72

LABORATORY WORK №4
«Feasibility study for the development of IS»

Aim: learn to constitute a feasibility study of value for the

develop of IS.
Tasks:
1. Calculation of Total Expenses for the development of IS.
2. Calculation of Price of Development.
3. Calculation of Prime Cost.
4. Calculation of Market Price.
5. Calculation of Revenue.
6. Calculation of Net profit.
7. Calculation of Payback period.
8. Calculation of Profitability.

Guidelines
on development of a feasibility study for the development of IS
(for example, an ITS)

The cost of development of information and training system

(ITS) include the following expenses:
- salary of developers;
- Social tax;
- Pension tax;
- Expenses of materials;
- Special equipment for the development;
- others;
- overhead.
Determination of estimated expenses of the development of ITS
m
С = C j ,
j =1
where Сj – value for the j-th article of the costs tenge;
m – the total number of cost items in calculation
Calculating the cost of staff salaries developer organization ITS,
directly engaged in software development, is carried out according to
the formula
Сз = Кз *T (tenge),
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where Кз – average rate of professional development organization ITS

tenge/man for day [36];
Т – the complexity of the development EITS, man for day.
Kз = FPO/ N *FWT (tenge/man day),
where – FPO – fund payroll organization for the previous year, tenge;
N – the average number of developer organization for the previous
year, man;
FWT – fund of working time per employee development organization
for the previous year, day.
Fund payroll organization define by formula
FPO = S * N * M,
where S – salary of one employee, tenge/mon.,
N – quantity of employees in organization,
M – quantity of months in 1 yesr, M=12
Special equipment for the development is determined in
accordance with the cost estimates.
The expenses of the article "social tax" represent 20% of the
wage.
On paper materials include all costs of magnetic media, paper,
office supplies and other materials necessary for the development of
ITS.
1.1.1 Payroll preparation
To effectively solve this problem, the process of developing
electronic textbooks is expedient to involve at least the following
professionals:
• specialist in the subject area, that defines the content of the
textbook, based on the requirements of the most informative,
relevant, contemporary educational material;
• psychologist, who must in the development process of the
structure and design of the electronic textbook, consider
psychological capabilities and characteristics of students in
order to create an atmosphere of psychological comfort;
• methodologist, which defines the methodology of teaching, by
considering specific computer training;
• designers, artists, animators, for aesthetic "stuffing" of the
multimedia capabilities of the electronic textbook;
• programmer of Software development project.
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It is desirable that all the professionals involved in all stages of

the software product. Especially important participation of specialists
in the design phase, when laid the basic didactic opportunities.
Experience shows that it is very useful at some intermediate
stages of conduct testing with future users, such as subject teachers and
students, as experts. It allows monitor the implementation of the
different requirements for training systems. For example, the
ergonomic requirements of visual perception of information
concerning the legibility of fonts, the lack of discomfort when playing
dynamic graphic materials, proper placement of information in the
field of perception, lack of color discomfort, brightness optimization
graphs relative to the background, etc. Important requirements are easy
to use tools for working with the learning system. These and other
issues can be identified just by testing in order to promptly amend the
developed computer product.

Table 1 – Salary specialists working on the electronic edition.

№ Specialist Quantity The average Quantity Total,
salary per of tenge
month, tenge months
1 Teacher 1 40000 3 120000
2 Psychologist 1 30000 1 30000
3 Methodologi 1 30000 1 30000
st
4 Designer 1 40000 2 80000
5 Animator 1 40000 2 80000
6 Programmer 1 50000 3 150000
Total: 490000

FPO = 490000 tenge

The cost of creating electronic complex depends on the

complexity of work, due to the volume of program content (text
tutorial, animation, tables and graphics, design) and the terms of
reference of the textbook.
It is impossible to accurately determine the cost of creating a
program without knowing its destination, not seeing the whole content
of the program, without knowing the terms of reference for the
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development of the program. Possible only a preliminary calculation of

the cost of program development.
Technological chain of creation of multimedia software includes
several steps:
• Formulation of the main themes and ideas in the publication.
• Development of the concept (close-up content and the basic
techniques, the use of which is expected in the publication).
• Writing flipping the script and the definition of the navigation
scheme.
• Collection and preparation of the material needed to create the
layout of publication (copyright issues, writing sample text
information, digitization and color corrector sample images, video
and audio rendering of screens, etc.).
• Create a layout (a-version) of the disc, which includes all types of
display forms, filled with the types of information and demonstrate
the logic of navigation and technical capabilities provided in the
publication.
• Collection and preparation of all of the information.
• Create a full version of the disc (b-version).
• Testing of the product.
• Create a matrix product (the "golden disc"), ready for circulation.
• Duplication

