Assignment Part B

Assignment Part B

ANSWER#1

Cumulative benefits and impacts are the result of the incremental benefits and impacts of a proposed action when added to other past, present, and reasonably foreseeable future actions. No significant cumulative impacts are anticipated in association with the implementation in a project. In Six Mile Creek Telecentre the cumulative cost is the combination of developmental and operational cost. Therefore they had a great impact on the ROI and the payback period. The graph highlights the cumulative costs and cumulative benefits. On the other hand, it also highlights the Payback period. The payback period is defined as the timeline in which a business recovers its costs. According to the graph, the payback period of SMC Telecentre is in 2.2years, whereas the cumulative cost and cumulative benefits offsets each other at $200,000(Sanborn, 2007).

ANSWER#2

Examining the Development and Operational costs

The development cost of SMC Telecentre includes of hardware and Software costs. The cost of equipment is given unit wise as well as; quantity of equipment is given. The annual cost of equipment needs to be calculated for seven years. (Milley, 2004) But at the end of 4th year the value of equipment depreciates @ 20%. Software license fees remain the same price over the analysis period but they have to be renewed every 2 years.

Development Cost

The total cost from the primary level to implementation level need to develop a project is termed as the cost of that project. It includes a number of costs some of them are highlighted above also. There is a deep impact of development cost on the project because most of the time companies regard these costs as extra costs and try to minimize them in order to enhance their profit figures.

DATA FOR DEVELOPMENT COSTS

Development costs

1.1 One-off costs (these costs are incurred only once)

Office Renovation @ $40,000

Furniture costs @ $15,000

System Installation costs @ $10,000

1.2 Equipment and software costs

You have decided to purchase:

• 20 desktop computers @ $1,500 each

• 2 Servers @ $4,000 each

• 1 system backup set @ $3,000

• 2 printers @ $800 each

• 2 heavy duty photocopiers @ $3,000 each

• Microsoft Open Licenses (for operating system and Office suite) @ $2,000

It is anticipated that the physical hardware equipment will be replaced every 4 years. After 4

Years the price of these equipment items is expected to decrease by 20%.

Software license fees remain the same price over the analysis period but they have to be

Renewed every 2 years.

DEVELOPMENT COSTS

Hardware & Software

 

 

 

 

 

 

 

 

 

 

ITEM

UNIT COST

QUANTITY

ANNUAL COSTS

 

 

 

YEAR 1

YEAR 2

YEAR 3

YEAR 4

YEAR 5

YEAR 6

YEAR 7

Computer

1500

20

30000

0

0

0

24000

0

0

Servers

4000

2

8000

 

 

 

6400

 

 

Backup System

3000

1

3000

 

 

 

2400

 

 

Printers

800

2

1600

 

 

 

1280

 

 

Photocopier

3000

2

6000

 

 

 

4800

 

 

Software License

2000

1

2000

2000

2000

2000

2000

2000

2000

 

 

 

 

 

 

 

 

 

 

ONE OFF COSTS

 

 

 

 

 

 

 

 

 

Office Renovation

40000

1

40000

 

 

 

 

 

 

Furniture

15000

1

15000

 

 

 

 

 

 

Installation

10000

1

10000

 

 

 

 

 

 

TOTALS

 

 

115600

2000

2000

2000

40880

2000

2000

Operational Cost

The cost occurred during the operation phase of the project is termed as operational cost. The operational cost is necessary for the project and it directly affects the ROI. The higher the operational cost the lower the ROI. Companies are on the view to lower down their operational cost because they had a direct impact on their ROI.

DATA

2. Operating costs

2.1 Fixed costs (costs that are relatively constant and not dependent on level of use)

Office Space Rental @ ...