RSS Feeds
BN Execs Anguished over PTC Expense
John Dodge, Editor-in-Chief -- Design News, October 30, 2008
This 1991 Harvard Business School (HBS) study on positive train control (PTC) shows how conflicted Burlington Northern executives were in spending $350 million for the 2,700-mile PTC rollout. Visit the HBS website if you wish to order the case for a nominal fee.
"Burlington Northern's decision whether to invest in ARES, an automated train control system, is a ($350 million) strategic investment in information technology. Although set in a service industry (railroad) the issues around this decision arise in many organizations and require the company to analyze the project from many perspectives. ARES offers the potential to change the basis of competition in the industry through technology. The company must consider the value, if any, of being first in the industry to adopt a technology; the potential impact on customer services, quality, and reliability; and the role and value of information systems technology. Burlington grapples with how to quantify both tangible and intangible benefits, and deliberates whether investments that yield improvement in hard-to-quantify factors such as reduced delivery time and improved service reliability can be subjected to the same financial scrutiny as equipment replacement decisions such as new locomotives. Demonstrates thoughtful, creative approaches to measuring hard-to-quantify benefits."
The full report can be ordered for a nominal fee from the Harvard Business School website.