Pension tax:
PT = 490000*10/100=49000 tenge

// According to the Social Tax (ST) of the Republic of Kazakhstan

(2009) = 11%
ST =(FPO - PT) *11/100
Social tax = (490000-49000)*11/100=441000*11/100=48510 tenge

Tax = Social tax + Pension tax = 97510 tenge

1.1.2 Special equipment for the development

• Technical resources

Table 2– The expenses of a equipment

Device Characteristics of workstations Value, tenge
CPU Intel Pentium 4 3,2 MHz 30000
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FSB533MHz
Mainboard Gigabyte GA-8IPE1000Pro-G\ 7000
i865PE
RAM DIMM DDR 1 ГБ PC400 10000
Winchester 120GB/7200 Seagate 12000
Storage devices DVD-ROM 52x LiteOn FDD 3.5 5000
Video card 512Mb GeForce MX4000 TV- 12000
OUT AGP8X
Sound card Onboard AC'97 SB 1000
Network card 10/100/1000 int. 5000
Corps Midi Tower ATX 6500
Monitor L1706 19" TFT Monitor , 35000
Essential, HP
Keyboard Genius 1400
Mouse Mouse 2 key - Button Optical 1500
Scroll PS/2
Total: 126400

Amortization of equipment (5 months ):

A(equipment) = Expenses of equipment * Period / 36

Ae=126400*5/36=17 555 tenge

• Software

Table 3 – The expenses of a software

№ Software Value, tange
1. Microsoft Windows XP Professional 9000
2. Microsoft Office 2007 7000
3. Antivirus Kaspersky 6.0 6000
4. Borland Delphi 7.0 50000
5. Sonic Sound Forge 6.0 6000
6. Macromedia Flash MX 9500
7. Adobe PhotoShop 7.0 11000
8. Adobe Premier 6.0 25000
Total: 123500
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Amortization of software (5 months ):

As = (123500)*5/12=51 458 tenge
Total amortization = 17561 tenge

Expenses = FPO + Tax(pens)+Tax (social)+Ae+As + Em + Other

Total Expenses = Expenses + Otherhead

Otherhead = Expenses *25 /100.

Expenses = 490000+49000 + 48 510 + 17 555 + 51 458 = 605 071

tenge
Total Expenses = 605 071 + 605 071 * 25/100 = 756 338,7 tenge

1.2 Calculation of intellectual labor

1.2.1 Calculating the cost of ITS

Table 4 – The composition of the content of the electronic textbook:

№ The composition of the content of Value, tenge
the textbook
1 Textbook’s pages nS 300
2 The word in the textbook nC 0,5
3 Internal hyperlink textbook nG 5
4 Image nK 150
5 1 second of video nV 2000
6 1 second sound nZ 600

The composition of the content of electronic information and training

system programming:
• The total number of words in the textbook nC – 18347
• The number of internal hyperlinks tutorial nG – 157
• The total number of images (pictures) nK– 12
С1 – the cost of program content
С1 = 18347*0,5+157*5+12*150=9173,5 tenge

1.2.2 Opportunities shell application program

Shell application program is a self-starting an interactive
application that starts when you insert the disc into your computer.
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Each information-learning system has its unique design and

streamlined system of interactive menus. Text information is
supplemented by a large number of photos and video clips. The system
may be embedded in a video or film case. Multimedia projects today -
is the main standard of presentation of information in the field of
education, replacing the paper textbooks. The relative cheapness of CD
media, which recorded training systems make it possible to their mass
distribution among students.

Table 5 – The opportunity cost of information

№ The possibility of presenting information Value of
unit, tenge
1 The possibility of a "free" navigation for 3000
information and exit to the main menu
(Enlargement content), the full table of contents or
all of the program at any point in the product
2 Possibility of separating the text accompanying 2000
the image or other visual materials "hot words
(area)", on which the immediate receipt of
reference or any other explanatory (including
visual) information (technology of hypertext and
hypermedia);
3 Ability to work with various applications (text, 2500
image and sound editors, cartographic
information);
4 The possibility of storing a large amount of the 5000
different information on the same carrier (20
volumes author's text, and about 2000 more high-
quality images, video 30-45 minutes, up to 7 hours
of sound);
5 The possibility of increasing (detail) image on the 4000
screen or the most interesting fragments,
sometimes twentyfold increase (mode "loop")
while maintaining image quality. This is especially
important for the presentation of works of art and
unique historical documents;
6 The ability to compare the image processing and 6000
its various software with research or educational
purposes;
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7 Possibility of continuous music or any other audio 3500

