Business Case Analysis and the Confounds of Innovation Driven by Performance‐Based Postproduction Support Strategies

Wesley S. Randall, Stephan P. Brady and David R. Nowicki

Transportation Journal, 2012, vol. 51, issue 1, 33-58

Abstract: The postproduction support cost of complex systems such as rail, power, and defense often exceed the cost of research, design and production. As such systems age and degrade the traditional maintenance, repair, and overhaul (MRO) approach does little to reduce their cost or improve performance. The failure of traditional MRO has given rise to a number of multi‐year, performance‐based, postproduction support strategies. These strategies drive investment to reduce cost, infuse innovation, and increase system performance. The dynamism and innovation associated with these strategies makes it difficult to conduct a business case analysis (BCA) that compares the return on sales model of traditional MRO to the return on investment model of performance based strategies. To address this gap in practice and theory we provide a framework for rationalizing performance‐based and traditional strategies within the same BCA. We develop questions to guide the creation of BCAs that include performance‐ based options. Finally, we offer analytical guidance to support direct economic comparison between these two fundamentally different postproduction support strategies.

Date: 2012
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https://doi.org/10.5325/transportationj.51.1.0033

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Persistent link: https://EconPapers.repec.org/RePEc:wly:transj:v:51:y:2012:i:1:p:33-58

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