The economic valuation of improved process plant decision support technology

How can investments that would potentially improve a manufacturing plant’s decision process be economically justified? What is the value of “better information,” “more flexibility,” or “improved integration” and the technologies that provide these effects? Technology investments such as improved process modelling, new real time historians and other databases, “smart” instrumentation, better data analysis and visualization software, and/or improved user interfaces often include these benefits as part of their valuation. How are these “soft” benefits to be converted to a quantitative economic return? Quantification is important if rational management decisions are to be made about the correct amount of money to invest in the technologies, and which technologies to choose among the many available ones. Modelling the plant operational decision cycle–detect, analyse, forecast, choose and implement–provides a basis for this economic quantification. In this paper a new economic model is proposed for estimation of the value of decision support investments based on their effect upon the uncertainty in forecasting plant financial performance. This model leads to quantitative benefit estimates that have a realistic financial basis. An example is presented demonstrating the application of the method.