Introduction to Technology Evaluation / Assessment

http://www.urenio.org/newventuretools/cba/overview.html

It is a powerful technique for an organization in examining new ideas, identifying and

analyse causes or potential change, develop and plan possible solutions, and finally select
and implement a proposed technology

Technology evaluation is a set of principles, methods and techniques/tools for effectively

assessing the potential value of a technology and its contribution to a company, a region or
an industrial sector. It is one of the most significant methodologies in innovation and technology
transfer, utilised in screening new ideas, assessing innovative or not innovative products and
technologies. It is a powerful technique for an organization in examining new ideas, identifying and
analyse causes or potential change, develop and plan possible solutions, and finally select and
implement a proposed technology.

Technology evaluation may be understood in a variety of ways:

 As a group of studies, which systematically examine the effects on society that may occur when a
technology is introduced, extended or modified. It emphasizes those consequences that are
unintended, indirect or delayed.
 As an attempt to establish an early warning system to detect, control, and direct technological
changes and developments so as to maximize the public good while minimizing the public risks.
 As a process of analysing alternative technologies that provides information and help the actors
involved in developing their goals. A thorough evaluation assesses the technology and its device's
value from technical, market and consumer perspectives and reconciles the results within a valid
methodology.

Technology Evaluation and Assessment Methodologies

Application of benchmarking focuses on the understanding in details your own processes, and then compare
your own performance with that of others analysed.

For the investigation of alternative technology evaluation methods and tools, we have used the
Science Direct data base of Elsevier, a major on-line base including more or less one million articles
with fairly good representation of engineering and technology.

Four technology evaluation approaches are identified, and every approach includes one or more
technology evaluation tools, which are essential and necessary for the implementation of the
evaluation.

 Technology benchmarking

Technology Benchmarking is a method for comparing the performance of an organisation

with best practices and technology applications of others. Application of benchmarking focuses
on the understanding in details your own processes, and then compare your own performance with
that of others analysed.

Comparison may also involve best practice based on standards and specifications stemming from the
systematic study of science literature, and business literature with the scope to identify relevant
information and technologies. In many cases, dedicated journals provide indicators that compare
characteristics of similar products / technologies that make a comparison easier.

Project teams conduct process or technology benchmarking. The first step is to specify a process or a
series of interconnected processes to be studied. Next a benchmarking partner with superior
 performance in the process being examined is identified. The high performance process of the partner
is then studied. In this way a performance gap is established and the elements, which have led to the
superior performance are understood. The final step is to formulate an improvement plan and
implement the actions necessary to close the performance gap.

Over the past 15 years, the evolution of the benchmarking practice came through the search for
performance benchmarks, the interest in process proficiency, the understanding and mastery of best
practice, and the development of best practice models.

Evolution of benchmarking

Performance benchmarks  Key output measures

 Balanced scorecard
 Leading indicators

Process proficiency  Processes inventoried

 Process ownership
 Process improvement

Best practice mastery  Best practice understanding

 Sharing
 Adoption

Best practice models  Best of best practice models

Check also
http://www.urenio.org/benchmark/index.asp
http://www.benchmarkingnetwork.com/
http://www.benchnet.com

 Failure analysis

Failure analysis is a laboratory based evaluation method, which takes samples of different
technologies and evaluates them, using appropriate destruction or not tests.

The concept is very close to the evaluation of products with respect to quality standards. In both
cases, a sample of technologies / products is brought to a laboratory where it is tested either against
other technologies and products, or against standards and specifications.

Check also
http://www.maintenanceresources.com/ReferenceLibrary/FailureAnalysis
/FailureAnalysisProblem.htm

 Life-cycle analysis

In life cycle analysis four stages can be distinguished in the evolution of a product or technology: introduction,
growth, maturity, and decline.

The life cycle models have been used in different fields of industrial studies in order to
explain the evolution of industries, products, and technologies. The assumption is that the life
 cycles of technologies and products follow similar patterns of the living beings. Therefore, changes are
easily predictable and life cycle models may capture the maturity of a technology and the trends of its
evolution.

In life cycle analysis four stages can be distinguished in the evolution of a product or
technology: introduction, growth, maturity, and decline.