track corresponding to the static or dynamic
visual range;
8 Including in the disc contents of databases, 4000
methods for processing images, animations (e.g.,
tracking the story of the picture composition
graphic animation demonstration of geometric
constructions of its composition), etc.;
9 Ability to create your own "gallery" (samples) of 7000
information provided in the product (mode
"pocket" or "my notes");
10 The ability to "memorize traversed path" and 6000
create "bookmarks" on the concerned screen
"page";
11 The ability to automatically view the entire 7000
contents of the product ("slide show") or create an
animated and voiced "guide-guide" Product
("talking and showing the user's manual");
inclusion in the product game components with
the information component;
Total: 50000

In the software development diploma project present

opportunities 1,2,3,4,8 points total cost:
С2 – The cost of opportunity of information
С2 = 3000+2000+2500+5000+4000=16500 tenge

1.2.3 The total value of the contents of the information and

training system

Table 6 – The cost of keeping information and training system

Contents Quantity Average
value,
tenge
Theoretical part
- Text information 1 page. А4 300
- Text information with graphics 1 page. А4 350
(drawings, pictures, graphics)
- Videography lectures (without 1 min 1000
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installation) 1 min 3000

- 2-D animation (no sound) 1 min 4000
- 2-D animation (with sound) 1 second 500
- 3-D animation (no sound) 1 second 700
- 3-D animation (with sound)
The practical part
- system with negative feedback (NF) 10 questions 5000
- Virtual Lab (NF) 1 task 10000
- interactive-multimedia application 1 task 7000
(Flash, Java)
The controlling part
- creative tasks 10 tasks 15000
- controlled test (normal) 10 questions 15000
Additional features:
- randomly generate questions +10000
- random distribution of responses +5000
- language selection kaz/rus +7000
- Access to the database +10000
- editor issues +15000
10 questions
- information protection +10000
- controlled testing (unique) 62000
The correction part
- work on the bugs 10 questions 15000
- connection with the theory test 7000

In the practical part there is a system with negative feedback in

controlling parts - creative tasks (10 pcs.) And controls testing, in the
correction of the opportunity to work on the bugs and test the
connection with the theory of the total cost:
С3 – the cost of additional features
С3 = 5000+15000+15000+15000+7000=57000 tenge

1.2.4 Calculating the cost of creating and organizing the

database
Table 7 – The cost of keeping information and training system
№ Parameter Value, tange
1 Organization Database 70000
Additional features
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2 Access to the database by the password 10000

3 Provides access rights to the database 15000
4 Backup and archive copy of the database 25000

Information stored in the indexed database server files N.

N – the number of database files indexed information.
The cost of one database file – 4000 tenge.

1.2.5 Organisation of search in the textbook

Each search engine is unique. Job search algorithm depends on
the specific program objectives
Creating a full-fledged search engine in the system complexity,
cost and time exceeds the creation of a large Internet portal.
There are proven alternative technical solutions systems find the
program that do not require human intervention and strict requirements
for hardware and software compatibility with the server.
The use of simple circuit design allows the user to quickly find
the information he needs.
The average cost of creating the possibility of finding
information on the program is 25 000 tenge.

1.2.6 Cost of services creation software

Table 8 – The cost of creating a software product

№ Characteristics Value, tenge
1 Shell design system
- normal From 25000
- complex From 45000
2 Increased demands on the design 50000
3 Animation (1 second) 5000
4 Imposition of static pages 1500
5 Typing (1000 characters) 50
6 Scan (1 A4) 150
7 Graphics 200
8 Text translation (1 thousand characters) 1500
9 Photoshoot (leaving the photographer) 5000
10 Testing 3000

1.2.7 Program design

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Development GUI includes:

• Development of the concept;
• Visualization of the structure;
• Visualization of information blocks;
• Additional features.

Table 9 – The cost of the design program

№ Characteristics Value, tenge
1 Design programs based on existing corporate 25000
identity of the organization.
2 options are available on line. 3 variant is
created according to the wishes and comments.
2 Design program. 3 options are available 30000
simultaneously. 4 variant is created based on
comments and suggestions made.
3 Design: design of the site. From the customer is 45000
working, as long as the customer does not
approve the concept.
The elements increase above the selected value of the type of design:
4 Screensaver tutorial animated (Flash) on the 10000
basis of the presented scenario.
5 Type of design, in which you must use a set of 18000
animation and static pages, additional items or
special programming.

