COST OF IMPLEMENTATION

All amounts in One time On going

Rupees

Hardware 20000000 700000

Software 22185420 400000
Customising / 2000000 400000
configuring

Data control
Data Base 13483656 1000000
Management

Education
External 150000 30000
Internal 730000 300000
Full time 2500000
project team (5)

Outside 1800000 90000

consultancy (3)

Miscellaneous 125000 50000

Total 62974076 2970000

Implementatio
n cost
 BENEFITS
All amounts in Rs
Sales 10000000000

Possible % increase if product always available

(make to stock items)+Possible % increase with
shorter lead times (make to order items) 2%

Gross margin% 30%

Annual benefit for 50% of above 30000000

Annual direct labour cost (250x100x260) 6500000

Possible % labour cost saving with stable schedules
& no material shortages 2%
Annual benefit from 50% of above 65000
Annual purchase material cost 4200000000
Possible % purchase cost saving with better material
requirement information 2%
Annual benefit for 50% of above 42000000
Estimated inventory holding cost (% of inventory
value) 1.6%
Reduction in raw material inventory value (50% of
the benefit) 1000000
less Depriciation (50%) 10000000
Total annual benefit 63065000
 NVP ANALYSIS
Asumming that the recurring cost remains constant for the next 5 years, to avoid the impact of inflati
discount the cost by the risk free rate
Assuming that the risk free interest rate in the market is 8%

Particulars Year
0 1 2 3 4 5
One time cost 62974076
Expenses 2970000 2970000 2970000 2970000 2970000

Present value of the

savings over the five
year period ### ### ### ### ###

Net Present Value= ###

Since the NPV is positive the company should accept the project
the impact of inflation in the cost we donot
 Hardware costs

Datacenter, space capable of housing, powering, backup power

Special power for uninterrupted power supply
Server hardware, LAN,WAN, Client server
Disk Subsystem
Disaster Recovery infrastructure
Deprication (50% as per Income Tax Act, 1972)
 Rs.
10,00,000 (at 4 units) 40,00,000
2,00,000 (at 4 units) 8,00,000
10,00,000 (at 4 units) 40,00,000
15,00,000 (at 4 units) 60,00,000
50,00,000 (at 1 unit) 50,00,000
10000000