Evaluating the Project and Specification for Costing - Coursework Example

In the context of business planning, the factors associated with cost and benefits are critical and must be understood. Similarly, cost-benefit analysis is also critical in the context of projects associated with GIS engineering and management. Scenarios This report is associated with cost/benefit analysis for two scenarios. The first scenario includes an interest rate of 4%, which indicates it as a best-case scenario, while the other scenario is the worst-case scenario with an interest rate of 10%.

Specification for Costing Cost of five workstations with minimum configuration of Quad-core processor, 2GB RAM and 250GB Hard Disk is illustrated below: Cost of single Workstation * 5 = ? 1300 * 5 = ?6500 Cost of upgrades in Year 3 and 6 = 2 *?650 * 5 = 2 * ?3000 = ?6000 Licensing Cost for GIS Software Cost for Year 1,2,4,6 = ?10000, Cost for Year 3, 5, 7 = ?3000 Data Purchasing Cost Total cost of Map Purchase = ?19500 Employment Cost Total costs of Salaries increasing at 3.5% per annum are as follows: Year 1 = ?

195,000, Year 2 = ?202,000, Year 3 = ?209,000, Year 4 = ?216,000, Year 5 = ?224,000, Year 6 = ?231,000 and for Year 7 = ?239,000 Conversion and Miscellaneous Cost Conversion Cost (1 time) = ?5000 (Given) Miscellaneous Cost = ?3000 (Given) Benefit Total Savings in the context of employments as salaries are as follows: Year 1 = ?195,000, Year 2 = ?202, 000, Year 3 = ?209,000, Year 4 = ?216,000, Year 5 = ?224,000, Year 6 = ?231,000, Year 7 = ?239,000. Efficiency Savings (Increasing at the rate of 4.5%) For Year 1 = ?

15000, Year 2 = ?15675, Year 3 = ?16380, Year 4 = ?17117, Year 5 = ?17887, Year 6 = ?18691 and Year 7 = ?19532. Scenario 1 ( Interest Rate 4%) The first scenario demonstrates the implementation of a GIS project with an interest rate of 4% which is considered as lowest when compared to normal. The interest rate of 4% (0.04), Fig 1.1 illustrates similarity for both cost and benefits in the graph over the period of 7 years, with the cost-benefit ratio of 1. Moreover, the net present value is also demonstrating 1st and 4th year of implementation is negative for the projects.

In comparison with both the cases, consequent years 2 and 5 are highlighting recovery and constant positivity for the net present value. Figures for implementation of the net present value over 7 years are calculated as 16.54. Moreover, the profitability month starts from the 2nd year till the 5th year with implementation outweigh is a cost that concludes to benefit. Both the implementation present value and the net present value at the end of 5 years are positive. For this reason, productivity does not require increment as the net present value is already showing healthy progress at the end of year 7.