Exercise

Return on Investment

Use the scenario described below and the Project Estimating and ROI Approval worksheet in the next tab of this workbook to create the basic spreadsheet that will be used for ROI calculations.

You have been assigned to lead a project to upgrade systems supporting the Customer Call Center in your business. The current system is old and unreliable. The call center associates must work with instruction books and manuals to answer customer$$s questions or take orders. The new system will automate all of the product information and provide easy access to customer files. The project is expected to last $14$ months with the User acceptance testing and training occurring in the final two months.

The following estimating inputs have come in from your project team. Assume the project will start on the first day of the fiscal year. Complete the spreadsheet assuming that the time columns represent one year. Assume the benefits will continue through the eighth year.

Department Costs Benefits

Call Center $$ Project support of one person during the project at $$6,000$ per month. $$ New sales of $$1,500,000$ the first year in operation and sales will grow $$100,000$ per year. Average product has $40\%$ Gross Profit.

$$ Three people for user acceptance testing during $2$ month period $$ each person is $$5,000$ per month $$ Reduced errors and improved productivity will create savings of $$330,000$ per year.

$$ Train all call center associates. $$1,200$ per associate $$ there are $70$ associates.

Purchasing $$ Call center system software supplier estimated at $$1,200,000.$

$$ New call center hardware estimated at $$70,000.$

$$ Purchasing oversight and management of supplier should average $$1,200$ per month during the project.

IT All IT costs are total estimates for listed activities. Work will be done by teams show are matrixed to support several projects. $$ Improved system will reduce maintenance costs by $$96,000$ per year.

$$ Requirements definition estimate is $$15,000.$

$$ System Architecture estimate is $$75,000.$

$$ Testing at unit level and at supplier estimate is $$110,000$

$$ System and user testing estimate is $$155,000.$

$$ Installation of hardware and system including database and security checks estimate is $$80,000.$

$$ Documentation of new system estimate is $$140,000.$

Project Mgmt $$ Provide project oversight, $50\%$ of one person for life of project. Estimate at $$4,000$ per month.

$$ Three trips to software supplier with project team $$ travel costs of $$5,000$ for each trip.