83 Hillside Avenue, Concord, MA, USA 01742, Telephon

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Estimating the Benefits and Costs of a Human
Factors Engineering ProgramAdapted from a
presentation toMEK 2005 Congress on Medical
Devices, Human Factors and Patient Safety,
Muenster, Germany,March 18, 2005Michael Wiklund
83 Hillside Avenue, Concord, MA, USA 01742,
Telephone [phone] Email
mwiklund_at_comcast.net
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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).

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Hypothetical Product

• 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.

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Human Factors Engineering Costs

• 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

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Opportunities for Savings and Returns

• Simplified learning tools
• Faster time to market
• Increased sales
• Product liability protection
• Reduced customer support
• Longer design life

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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

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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.

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Simpler Learning Tools

• 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

9
Faster Time to Market

• 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

10
Increased Sales

• Products 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

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

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

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.

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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

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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

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Timeline
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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 products enhanced user interface protects
  against additional product liability claims.
• The product is marketable for more than 6 years.