Automation Investment Return Calculator

How the automation investment return calculator works

Annual time value is released hours times hourly value. Realized gross cash saving multiplies that value by your cash-realization percentage. Subtract added annual operating cost for net cash saving; a freed employee hour is not automatically a reduction in cash spending.

Simple cash payback divides upfront cost by positive annual net cash saving. Undiscounted horizon net is repeated annual net saving times years less upfront cost. Horizon return divides that net by upfront cost; it is unavailable when upfront cost is zero. Cash components round half-up to cents.

No productivity improvement, staff reduction or actual savings are guaranteed. Years repeat a constant assumption without ramp-up, downtime, financing, tax, discounting or residual value. NIST’s case context shows that automation can redeploy workers; this calculator does not import its reported savings.

Worked example

1,000 released hours valued at $35 are worth $35,000 annually. At 60% cash realization, gross cash saving is $21,000; after $3,000 added cost, net saving is $18,000. A $50,000 project has about 2.778 years simple payback and $40,000 net over five years. At 100% realization the five-year net is $110,000.

Sources and assumptions

The source material explains the underlying calculation or pricing structure. Entered prices, costs, schedules and scenario choices are your assumptions; this tool does not obtain supplier quotes or predict actual results.

• NIST MEP: automation and redeployment of employee time