 Introduction: a new product / technology is introduced into the marketplace. Only one or two
firms have entered the market, and the competition is limited. The rate of sales growth depends on
the newness of the product. Generally, a product modification generates faster sales than a major
innovation. The technology performance of the innovation increases slowly.
 Growth: a new product gains wider consumer acceptance and the objective is to expand the range
of available product alternatives. Industry sales increase rapidly as a few more firms enter the
marketplace. To accommodate the growing market, modified versions of basic models are offered.
Successive incremental innovations increase the technology performance rate of the product.
 Maturity: industry sales stabilize as the market becomes saturated and many firms enter to
capitalize on the still sizable demand. The possibilities of increasing product contributions are
limited. Innovations are less frequent. The technology performance rate stabilizes.

Check also
http://www.cfd.rmit.edu.au/outcomes/papers/LCA-CR.html

 Cost-benefit analysis

As technology has evolved, it has become more complex, seemingly at an increasing pace. Decision
makers are left with the awkward problem of evaluating potential outcomes and choosing technologies
to achieve these outcomes in the presence of this intense complexity. Decisions that are well intended
can lead to losses in results as unexpected outcomes develop, or as outcomes have unexpected
consequences. Decision makers therefore have a great need for a framework which structures
information in a way, which makes the complexity more tractable, but still takes into account the
implications of the complexity. Cost-benefit analysis is an analytical tool, which has the potential to
significantly advance this process.

Cost-benefit analysis (CBA) provides a means for systematically comparing the value of outcomes with
the value of resources achieving the outcomes required. It measures the economic efficiency of the
proposed technology or project. When all else is equal more efficient projects should be chosen over
less efficient ones. When there are many options to consider during a decision-making task, it is useful
to evaluate the options with a common metric. Cost-benefit analysis refers to any type of structured
method for evaluating decision options.

CBA has become widely accepted among business and governmental organizations. Although CBA has
definite limitations, especially in the non-standard way that the payoff function is derived and
calculated, its potential for making decisions more rational is comforting to those who must make the
decisions. In situations in which large amounts of money are at stake, the presentation of a cost-
benefit analysis is the preferred way to demonstrate the reasoning behind investments.

For the application of CBA, inputs may be divided into parameter values and benefit and cost values.
Parameters include the discount rate, the future rates of economic growth, the future rates of
inflation, the estimations about the future rates of technological change. Benefit and costs include
monetary values for marketed goods, monetary values for non-marketed directly used goods,
monetary values for non-marketed passively used goods, goods for which monetary values cannot be
measured.

An example of cost-benefit analysis is given by the comparison between three technologies for
setting-up a workshop for mechanical construction in the plant of Citroen at Meudon, France . The
technologies, which were compared, were: (1) a flexible workshop based on high-level automation,
(2) a flexible workshop based on the re-engineering of existing machinery, and (3) a traditional
workshop. The question was to analyse which solution was the most profitable for the company, in
terms of investment and profitability. A cost-benefit analysis was adopted, which systematically
 investigated both sides of the problem: the costs for setting-up each type of workshop, and the
benefits from its operation.

For the estimation of the costs of each of the three solutions, a series of assumptions were adopted:

 That the workshops produce the same type of pieces, selected from a representative sample of the
production at Meudon.
 That the workshops produce the same number of pieces, but they use different combinations of
materials, labour force, industrial space, etc.
 Than the cost of initial investment is calculated for a given production output, the same for the
three solutions, and the revenue from the sales of the products is equal in all the three workshops.

These assumptions permitted to calculate the costs for setting-up each workshop. The costs included
the purchase of machinery, studies, materials for the production, costs of personnel, and financial
expenses.

The calculation of costs gave the input for the second step of the method, which included the
estimation of the benefits from each solution. This estimation was based on the annual cash-flow for a
period of 10 years, pay-back time, rate of internal return, and realised benefits.

It appears that the flexible workshop is the solution with the better performance and profitability. This
evaluation is meaningful for any industrialist wishing to invest and looking forward at the
modernisation of the tools of production.

Check also
http://www.lboro.ac.uk/research/husat/eusc/g_cost_benefits.html http://
www.rms.net/training_cost_benefit.htm