Let us now use this formula in an industrial production example. As with the research example and for the sake of simplicity, we will assume a time period of one year (investment at the beginning of the year and benefits by the end of the year).

We assume that an automotive firm has three high priority projects that cannot go forward without the purchase of an HPC system. If the HPC system is purchased, the three projects are very likely to be successful and are expected to bring in profits of $5.25 million, $2.0 million, and $4.5 million. In terms of costs:

• The software licenses will cost $2.5 million.
• A forecasted 90 users will get 80 hours of training on the system and software at $120 per hour.
• Ten system administrators will service the HPC system with an average annual fully burdened salary of $200,000.
• The HPC system will cost $3.0 million.

Given these estimates, we insert the values into the formula:

From this result, the management must determine whether a one-year IRR of 40% (BCR = 1.4) is acceptable and whether the purchase will go forward.

These two examples demonstrate how the productivity (BCR) formulation can be used in different organizations. The key is to identify and estimate the benefit(s) and costs for a particular organization.