Estimating the Benefits and Costs of a Human Factors Engineering Program Adapted from a presentation to: MEK 2005: Congress on Medical Devices, Human Factors and Patient Safety, Muenster, Germany, March 18, 2005 Michael Wiklund 83 Hillside Avenue, Concord, MA, USA 01742, Telephone:

Estimating the Benefits and Costs of a Human Factors Engineering Program 2 My Presentation Discuss the costs and benefits of human factors engineering. Build a business case based on conservative estimates that human factors engineering produces a large return on investment (ROI).

Estimating the Benefits and Costs of a Human Factors Engineering Program 3 Medical device used in critical care settings that has both a hardware and software user interface. Development takes about two years and costs $2,000,000. Manufacturer conducts a rigorous human factors program. Hypothetical Product

Estimating the Benefits and Costs of a Human Factors Engineering Program 4 User research$40,000 Requirements specification$10,000 Concept development$50,000 Detailed design$100,000 Prototyping (2 rounds)$30,000 Usability testing (3 rounds)$50,000 UI specification$20,000 $300,000 Human Factors Engineering Costs

Estimating the Benefits and Costs of a Human Factors Engineering Program 5 Simplified learning tools Faster time to market Increased sales Product liability protection Reduced customer support Longer design life Opportunities for Savings and Returns

Estimating the Benefits and Costs of a Human Factors Engineering Program 6 Existing Product (subject to replacement) Product price: $3000 Units sold per year: 4000 Profit per unit: 10% Annual revenue: $12,000,000 Salary + benefits for customer support representatives and technical writers: $100,000/yr. Documentation: $45/set Design life: 5 years

Estimating the Benefits and Costs of a Human Factors Engineering Program 7 Note: Cost and benefits analysis makes several simplifying assumptions. Analysis does not address the time value of money. Estimates of projected benefits considered to be conservative. Manufacturer presumed to be a large company that produces many other products.

Estimating the Benefits and Costs of a Human Factors Engineering Program 8 Reduce development time by 33% (6 person- months instead of 9 person-months). Save: $25,000 Shorter documents reduce printing costs by 33% ($15 per set x 4400 sets). Save: $66,000 Simpler Learning Tools

Estimating the Benefits and Costs of a Human Factors Engineering Program 9 Human factors program prevents late design changes. Replacement product introduced to market 2 months earlier. Save: $167,000 (development cost) Return: $20,000 (increased profit due to increased sales) Return: 2 months of related savings Faster Time to Market

Estimating the Benefits and Costs of a Human Factors Engineering Program 10 Increased Sales Product’s greater ease of use boosts sales by 10% (from 4000 to 4400 units/year). Revenue increase: $120,000 Profits (viewed simply) increase: $1,200,000 to $1,320,000. Return: $120,000

Estimating the Benefits and Costs of a Human Factors Engineering Program 11 Product Liability Protection Avoid 1 major claim over 10 years that settles for $2,000,000 Avoid legal fees: $200,000 Save: $220,000/year

Estimating the Benefits and Costs of a Human Factors Engineering Program 12 Reduced Customer Support Demand for support drops by 25% because the product is easier to learn to use and troubleshoot. Require 1 less customer support representative. Save: $100,000/year

Estimating the Benefits and Costs of a Human Factors Engineering Program 13 Longer Design Life Product remains competitive for 6 years instead of 5 years. Major redesign cost: $2,000,000. Major redesign postpone for 1 year. Save: $400,000/year.

Estimating the Benefits and Costs of a Human Factors Engineering Program 14 Return on Investment One time –Time to market:$187,000 –Design life:$400,000 –Develop learning tools:$25,000 Annual –Product liability:$220,000 –Customer support:$100,000 –Produce learning tools:$66,000 –Increased sales:$120,000

Estimating the Benefits and Costs of a Human Factors Engineering Program 15 Return Over 5 years Cost:$300,000 Return –One time savings:$612,000 –Annual savings x 5:$2,530,000 $3,142,000 Return on Investment:~ 10 to 1

Estimating the Benefits and Costs of a Human Factors Engineering Program 16 Timeline

Estimating the Benefits and Costs of a Human Factors Engineering Program 17 Conclusions Human factors engineering is cost-effective. Manufacturers reap benefits for several years following an up-front investment. The projected ROI of 10 to 1 might double if: –Sales increase more dramatically as a result of improved product usability. –The product’s enhanced user interface protects against additional product liability claims. –The product is marketable for more than 6 years.