6.

Project Budget Summary

Budget Estimation
Resource Description Year 0 Year 1 Year 2 Year 3

Software -Operating 20 000 8 000 8 000 8 000

system (OS)
that will be
added to the
table.

Hardware - Custom PCs 35 000 16 000 15 500 14 000

specialized to
add OS to the
table.
- PC for
designer
sketch and
design the
shape of table.

Labour such - Working 30 000 16 000 14 000 14 000

as hour and also
programmer, training to
marketer and master the
designer system.

Research - - Do research 24 000 4 000 3 500 3 000

Project about
Management education in
Malaysia.
- Research
about learning
environment.
 - Research
about learning
patterns of
students

Manufacturing - Develop 19 000 8 000 8 000 7 500

table ready to
work unless
the OS.

Utilities - Electricity 2 000 2 000 2 000 2 000

and water bill
Total cost 130000 54 000 51 000 48 500

6.1 Analysis of Alternative

Total cost for one unit of product = RM 1000

Estimated product sale price = RM 1 800
Estimated unit sales for first year = 100 units
Estimated sales for first year = RM 180 000

6.2 Payback
Company spends RM130 000 developing and manufacturing the products then
receives a net cash return of RM180 000 a year.

Payback period = Initial Investment/Net Cash Flow

= RM130 000/RM180 000
= 0.72 years

6.3 Return on Investment (ROI)

Project alternative is expected to cost RM130 000 but provides RM160 000 in
expected benefits, therefore the project ROI would be:
Project ROI = Total Expected Benefits Total Expected Costs
Total Expected Costs
 = RM160 000 RM130 000
RM130 000
= 23% per year

6.4 Net Present Value (NPV)

The expected cash flows for the next four years of the business:
Year 0 Year 1 Year 2 Year 3
Total Cash Inflows RM 0 RM180 000 RM200 000 RM220 000
Total Cash Outflows RM130 000 RM54 000 RM51 000 RM48 500
Net Cash Flow (RM130 000) RM126 000 RM149 000 RM171 500

To calculate the net present value (NPV),

Net Cash Flow

NPV= -I0 ( )
(1+r)t
Where:
I = total cost (or investment) in the project
r = discount rate
t = time period

Assuming that the management team sets the discount rate of 12 percent,
therefore we can discount the net cash flow for each period and add them up to
determine the NPV.

Time Period Calculation Discounted Cash Flow

Year 0 (RM134 000) (RM134 000)
Year 1 RM126 000 (1 + 0.12)1 RM112500
Year 2 RM149 000 (1 + 0.12)2 RM118781.89
Year 3 RM171 500 (1 + 0.12)3 RM122070.31
Net Present Value (NPV) RM219352.2
 1. QUALITY ISSUES

The following is the quality issues that may occur during the development, focusing on three main
aspect:

Type Issues Description

Process Quality Standards -The quality standards set or
followed are not up to the
minimum standards

-This may affect the overall

quality of the product as well
as the project success
Product Customer Satisfaction -Product quality may does not
meet the stakeholders demand
or requirements due to issues
arise during process

-Low quality product may

Project Over-allocated or under-
allocated resources
ultimately decrease the
customer satisfaction and
lower the stakeholders
confidence on the success of
the product
- Over-allocated may cause the
organization to waste of
important resources such as
budget, labor that will
negatively impact the
organization

-under allocated may cause

organization to produce low
quality product due to limited
budget or timeline