Estimating a Project’s Value
To complete the initial assessment of the project, Ellen still needs to estimate the value that the project will bring to the organization. The main reason to upgrade the NNM software is simply to ensure that Widget Data Center is not relying on unsupported software. Still, the new version of NNM does provide some improvements that will add value.
Ellen estimates that the new version is going to reduce the number of outages by roughly 5% which should reduce the yearly downtime costs by approximately $18,000. In addition, Ellen expects the improved automation capabilities of the new version to reduce the number of events that require a manual action to be reduced by 10%, saving Widget Data Center roughly $4,000 per year.
Widget Data Center calculates the value and ROI of its projects over a
Question:
What is the value of the project?
Once the project has been completed, the annual savings are expected to be $18,000 + $4,000 = $22,000. Because Widget Data Center calculates its project values and ROIs over a 3-year period, the value of the project is 3 x $22,000 = $66,000.
Go ahead and fill out the Value field in the ‘Assessment’ section of the project. After you have saved the project, you will see the ROI that 4me calculated using your assessment estimates (164%).