How to Calculate ROI on Engineering Design Automation

Why Engineering Leaders Struggle with the Automation Business Case

Ask any engineering manager whether automation would save time, and the answer is almost always yes. Ask them to put a number on it, and the conversation stalls. There are several reasons this happens, and understanding them is the first step to building a compelling case.

First, many automation benefits feel intangible. Faster turnaround, fewer errors, less frustration — these are real, but they resist easy quantification. Unlike purchasing a new CNC machine with a published cycle-time improvement, automation ROI depends on the specific workflows being automated, the complexity of the outputs, and the skill level of the engineers involved.

Second, there is a lack of industry benchmarks. Engineering design automation is not a commodity product with published ROI tables. Every implementation is different because every company's drawings, models, calculations, and processes are different. This makes it tempting to fall back on qualitative justifications, which rarely survive a CFO review.

Third, engineering leaders often underestimate the full scope of savings. They calculate the obvious time reduction but miss the downstream effects: fewer drawing revisions, reduced shop floor errors, faster quoting, and the ability to take on more work without expanding headcount.

The ROI Formula for Engineering Design Automation

At its core, the calculation is straightforward. You do not need a financial modeling tool. You need honest estimates and a simple formula:

The key variables are:

• Tasks per month — the number of repetitive design tasks your team performs. This could be drawing variants, calculation reports, BOM generations, or quote packages.
• Time saved per task — the difference between the current manual process and the automated process. Be conservative here. If a drawing currently takes 3 hours and automation reduces it to 30 minutes, the savings is 2.5 hours, not 3.
• Fully loaded hourly cost — not just salary. Include benefits, overhead, software licenses, and workspace costs. For most engineering roles in North America, this ranges from $70 to $120 per hour.

This formula gives you the direct labor savings. It is the foundation of your business case, and it is usually enough on its own to justify the investment. But there are additional categories of savings worth capturing.

Direct Cost Savings: Time Reduction

Let us walk through a real-world example. A mid-size structural steel fabricator produces roughly 200 custom shop drawings per month. Each drawing requires an engineer to open a template, manually update dimensions, modify connection details, regenerate the BOM, and produce a PDF package. On average, this takes about 3 hours per drawing.

After implementing a drawing automation system that reads project parameters from a spreadsheet and generates completed drawings with BOMs, the process takes approximately 45 minutes per drawing — mostly spent on a final quality review.

Compare that to the typical cost of a custom automation project — which ranges from $30,000 to $150,000 depending on complexity — and the payback period becomes very compelling.

Hidden Savings: Error Elimination

The time calculation captures the most visible savings, but it misses one of the most expensive costs in engineering: errors. Manual processes produce errors. Not always, not intentionally, but consistently. Research across multiple industries shows that manual data entry and copy-paste workflows in engineering environments produce error rates of 5-15% over time.

What does an error cost? Consider the chain reaction:

• Discovery and diagnosis — an engineer or shop floor worker identifies the mistake, investigates the cause, and determines the fix. Time: 1-4 hours.
• Rework — the drawing is revised, re-approved, and re-issued. Time: 1-3 hours. If material has been cut or ordered, the cost multiplies.
• Scrap and material waste — if fabrication has already begun, material may be wasted. Cost: varies, but $500-$5,000 per incident is common in structural and mechanical fabrication.
• Schedule delays — rework pushes other jobs back. The downstream cost of missed deadlines is difficult to calculate but often dwarfs the direct rework cost.
• Customer impact — repeated errors erode customer confidence and can result in lost future work.

Automated systems eliminate entire categories of errors because the logic is validated once and applied consistently. Dimensions are pulled from a single source of truth, not manually transcribed. If your current error rate costs you even 5% of engineering time in rework, the savings from automation are significant — and they compound with volume.

Throughput Gains: Doing More Without Hiring

This is the benefit that resonates most with leadership, particularly in a tight labor market. When your existing engineers can produce more output per week, you effectively increase your team's capacity without the cost, lead time, and risk of new hires.

But it goes further. Those engineers are not sitting idle — they are redirecting time from repetitive production work to higher-value activities: complex design challenges, process improvement, customer support, and innovation. This shift in how engineering time is allocated often has the most transformative long-term impact, even if it is the hardest to quantify in a spreadsheet.

In our experience, most CAD automation projects pay for themselves within 6-9 months. The key is starting with the highest-volume, most repetitive workflows.

What NOT to Include in Your ROI Calculation

A credible business case is one that does not overclaim. Resist the temptation to pad your numbers with speculative or difficult-to-verify benefits. Here is what to leave out — or at least separate into a "soft benefits" appendix:

• Morale improvement — yes, engineers prefer interesting work over repetitive tasks. But quantifying "improved morale" in dollar terms invites skepticism.
• Revenue growth assumptions — claiming that automation will directly generate new sales is a stretch unless you can draw a clear, documented line from faster turnaround to won contracts.
• Software licensing savings — unless automation specifically reduces the number of CAD seats you need, do not include this.
• Long-term strategic value — standardization, scalability, and institutional knowledge preservation are real benefits, but they are better discussed qualitatively in the narrative section of your proposal.

The goal is a business case that can withstand scrutiny. Conservative numbers that hold up under questioning are far more powerful than optimistic projections that get discounted or rejected.

Sample Business Case Template

When you are ready to formalize your proposal, structure it in a format that decision-makers expect:

1. Current State — Describe the workflows being targeted. Include volume (tasks per month), current time per task, team size, and any known quality issues. Use real data from the past 6-12 months.
2. Proposed Solution — Describe the automation approach in non-technical terms. Focus on what changes for the user: inputs, outputs, and the new workflow.
3. Investment Required — Break this into implementation cost (one-time) and ongoing costs (annual maintenance, hosting, licenses). Be transparent about the range if the scope is not fully defined.
4. Expected Returns — Present the three categories: direct time savings, error reduction savings, and throughput/capacity gains. Show your assumptions clearly.
5. Payback Period — Divide the total investment by the annual savings. For most engineering automation projects, this falls between 4 and 12 months.
6. Risk and Mitigation — Acknowledge the risks (scope creep, adoption challenges, edge cases) and describe how they will be managed. A phased approach is the most effective risk mitigation strategy.

If you want a faster starting point, our ROI Calculator can help you generate initial estimates based on your specific workflow volumes and team costs.

The business case for engineering design automation is not theoretical. It is arithmetic. Start with the tasks your team performs most frequently, measure the time they consume, and calculate the savings using the framework above. The numbers will make the argument for you.