MAKE-BUY ANALYSIS

The make-buy analysis determines whether to purchase or build a product. It involves looking at different alternatives and using cost, schedule, and quality criteria. For cost, the key criteria are development and sustaining costs, payback period, and the time value of money. For schedule, the key elements are times for building and delivering the product. For quality, the key elements are reliability, repeatability, and maintainability of the product.

Make-buy analysis offers two benefits. It precludes embarking on inefficient and ineffective projects, and it provides a basis for good contract negotiations and planning.

for Make-Buy Analysis

• Define the objective or specifications of the product.
• Determine the different alternatives to pursue.
• Determine cost, schedule, and performance requirements to evaluate alternatives.
• For each alternative, apply requirements.
• Select the best alternative that satisfies the objective(s) or specification(s).