Calculate the financial impact of a root cause by multiplying frequency, cost per occurrence, and duration. Justify corrective action investment.
The Five Why method drills down from a symptom to a root cause through iterative questioning. Once you identify the root cause, the next step is quantifying its financial impact. By multiplying how often the root cause triggers a problem, how much each occurrence costs, and how long the problem has existed or will persist, you get the total cost impact.
This cost impact figure is essential for two purposes: building the business case for corrective action investment and prioritizing among multiple root causes. A root cause with daily occurrence and $500 per event represents $182,500 per year — far more urgent than a monthly event costing $1,000 ($12,000/year).
This calculator takes root cause frequency, cost per occurrence, duration in months, and optional corrective action cost to compute total impact and net savings. It provides the ROI and payback period for the proposed fix, helping you secure approval and resources for permanent corrective action.
Most Five Why analyses stop at identifying the root cause without quantifying the financial impact. This calculator bridges the gap between root cause identification and management action by putting a dollar figure on the problem and demonstrating the return on investment for fixing it. Data-driven tracking enables proactive decision-making rather than reactive problem-solving, ultimately saving time, materials, and labor costs in production operations.
Total Cost Impact = Frequency × Cost per Occurrence × Duration (months) Annual Cost = Frequency × Cost per Occurrence × 12 Net Savings = Annual Cost − Corrective Action Cost (first year) Payback Period = Corrective Action Cost / Monthly Savings
Result: $33,600 annual impact; payback in 5.4 months
Monthly cost = 8 × $350 = $2,800. Annual cost = $2,800 × 12 = $33,600. After spending $15,000 on corrective action, net first-year savings = $33,600 − $15,000 = $18,600. Payback = $15,000 / $2,800 = 5.4 months.
The Five Why method identifies root causes, but identification alone does not drive action. Management needs to see the financial impact and the return on corrective action investment. This calculator transforms qualitative root cause findings into quantitative business justification.
A single Five Why session may uncover several contributing causes. Calculate the cost impact of each and rank them. Address the highest-impact cause first, then reassess — sometimes fixing one cause reduces the frequency of others, changing the priority order.
After implementing corrective action, track the actual frequency and cost to verify savings. Report actual vs. projected savings monthly. This builds organizational trust in the Five Why process and makes future corrective action approvals easier to obtain.
Sum all costs triggered by one occurrence: scrap value, rework labor, machine downtime at hourly rate, expedited shipping, warranty repair, and any customer credits. Use conservative estimates and document your sources.
Use the average monthly frequency over the past 6–12 months. If the problem is seasonal, calculate an annualized figure. Note the variability in your business case so stakeholders understand the range.
Show the payback period. If a $50,000 corrective action eliminates $10,000/month in problem costs, the payback is 5 months. After that, every month delivers pure savings. Most companies approve projects with payback under 12 months.
No. The investigation cost is sunk — it's already spent. The business case evaluates future corrective action costs vs. future savings. However, you can report investigation cost separately for total project accounting.
Calculate the impact for each product or line separately and sum them. The aggregated total may be significantly larger than any individual impact, strengthening the business case for a systemic fix.
DMAIC project charters require a financial opportunity statement. This calculator provides exactly that — the annualized cost of the problem that the project aims to reduce. It directly populates the charter's business case section.