WBIT 3111: Info Tech Project Management

PART 2: RETURN ON INVESTMENT You have been assigned as the project manager for Georgia Techs new University Grant Management System and need to prepare a preliminary financial analysis to assess the economic feasibility of the project based on the cost/benefit assumptions listed below. The project is expected to take 6 months to complete and the discount rate is 7%.

Formatting Instructions: Complete your analysis on the same Excel file as Part 1 using a separate tab labeled Part 2. Complete the calculations using the template shown below. An example of a completed analysis is also shown on p. 100 in your textbook. Below your analysis, under the heading ASSUMPTIONS, clearly state the project costs (listed below) and indicate whether they are one-time or annual. Your analysis should show all costs and benefits for each year (Year 0 Year 3) and clearly identify the NPV, Payback Period, and ROI of the project. The formulas for calculating the discount factor, NPV, and ROI are in your textbook Chapter 4 p.164-165.

At the bottom of your worksheet, under the heading RECOMMENDATION, indicate if the project is a good investment based on your analysis. For this part you will be interpreting the financial ratios to determine whether the project is a good investment. Prepare your spreadsheet as a professional business document (include the title of your document, cell references and formulas for all calculations and accounting format 0 decimals). Assumptions: (List these at the bottom of your spreadsheet with all calculations for each cost shown)

Project Costs:

1. Project manager assigned 30 hours per week for 25 weeks @ $50/hr.

2. Staff personnel assigned 60 hours per week for 25 weeks @ $70/hr.

3. Initial software costs of $150,000.

4. After the project is complete, the annual software maintenance costs are $50,000/yr. for three years

Project Benefits: 1. Increase in grant revenue is projected to be $10,000 per grant.

2. Projected number of new grants awarded each year starting in Year 1 is 25 (grant awards are noncumulative).