Developing Economic and Non-Economic Models Incentives to Select Among Technical Alternatives

ABSTRACT

Improving the way that Research and Development projects are chosen will improve the contribution that technology makes to corporate profitability. This was the conclusion reached from a survey conducted by the Industrial Research Institute (IRJ) which gathered replies from R&D Directors of 64 companies representing every major industrial sector.

A number of companies surveyed indicated that they used Technical Limits Analysis (TLA) to develop “targets” and “potential improvements” to guide their technical efforts. While these “targets/potentials” imply that a set of economic and non-economic incentives were developed, there is no detailed explanation of how this was accomplished.

This paper provides a specific approach and detailed methodology to develop economic and non-economic incentives to select among technical projects.

TLA is defined and its use in managing technology is discussed along with its objectives, key assumptions, and limitations. A detailed case example for a chemical process is included to demonstrate the methodology and to show how the economic incentives are developed. The article concludes with a critique of TLA and directions for future research.