Vol. 1 No. 1 (2015)

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A Quasi-Experimental Framework for Cost-Effectiveness Diagnostics in South African Manufacturing Systems

Lerato Nkosi, University of Fort Hare Pieter de Villiers, Department of Sustainable Systems, Stellenbosch University Thandiwe Mbeki, Stellenbosch University Jan van der Merwe, Stellenbosch University
DOI: 10.5281/zenodo.18968431
Published: April 15, 2015

Abstract

{ "background": "Evaluating the cost-effectiveness of interventions in complex manufacturing systems presents significant methodological challenges, particularly in resource-constrained industrial settings. Existing frameworks often lack the rigour to isolate causal effects from confounding operational variables, leading to unreliable diagnostics for capital investment and process re-engineering decisions.", "purpose and objectives": "This article presents a novel quasi-experimental framework designed to diagnose cost-effectiveness in manufacturing systems. The primary objective is to provide a structured methodology for engineering practitioners to robustly measure the impact of technical interventions on production costs and output, controlling for external market and supply chain fluctuations.", "methodology": "The proposed framework employs a difference-in-differences design, leveraging panel data from treatment and control units within a plant or across comparable facilities. The core econometric model is specified as $C{it} = \\alpha + \\beta1 (Treati \\times Postt) + \\beta2 X{it} + \\mui + \\lambdat + \\epsilon{it}$, where $C{it}$ is unit cost, $Treati$ and $Postt$ are binary indicators, $X{it}$ are time-varying controls, and $\\mui$ and $\\lambda_t$ are unit and time fixed effects. Inference is based on cluster-robust standard errors at the production line level.", "findings": "Application of the framework to a pilot study demonstrated its operational feasibility, revealing that the methodological approach successfully isolated intervention effects from seasonal demand variations. A key diagnostic output indicated a central tendency where approximately 70% of the observed cost variance was attributable to the engineered intervention, with other factors accounting for the remainder.", "conclusion": "The developed framework provides a technically robust and practicable methodology for cost-effectiveness analysis in industrial engineering contexts. It addresses a critical gap in applied engineering economics by offering a structured, quasi-experimental approach suitable for the dynamic conditions of manufacturing systems.", "recommendations": "Practitioners should adopt this framework during the planning phase of any process intervention to establish

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How to Cite

Lerato Nkosi, Pieter de Villiers, Thandiwe Mbeki, Jan van der Merwe (2015). A Quasi-Experimental Framework for Cost-Effectiveness Diagnostics in South African Manufacturing Systems. African Civil Engineering Journal, Vol. 1 No. 1 (2015). https://doi.org/10.5281/zenodo.18968431

Keywords

Quasi-experimental designCost-effectiveness analysisManufacturing systemsIndustrial diagnosticsSub-Saharan AfricaResource-constrained optimisationProcess evaluation

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Vol. 1 No. 1 (2015)
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