IEEE Trans. on Reliability, Vol. 58, No. 2, pp. 305-316, , June 2009
A Methodology for Determining the Return on Investment Associated with
Prognostics and Health Management
Kiri Feldman
Taoufik Jazouli
Peter Sandborn
Center for Advanced Life Cycle Engineering (CALCE)
Department of Mechanical Engineering
University of Maryland
College Park, MD 20742
Abstract:
Prognostics and Health Management (PHM) provides opportunities for lowering sustainment
costs, improving maintenance decision-making, and providing product usage feedback into the product
design and validation process. However, support for PHM is predicated on the articulation of clear business
cases that quantify the expected cost and benefits of its implementation. The realization of PHM requires
implementation at different levels of scale, and complexity. The maturity, robustness, and applicability of the
underlying predictive algorithms impact the overall efficacy of PHM within an enterprise. The utility of
PHM to inform decision-makers within tight scheduling constraints, and under different operational profiles
likewise affects the cost avoidance that can be realized. This paper discusses the calculation of Return on
Investment (ROI) for PHM activities, and presents a study conducted using a stochastic discrete event
simulation model to determine the potential ROI offered by electronics PHM. The case study of a
multifunctional display in a Boeing 737 compares the life cycle costs of a system employing unscheduled
maintenance to the same system using a precursor to failure PHM approach.
Complete Article available to CALCE consortium members