APPENDIX 2

Re-engineering

FORMULA 8. The value of re-engineering a process

Cost of old process E − e = avpy cost of new process (plus change costs) = added value created per year.

In the example given, the process time was 7.5 hours (that’s just the elapsed time value)

7.5 hours × £46.00 × 226 = E £77,970

The best concept for this process

1 hour × £46 × 226 = e £10,396

 

 

Formula

E £77,970 − e £10,396 = £67,574 avpy (added value in 1 year)

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