PROJECT SELECTION CRITERIA AND A HIGH LEVEL PROCESS/ TUTORIALOUTLET D PROJECT SELECTION CRITERIA AND A HIGH LEVEL PROCES | Page 4

Currently ordering processing is done online. The software and
hardware used in this system are about ten years old. As such, order
processing is a long, arduous process for the fifteen person staff.
Upgrading this process to a state of the art system would cost
approximately $2.5 million dollars, and it is a onetime pay in full
internal charge to your SBU. It would also result in a reduction in the
fifteen person staff by 7 individuals and reduce order processing time
by 50%. Each individual in this department is paid $35,000 burdened
labor costs a year. Most of the work of this project could be done
internally with existing staff. One weekend of operations will be
impacted by the project in its entirety.
Project Rocky
The Alaskan cruise ship industry is booming. For some reason, people
like to look at icebergs. Unfortunately, our company is servicing no
cruise ships in Alaska. Project Rocky is to expand into the Alaskan
market. This project will require the acquisition of property in Alaska,
renovation of that property, and staffing of the facility. This project is
seen as a major money maker for the company and has a NPV of $19
million dollars over five years. Its costs would be $13 million dollars
to initially set up the project and $400,000 a year to operate the
facility. This initial cost can be spread evenly over each of four
quarters of the entire year. These initial costs should be recovered
within the first two or three years of operation. Most of the work of
this project would be outsourced and management of the project
would likely be difficult.
Project Europa
The Mediterranean cruise ship industry is booming. Unfortunately,
our company is servicing no cruise ships in the entire European area.
Project Europa is to expand into the Mediterranean market. This
project will require the acquisition of property in Italy, renovation of
that property, and staffing of the facility. The current governmental
overspending and austerity issues may impact this project. However,
this project is seen as a major money maker for the company and has
a NPV of $15 million dollars over seven years. Its costs would be $11