Automation Project Justification – How to Sell the Goods!

Back when I was a plant automation engineer, one of the most challenging and sometimes frustrating parts of the job was trying to justify what I knew were worthwhile automation projects. Despite knowing they were valuable, convincing company leadership those projects deserved funding ahead of all the other competing projects was a difficult endeavor! What does it take to successfully sell your automation project to company management? Regardless the type of project (e.g., migration of a legacy system, improved process control, information integration or other), here are a few steps to help develop the justification you need to put you on the path to success both from a business and professional standpoint.

1. Understand the Process

Thoroughly understanding your company’s project approval process is a critical first step. Project approval requirements vary widely from company to company, and specific requirements can change from year to year. For example, some companies place a “hurdle” for payback justification where only projects with less than a certain time for payback (say less than 2 years) are considered for funding and that threshold can vary depending on the financial outlook for a given year.
It is also critical to understand all the submittal requirements for securing approval. What level of up-front engineering is required? What deliverables in what format are needed to accompany the funding request? How accurate does the cost estimate need to be? What are the deadlines for submittal? How does the approval process flow, and how long does it take? Knowing the answers to these questions will allow you to satisfy the requirements in time for the project to even be considered.

2. Cater to Your Audience

Who are the stakeholders with a say in getting your project approved? What goals are they being judged against, and what key initiatives are they trying to accomplish? What are the company objectives for the year? What sort of justification would make your project stand out relative to the other projects competing for company funding? Knowing the answers to these questions will give you a much better idea on how to develop a justification that appeals to the folks responsible for approving your project. Once you have made a first pass at the justification, set up meetings with individual stakeholders to explain the project and your proposed justification to get their feedback on what will have the most appeal. This has the additional benefit of getting stakeholders familiar and more comfortable with the project you are trying to get approved.

3. Gather the Data

In order to develop a solid justification that credibly identifies and monetizes all the potential benefits of your automation project, you need do some research. In general, most project financial justification falls into the following categories:

  • Improved Asset Utilization – Increased production, reduced unplanned downtime and reduced Mean Time To Repair (MTTR)
  • Improved Quality – Better ability to meet key quality parameters results in product that is more valuable and reduces off-spec product and scrap material
  • Reduced Cost – Less raw material usage, reduced WAGES (water, air, gas, electricity and steam), lower maintenance cost and lower personnel cost

To start, determine what key performance indicators (KPIs) your company uses to monitor production performance. Next, gather the historical performance of the parameters that affect the KPIs in the unit for which you are developing justification. Often, it is best to start with the basic production data for the past few years used, for instance, to populate the following table:

Annual Production Rate Annual Unexpected Downtime % First Pass Prime % Annual Waste Generation Total Cost/lb Utility Cost/lb Raw Material Cost/lb
Maximum
Minimum
Average

Once you have the overall performance data, then you can dive in and figure out what is driving the shortcomings in performance. For example, what are the causes for unexpected downtime, and how much does each cause contribute? How much is from operator error? Equipment failures? Utility issues? Tracking down this level of detail can be a challenge but is necessary to truly understand historical production performance and discover where the opportunities lie.
Armed with this historical performance information, you can make credible predictions on how your automation project might improve various KPIs. This is where you can really be creative!

4. Customize Your Justification

One of the really cool characteristics of automation is that no other component has such a pervasive effect on production performance. A plant literally cannot operate well with a poor-performing automation system, and conversely, a well-performing automation system can have a huge impact on improving operations. Once you have accomplished the previous steps of understanding the approval process, knowing your stakeholders and what is important to them, and gathering information on historical unit performance, you can focus on customizing the justification for maximum appeal.
Using the unexpected downtime category in the previous section, think of how your automation project might address the various causes. Estimate an expected improvement based on the performance achieved in plants which have already implemented the automation changes being proposed by your project – either elsewhere in your company or from industry data based on what other companies have experienced. See the following table for an example:

Downtime Cause Downtime % Expected Improvement Source
Operator Error 35% 80% reduction 1) Automating the tasks operators currently perform manually
Equipment Failures 45% 25% reduction 2) Implementing state-based control and alarming to minimize production disruption from common equipment failures
3) Reducing automation system equipment failures
Utility Issues 20% 20% reduction 1) Implementing state-based control and alarming to minimize production disruption from common utility issues

Instead of focusing the justification on problems with the existing automation system, this approach develops a justification around the business outcomes that your company is trying to achieve. For example, say you are trying to justify modernizing an obsolete control system. That old system is probably having component failures which are increasing over time. You might be tempted to justify the modernization based on the increasing cost of replacement parts, but your stakeholder research reveals that your company has an initiative to improve first-pass product quality. Therefore, instead of focusing on reduced parts cost, determine how the component failures are reducing product quality and highlight that improvement in the project justification – not that you don’t also use the benefit of reduced cost as justification. Claim everything you can but make sure you highlight the benefits in the areas your stakeholders have the most concern.

Go Forth and Conquer

By gaining a thorough understanding of your company’s project approval process along with the desires of the various approvers and historical unit performance, you can develop a justification that will put your automation project in the best position to secure approval. This attention to detail and upfront planning provides key information that allows your company to select projects most aligned with strategic goals and make the smartest use of their investment dollars. In turn, this also helps you professionally by showcasing your ability to secure spending on projects that can really make a difference!

Lee Swindler

Lee Swindler

is an Industry Manager with MAVERICK Technologies. Lee has 31 years of automation industry experience, including 21 years in manufacturing and 10 years on the engineering services side. He holds a Project Management Professional (PMP) certification along with being a TÜV Certified Functional Safety Engineer (FSEng). Lee has a B.S.E.E degree from the South Dakota School of Mines and Technology.

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