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    CBA Sample

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    monderoclyde24
    This document contains a breakdown and analysis of the tangible benefits, costs, and savings of an existing vs. proposed system. It finds that the proposed system would save $62,585 annually in supplies and labor costs, plus $46,320 from reducing errors. A net present value analysis over 5 years finds the proposed system would have a positive NPV of $140,180, with a break-even point of 3.5 years. Upfront costs of $178,500 are required for development, training, and new hardware/software for the proposed system.

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    CBA Sample

    Uploaded by

    monderoclyde24
    8 views9 pages
    This document contains a breakdown and analysis of the tangible benefits, costs, and savings of an existing vs. proposed system. It finds that the proposed system would save $62,585 annually in supplies and labor costs, plus $46,320 from reducing errors. A net present value analysis over 5 years finds the proposed system would have a positive NPV of $140,180, with a break-even point of 3.5 years. Upfront costs of $178,500 are required for development, training, and new hardware/software for the proposed system.

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    This document contains a breakdown and analysis of the tangible benefits, costs, and savings of an existing vs. proposed system. It finds that the proposed system would save $62,585 annually in supplies and labor costs, plus $46,320 from reducing errors. A net present value analysis over 5 years finds the proposed system would have a positive NPV of $140,180, with a break-even point of 3.5 years. Upfront costs of $178,500 are required for development, training, and new hardware/software for the proposed system.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    8 views9 pages

    CBA Sample

    Uploaded by

    monderoclyde24
    This document contains a breakdown and analysis of the tangible benefits, costs, and savings of an existing vs. proposed system. It finds that the proposed system would save $62,585 annually in supplies and labor costs, plus $46,320 from reducing errors. A net present value analysis over 5 years finds the proposed system would have a positive NPV of $140,180, with a break-even point of 3.5 years. Upfront costs of $178,500 are required for development, training, and new hardware/software for the proposed system.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 9

    Breakdown of Tangible Benefit Worksheet

    A. SUPPLIES COST

    EXISTING SYSTEM PROPOSED SYSTEM


    Description Qty Price/Qty Sub_Total Description Qty Price/Qty Sub_Total
    Folders 2 Bundles 150.00 300.00 Folders 2 Bundles 150.00 300.00
    Ballpen 3 Boxes 130.00 390.00 Ballpen 1 Box 130.00 130.00
    Bond Papers 12 Reams 150.00 1,800.00 Bond Papers 5 Reams 150.00 750.00
    Carbon Papers 1 bundle 125.00 125.00 Record Book 10 pieces 35.00 350.00
    Record Book 10 pieces 35.00 350.00 USB 1 PIECE 350.00 350.00
    Vouchers 30 pads 30.00 900.00 Ink 8 bottles 150.00 1,200.00
    Ink 12 bottles 150.00 1,800.00
    TOTAL 5,665.00 TOTAL 3,080.00
    Supplies Cost Reduction=Total Supplies of the Existing System- Total Supplies of the Proposed System
    Supplies Cost Reduction 2,585.00

    A. LABOR COST

    EXISTING SYSTEM PROPOSED SYSTEM


    Salary/ Salary/
    Personnel Month Annual Personnel Month Annual
    1 CIO 15,000.00 180,000.00 1 CIO 15,000.00 180,000.00
    2 Cashiers 9,000.00 216,000.00 2 Cashiers 9,000.00 216,000.00
    2 Clerks 10,000.00 240,000.00 1 Clerk 15,000.00 180,000.00
    TOTAL 636,000.00 TOTAL 576,000.00

    Labor Cost Reduction=Labor Cost of the Existing System- Labor Cost of the Proposed System
    Labor Cost Reduction 60,000.00

    Total Cost Reduction=(Labor Cost Reduction + Supplies Cost Reduction)


    Total Cost Reduction 62,585.00
    ADDITIONAL COST REDUCTION
    EXISTING SYSTEM PROPOSED SYSTEM
    Employees Salary a Year 636,000.00 Employees Salary a Year 576,000.00
    Percentate of Error 10% Percentate of Error 3%
    TOTAL 63,600.00 TOTAL 17,280.00

    Additional Cost Reduction=Additional Cost Reduction of the Existing System-Additional Cost


    Reduction of the Proposed System
    Error Cost Reduction 46,320.00

    Example are Overtime Pay of Employees doing extended job due to volume of work cause by the existing system
    NET ECONOMIC BENEFIT WORKSHEET

    Description Amount
    Total Cost Reduction 62,585.00
    Additional Cost Reduction 46,320.00
    TOTAL 108,905.00
    Net Economic Benefit=Total Cost Reduction+Error Cost Reduction
    BREAKDOWN OF ONE TIME COST WORKSHEET
    Assuming that the project development duration is 3 MONTHS

    A. Development Cost BREAKDOWN OF ONE TIME COST WORKSHEET

    Description Salary/Month Mo. Sub_Total A. Development Cost 135,000.00


    1 System Analyst 15,000.00 3 45,000.00 B. User Training 4,500.00
    1 Programmer 12,000.00 3 36,000.00 C. Additional 39,000.00
    1 Encoder 8,000.00 3 24,000.00 Hardware/Software
    1 Researcher 10,000.00 3 30,000.00 TOTAL ONE TIME COST 178,500.00
    TOTAL 135,000.00 Total One Time Cost =Total Development Cost+ Total User
    Training + Total Additional Hardware/Software
    B. User Training

    Description Honoraria/day Sub_Total


    2 days User Training 1,000.00 2,000.00 RECURRING COST
    Training Kit 2,500.00 2,500.00 Description Unit Cost Annually
    TOTAL 4,500.00 Software Maintenance 500/month 6,000.00
    Incremental Communication 1000/month 12,000.00
    Software Licensed Renewal 2500/year 2,500.00
    C. ADDITIONAL HARDWARE/SOFTWARE TOTAL 20,500.00

