Cost-Impact Analysis

Are your programs making the impact you envision or are they costing more than they give back? A few years ago, I worked with an organization grappling with a tough question: Which programs should we keep, grow, or let go? They felt stretched thin, with some initiatives thriving and others barely holding on. It was clear they needed a clearer strategy to align their programs with their long-term goals. We introduced a tool that breaks programs into four categories: Heart, Star, Stop Sign, and Money Tree each with its strategic path. -Heart: These programs deliver immense value but come with high costs. The team asked, Can we achieve the same impact with a leaner approach? They restructured staffing and reduced overhead, preserving the program's impact while cutting costs by 15%. -Star: High impact and high revenue programs that beg for investment. The team explored expanding partnerships for a standout program and saw a 30% increase in revenue within two years. -Stop Sign: Programs that drain resources without delivering results. One initiative had consistently low engagement. They gave it a six-month review period but ultimately decided to phase it out, freeing resources for more promising efforts. -Money Tree: The revenue generating champions. Here, the focus was on growth investing in marketing and improving operations to double their margin within a year. This structured approach led to more confident decision-making and, most importantly, brought them closer to their goal of sustainable success. According to a report by Bain & Company, organizations that regularly assess program performance against strategic priorities see a 40% increase in efficiency and long-term viability. Yet, many teams shy away from the hard conversations this requires. The lesson? Every program doesn’t need to stay. Evaluating them through a thoughtful lens of impact and profitability ensures you’re investing where it matters most. What’s a program in your organization that could benefit from this kind of review?

The harsh truth: Without proper techno-economic assessment, your net zero technology or project can be *just* a science experiment. Here’s what you need to know. Performing a techno-economic assessment (TEA) from the early stage of technology or project development will support your decision making. It will provide you with key insights into costs, benefits, and feasibility. Here’s a quick breakdown of the key steps in a TEA: 1. Define Your Goal and Scope • What are you trying to achieve with this assessment? • Set clear objectives, boundaries, and a functional unit (e.g., cost per ton of CO₂ avoided). 2. Design Your Process and System Boundaries • Map out the process with flow diagrams and identify all key input/output streams. • Establish clear boundaries to understand what’s included in the analysis. 3. Gather Data for Inventory Analysis • Collect data on capital expenditures (CAPEX), operating costs (OPEX), energy use, and material inputs. • Address gaps and uncertainties in data collection. 4. Perform Economic Modeling • Break down costs into CAPEX, OPEX, and variable costs. • Use tools like discounted cash flow (DCF) analysis to calculate metrics like NPV and ROI. 5. Assess Key Performance Indicators (KPIs) • Focus on critical metrics such as: • Cost per ton of CO₂ avoided • Energy efficiency • Payback period 6. Run Sensitivity and Uncertainty Analysis • Identify the most significant cost drivers and test assumptions under different scenarios. • Identify and understand financial risks 7. Interpret and Present Results • Link findings to actionable recommendations for optimization or decision-making. • Communicate results in a way that resonates with stakeholders (e.g., policymakers, investors). Pro Tip: Combine TEA with life cycle assessment (LCA) to address both economic and environmental impacts for a holistic evaluation. 💡 Want to learn how to build and apply a TEA for your net zero project? I’ll be hosting regular 2-day training sessions throughout 2025 to provide hands-on guidance and tools to evaluate your projects confidently. The first cohort will be announced later today (as I’m screening through 250 applications!) #CarbonCapture #Research #Scientist #Sustainability #NetZero #ChemicalEngineering #Professor

“Sales didn’t grow much. But profits did — from ₹5 Cr to ₹8 Cr.” That’s the story of a ₹70 Cr engineering company. They were stuck. 👉 Sales had been hovering around ₹68–70 Cr for 3 years 👉 PBT was stable at ₹5 Cr 👉 The MD was frustrated: “We are working so hard... but not growing.” He wanted a profit roadmap. That’s when we applied my 5 Profitability Levers Framework. We didn’t chase more orders. Instead, we worked on tightening the engine — the business model, plant efficiency, and cash cycle. Here’s what we did over 12 months: 🔧 1. Reduce COPO (Cost of Poor Operations) – Identified hidden leakages: rejections, rework, premium freight, missed dispatches – Plugged top 6 loss points across QC, dispatch, and breakdowns 💥 Impact: ₹1.1 Cr added to bottom line 📉 2. Improve Contribution Margin – Removed 4 low-margin SKUs and introduced new High margin SKUs – Renegotiated pricing with 3 legacy customers – Reduced RM wastage by 1.3% through tighter process control 💥 Impact: ₹0.6 Cr additional contribution ⚙️ 3. Optimize Capacity Utilization – Reduced unplanned breakdowns by 18% – Increased hourly production by reducing fluctuations – Reduced cycle times 💥 Impact: ₹0.7 Cr improvement 💼 4. Free Up Working Capital – Reduced receivables >60 days from ₹6 Cr to ₹3.5 Cr – Cleared slow-moving inventory worth ₹1.2 Cr – Negotiated better payment terms with key suppliers 💥 Impact: ₹0.4 Cr saved in interest + cash cushion for growth 🧾 5. Eliminate Operational Waste – Did value stream mapping to find where flow is getting stuck – Introduced visual controls, operator-level skilling – Reduced manpower cost by 7% without layoffs 💥 Impact: ₹0.3 Cr reduction in overheads The MD told me: “We thought we had to grow sales to grow profits. You showed us how to grow profits to fund future growth.” Your factory has far more profit potential than you think.

Turning Data into Dollars: The Missing ROI Step Many organizations track impact measures—but fail to convert them into monetary value. Without this step, you can't calculate a true ROI. Here's how it works: 📈 Increased sales? Use profit margins to quantify the gain. 📉 Reduced turnover? Use HR cost savings data. 🔄 Fewer errors? Use quality cost metrics. Once you translate #impact measures into financial terms, comparing benefits vs. costs gives you a clear ROI. It's not just about tracking results—it's about proving value in dollars and cents. Are you making this critical #ROI connection? #ROIInstitute #BusinessImpact #PeopleAnalytics #PerformanceMeasurement #TalentDevelopment #ProfessionalDevelopment #PerformanceImprovement