Total charge $570,000

The supplier will need to quote a price that will include a margin to cater for 10.4 Advantage to possible increases in equipment prices. It might turn out that actual prices do not increase as much as was estimated - in the case of IT equipment some prices are likely to go down - but the customer would still have to pay the additional margin. If the contract specifies a fixed charge plus the actual cost of materials and equipment, then the customer in this case would be better off.

customer of variable cost charges

System X sav ings would be £20 x 20 hours x 4 years = £ I .(XX). for the automatic 10.5 Calculating scale point adjustment facility, and £20 x 12 hours x 2 times a year x 4 years = value for money £ 1.920. for the bar chart production facility. In total the saving for System X would be £3,520.

For System Y. the saving would be £300 x 0.5 (lo lake account of the probability of change). That is, £150.

Even though System X costs £500 more, it will still give better value for money. Note that discounted cash flow calculations could be applied to these figures.

10.6 Evaluation i. The usability of an existing system could be evaluated by such means as the methods examination of user handbooks, the observation of demonstrations and practical user trails.

ii. This is clearly tricky. One would have to evaluate the methods that the developers intend to use to see whether they adhere to good interface design practice. One might also examine any interface standards that are in use by the supplier.

iii. Note that the question focuses on the costs of maintenance, rather than that of reliability. The cost of unexpected maintenance could be reduced, at least for a short time, by passing this risk to the supplier if there is a comprehensive warranty. The warranties provided by suppliers would therefore need to be scrutinized. Discussion with reference sites might also be helpful.

iv. Once again guarantees could be put in place by suppliers concerning this. The nature of these guarantees could be examined.

v. Training materials could be examined. The training staff could be interviewed and their CVs examined. Reference sites who have already used the supplier's training services could be approached for their views.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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