    Description Honoraria/day Sub_Total


    1 Database Server 18,000.00 18,000.00
    1 External Drive 2,500.00 2,500.00
    License Software
    Platform for Vendor 15,000.00 18,500.00
    TOTAL 39,000.00

    Total One Time Cost =Total Development Cost+ Total


    User Training + Total Additional Hardware/Software
    BREAK EVEN ANALYSIS TABLE OF WEB LANE CAFÉ
    Project Implementation: December 1, 2020
    YEAR 0 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

    Net Economic Benefit - 108,905.00 108,905.00 108,905.00 108,905.00 108,905.00


    Discount Rate (12%) 1.00 0.89 0.80 0.71 0.64 0.57
    PV of Benefits - 97,236.61 86,818.40 77,516.43 69,211.10 61,795.62
    NPV of all Benefits - 97,236.61 184,055.01 261,571.43 330,782.53 392,578.15

    One Time Cost 178,500.00

    Recurring Cost - 20,500.00 20,500.00 20,500.00 20,500.00 20,500.00


    Discount Rate (12%) 1.00 0.89 0.80 0.71 0.64 0.57
    PV of Recurring Cost 18,303.57 16,342.47 14,591.50 13,028.12 11,632.25
    NPV of all Costs 178,500.00 196,803.57 213,146.05 227,737.54 240,765.66 252,397.91

    OVERALL NPV
    OVERALL ROI
    YEAR 0 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
    BREAK-EVEN ANALYSIS
    Yearly NPV Cashflow (178,500.00) 78,933.04 70,475.92 62,924.93 56,182.98 50,163.37
    Overall NPV Cashflow (178,500.00) (99,566.96) (29,091.04) 33,833.89 90,016.87 140,180.24

    Project Break-even occurs at Year 3 Get the year where it turns out positive
    To convert into number of months get the de
    0.46 5.52 5 months we have 12 months in a year and just get the
    Use First Year of Positive Cash Flow Break-Even Function
    To convert into number of days get the decim
    (Note: Look when yearly NPV Cashflow turns positive) 0.52 15.60 15 days months in a year and just get the whole num
    Actual Break Even occur at Year 3, 5 months and 15 days To compute for the actual Break Even Da
    If project will be implement December 1, 2020 Actual Break Even Occurs on May 16, 2024. Project Implementation Date
    Formulas to be used in this worksheet as as follows
    Net Economic Benefit=Total Cost Reduction+Additional Cost Reduction
    Discount Rate = [1 ( / (1 + i)^n )
    Where:
    i = Discount rate (or interest rate)
    n = the number of year in the future the cash flow is

    PV of Benefits=Net Economic Benefits * Discount Factor


    NPV of All Benefits=Current NPV of All Benefits+Succeeding Year of PV of Benefits

    Total One Time Cost =Total Development Cost+ Total User Training + Total Additional Hardware/Software

    Recurring cost is the sum of all recurring expenses include any costs that the company
    is incurring on a regular basis.
    PV of Recurring Cost= Recurring Cost * Discount Rate
    NPV of all Costs=Current NPV of All Costs+Succeeding Year of PV of Recurring Costs

    Overall NPV=NPV of All Benefits-NPV of All Costs


    Overall Return on Investment=(Total NPV of All Benefits-Total NPV of All Cost)/ Total NPV of All Cost
    Project Break Even= (The value of the Yearly NPV Cashflow when it turns POSITIVE --
    Counter Equivalent Value in Overall NPV Cashflow) / The value of the Yearly NPV
    Cashflow when it turns POSITIVE
    TOTAL

    392,578.15
    392,578.15

    73,897.91
    252,397.91

    0.46
    140,180.24
    56% 0.56
    TOTAL
    15.6
    140,180.24

    year where it turns out positive which is Year 3 base on the example
    ert into number of months get the decimal value of the break even point and multiply it with 12 coz
    e 12 months in a year and just get the whole numbers
    ert into number of days get the decimal value of the months and multiply it with 30 coz we have 12
    in a year and just get the whole numbers
    mpute for the actual Break Even Date just add the number of years, months and date to the
    Implementation Date
    Use this data as legend in the Chart showing the Payback Period
    YEAR NPV of all Costs NPV of all Benefits
    0 178,500.00 -
    1 196,803.57 97,236.61
    2 213,146.05 184,055.01
    3 227,737.54 261,571.43
    4 240,765.66 330,782.53
    5 252,397.91 392,578.15

    PAYBACK PERIOD ANALYSIS TABLE


    450000
    400000
    350000
    300000
    250000
    200000
    150000
    100000
    50000
    0
    1 2 3 4 5 6

    YEAR NPV of all Costs NPV of all Benefits


    Here is the mathematical formula for calculating the present value of an individual discount rate

    Discount Rate = [1 ( / (1 + i)^n )

    Where:

    i = Discount rate (or interest rate)


    n = the number of year in the future the cash flow is

    Note : You need to check on the current inflation rate of the Philippines during that time

    Discount Number of Years


    Rate 1 2 3 4 5 0
    7% 0.93 0.87 0.82 0.76 0.71
    8% 0.93 0.86 0.79 0.74 0.68
    9% 0.92 0.84 0.77 0.71 0.65
    10% 0.91 0.83 0.75 0.68 0.62
    11% 0.90 0.81 0.73 0.66 0.59
    12% 0.89 0.80 0.71 0.64 0.57 1.00
    13% 0.88 0.78 0.69 0.61 0.54
    14% 0.88 0.77 0.67 0.59 0.52

    Note : You need to check on the current inflation rate of the Philippines during that time

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