managers realize that management is the art of dealing with problems to keep operations running smoothly. But great managers are always on the lookout for problems that they can solve proactively to realize savings and increase efficiency. So it stands to reason that CAD managers who actively find and fix hardware, software, and user problems save their companies time and money, right?

You've probably seen all sorts of problems around your company that you'd like to fix, if only you had the authority to do so. In fact, you probably have a pretty good idea of how to fix those problems — via configuration, upgrading, training, and so forth — if you could get the budget and time. The good news is that the key to gaining the needed approval and authority may be as simple as documenting the cost of those problems and touting the savings you could achieve by fixing them.

The Savings Plan

Start your quest for savings by asking yourself the following questions:

  • Where are the CAD processes or procedures that sometimes fail in our environment?
  • Are our standards difficult to follow? If so, why, and what can we do to make this easier?
  • Which manual procedures could we automate to save time?
  • Which programs and hardware don't always work properly?
  • How can we train our users to help eliminate confusion and error?

Get a pad of paper and start writing down the answers that pop into your head. You'll be surprised by how many things there are around your office that actually are broken, but you've been putting off fixing. Make this exercise even better by asking your CAD power users the same questions and listening to what they tell you.

After you've collected your answers, you should have a problem to-do list to form the basis of your cost-saving plan.

Quantify Problem Costs

For every item on your problem list, you have an opportunity to create savings — if you can eliminate the problem. The trick is to quantify the savings of each problem so you'll know where to focus your efforts to achieve maximum payoff. Here's an example of how to quantify problem costs.

Problem. Users continue to have troubles plotting because of their confusion about proper page setup and line-weight use.

Quantification metrics. You have 20 users who plot. You estimate that each user averages approximately 1 hour of lost labor per month due to plotting problems. You know that the average CAD user costs the company $35 per hour. Ask your management for the pay rate if you don't know.

Calculation. 20 users x 1 hour (per month) x 12 months (per year) x $35 (per hour) = $8400 per year

Find the Fix 

Next, you need to compute the cost of fixing the problem so you can ultimately arrive at a savings figure. Read on to continue our savings example.

Fix. Revise plotting standards, deploy to user machines, and provide a half-hour training session.

Metrics. Revising and deploying standards will take 8 hours of your time valued at $60 per hour. The training class will consume half an hour for each of 20 users for a total of 10 hours.

Calculation. 8 hours (CAD manager) x $60 (per hour) + 10 hours user training x $35 (per hour) = $830

Sell Those Savings

Now, go to your senior managers and tell them that plotting errors are costing your company $8,400 per year and that you can make the problem go away with an investment of $830 in time alone, yielding a first-year savings of $7,570 ($8,400 minus $830). Doesn't it make a lot of sense when you phrase it this way? This type of computation works equally well in euros, pounds, and pesos, by the way.

When you have approval to proceed, complete the task as soon as you can to gain credibility and momentum. When you're done, write a concluding memo telling your management team — OK, bragging a little bit — about the savings you've achieved, then move on to the next cost-saving idea.

 

Your Savings Action Plan
After you see how the savings approach works, you'll want to map out your action plan for the coming year. Following are some guidelines to help you prioritize your savings action plan and stay focused on your savings quest.

Start with something easy. Solving problems that require little of your time and minimal user training will realize savings quickly, get management's attention, and motivate you to tackle bigger problems.

Go for maximum savings. When you can't decide between two problems, pick the one that will generate bigger savings.

Keep refining your list. Always keep your eyes open for new savings opportunities and don't be afraid to reprioritize at any time. Don't stick to a rigid list; be flexible.

Listen to management. Once senior managers see what you can save them, they may start giving you ideas. If that happens, listen and act accordingly.

Never quit saving. You can always make things more efficient.

 

 

Standards + Training = Savings

Something that becomes apparent when you go through the cost-savings analysis is that standardization can make problems go away and generate savings. However, it also becomes obvious that you can't impose new standards without some amount of user training. The good news is that by including your training cost in the savings computations, you can illustrate that training pays for itself!

The standards-plus-training approach has helped me solve two of the most vexing management problems I encounter: lack of authority to implement standards and lack of approval for training time. By tying standards and training to cost savings, you'll be speaking the language of senior management — that is, business metrics — and improving your chances of gaining support for your CAD management objectives.

An unexpected bonus you'll gain by using CAD management to achieve cost savings is gaining management's support for enforcing standards and work procedures. Your new standard for plotting is saving the company money, so any user who purposely decides to deviate is costing the company. When viewed in financial terms, the user's transgression is more likely to get attention from management if you need it.

Increasing Your Stock

A CAD manager can do no better than to become a key part of his or her company by becoming a cost-savings machine. By following the plan I've outlined, you'll find yourself gaining your management's support and making operations easier for your users at the same time. Try it and see how your career and overall office management benefits.


About the Author: Robert Green

Robert Green

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