Question

As a project manager, you have been asked to evaluate the feasibility of the following proposed acquisition:

Your organization is considering the purchase of an automated OB/GYN documentation system.Proposed costs are as follows:

Hardware	$      250,000
Software	$      400,000
Software maintenance	$         65,000
Training	$         35,000
Implementation	$         75,000

Software maintenance will start after one year and will be incurred annually.All other costs are incurred in the first year.

Your analysis projects the following benefits to be expected annually:

Labor savings	$      220,000
Equipment savings	$         55,000
Reduced malpractice premiums	$         20,000
Increase in OB business	$         50,000

Construct a table showing the investment, and showing annual benefits for five years.

Use a discount rate of 5%.

Use an assumed inflation rate of 4%.

Show the Net Present Value and the Internal Rate of Return of the proposed investment every year for five years.

Are any of the benefits operational, or should some benefits be considered tactical or strategic benefits?