Answer:
Capstone Case: New Century Wellness Group
Task 1: Financial Overview Of The Proposed System
The cost and benefit data of an organization is considered a significant step as these economic factors affect directly the future development and feasibility of the new system. Below an analysis has been shown that will explain that every individual company has its way of calculating the costs and the benefits where some of the techniques are more conservative than the other technique. For example, there are companies who don’t count their saving till the time there is an actual need for a reduction in out-of-pocket expenses. Whereas, in other companies, the saved hours present a valuable resource that can be accounted and identified for – as well as it is the job of the management to see that the possible savings on the cost are achieved by performing more tasks, and better-quality work, and other work.
Below a sample analysis has been presented that outlines the tangible costs as well as benefits which are addressed in the background of Chapter 7. Later by using the below table data an analytical spreadsheet will be created that will present the feasibility analysis in detail.
|
Costs and Benefits |
Economic Effects |
Cost and Benefit Categories |
|
Eliminating 3 hours of overtime every week at 15 dollars per hour |
6 hours (Annual Saving) * Hourly rate $15 * 52 weeks * overtime factor of 1.5 = 7020 (6 impact months or 3510 dollars will be available in every Year 0) |
Variable, positive benefit, operational, direct |
|
Removing the errors that occur daily |
1 hour per day of possible annual savings = 52 weeks * 5 days * hourly rate of $15 * 1 = 3900 dollars (6 impact months or 1950 dollars will be available in every Year 0) |
Variable, positive benefit, operational, direct |
|
Time required by a consultant to develop the system – in-house option |
75 dollars hourly rate * 40 hours * 20 weeks = $60000 |
Fixed cost, development, direct |
|
Removing the requirement of additional position in 6 months |
40 hours (Avoidance annual cost) * hourly rate $15 * 52 weeks = 31200 dollars (6 impact months or 15600 dollars will be available in every Year 0) |
Variable, cost avoidance benefit, operational, direct |
|
Network commercial database software – in-house option |
4200 dollars |
Fixed cost, development, direct |
|
The vertical software package from the vendor – package option |
$28000 in Year 0 is followed by 2 annual payments of $23500 for a total of $67000 |
Fixed cost, development, direct |
|
Time to install, configure, and then test the vendor package by the consultant – package option |
$75 hourly rate * 40 hours * 2 weeks = 6000 dollars |
Fixed cost, development, direct |
|
Vendor technical support – package option |
The annual cost of $2000 after the 1st operation completion year |
Fixed cost, development, direct |
|
Time required by the staff of the clinic to perform file backups, updating, and maintenance |
4 hours annual cost * 52 weeks * 15 dollars hourly rate = 3120 dollars (6 cost impact months or 1560 dollars will be acquired during every Year 0) |
Fixed cost, development, direct |
|
Time required by a consultant to provide starting support and training |
$75 hourly rate * 13 weeks * 10 hours = 9750 dollars |
Fixed cost, development, direct |
|
Hardware requirements |
8500 dollars |
Fixed cost, development, direct |
Task 2: Economic Feasibility Analysis
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