6 Design for the entire animation (Flash) project, 25000

including programming.

The usual design programs with animation is estimated at 35,000

tenge.
1.2.8 Manufacturing cost of professional film-video
production, reproduction and adaptation of videos

Steps for creating animation:

1) drawing up terms of reference;
2) establishing the part of the presentation;
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3) creation of a graphical layout;

4) providing the Customer layout presentation;
5) provided by the customer list of changes to be made to the
layout;
6) making necessary changes to the layout;

• Rollers on the basis of location filming

• They require labor actors, film studios and rental details. Costs
are often unpredictable. The minimum price of such surveys -
from 90 000 tenge per 15 seconds.
• The characteristic animation
• This is a time-consuming process, which is still not amenable
to automation and requires a lot of time-consuming. Animation
by definition will never be possible without the work of living
artists. The cost of 25 00 tenge per one frame of the animation.
• Rollers on the basis of computer graphics
• The achievement of recent years. Computer graphics can be
different (for example, two-dimensional and three-
dimensional). With it you can realize almost everything, even a
stylized "typical animation." These graphics will cost 30%
more expensive than usual, but it is much cheaper than the
actual characteristic animation. Minimum price for a movie
made by means of computer graphics - from 50 000 tenge per
15 seconds.
• The combination of computer graphics and filming on
location
• Under-registration is understood as the simultaneous presence
and interaction in the frame as computer graphics, and location
filming. The most stunning effects in modern cinema is
achieved with the help of this technology. The possibilities are
limited only by the amount of the method of invested money.
Price - 100000 tenge for 15 seconds.
• Combining distinctive animation and filming on location
• The simultaneous presence and interaction in the frame of
filming on location and characteristic of the animation. This
approach imposes stringent requirements on the characteristic
animation (it should be smooth), affixed subsequently to "live
video". The process, of course, time-consuming, but the
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resulting effect cannot be achieved by other means. Price -

300000 tenge for 15 seconds.
• The promotional film
• Involves the use of location shooting, but without the
involvement of actors, rent pavilions and details. Work crews
are made at the customer premises, facilities filming
themselves become customers and their jobs. Such films
typically last from 3 to 30 minutes. Price - about 240000 -
420000 tenge.
• Animated commercials
Timing animation, commercials may be different (but usually
not more than 30 seconds). This is due primarily to the relatively high
cost of advertising on television, compared with other types of media.
This kind of infomercial is often used in advertising of products for
children, but also adults animation sometimes has a strong impact. For
example, the famous Masyana won the hearts of huge count of people
of different ages, status and wealth. Often under the animation writes
songs as audio support.
Price list for the manufacture of film video production,
reproduction and adaptation of the movie is shown in Table 10.
Table 10 – Price list for the manufacture of film video production,
reproduction and adaptation of videos
№ Types of work Value, tenge
1 Video screensaver simple / complex (5-15 72000/144000
seconds)
2 Advertising report 1-3 minutes (1 day of 72000
shooting, Betacam SP)
3 Video easy 10-30 sec (video Betacam SP, 144000 –
processing of slides and logos, simple 204000
special effects)
4 Video complex staging 10-30 sec (video 300000 600000
Betacam SP, the actor, computer graphics
/ animation)
5 Film movie game 15-30 seconds (filming 720000 –960000
at Kodak, the actor, computer graphics /
animation)
6 18000 – 30000
Animation (animation) simple / complex
for sec.
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7 Presentation (corporate) 10-15 minutes 240000 – 360000

video (video Betacam SP, screensaver,
jingle, special effects)

8 Installation commercials of presentation 72000 – 144000

video
9 Duplication of video tapes Betacam SP - 180/unit
VHS or VHS - VHS
10 Duplication of video tapes Betacam SP - 2400/ unit
Betacam SP
11 18000 – 30000
Computer graphics 2D, 3D Max
for sec.
The table shows the average cost of preliminary work on the
production of video materials. After the approval of the estimate of the
script ideas, which is final.
1.2.9 Translation of the electronic textbook to other
languages
Table 11 – The cost of the transfer sheet 1 into another language
№ Lamguage Volume Value, tenge
1 Kazakh 1 page (А4) 2000
2 English 1 page (А4) 2500
3 French 1 page (А4) 5000
4 German 1 page (А4) 4000
5 Chinese 1 page (А4) 8000
6 Other language 1 page (А4) Negotiated price

The textbook consists of Russian and Kazakh languages with the

possibility of an interactive switch.
Number of pages in the textbook - 30.
The cost of translation is - 60000 tenge.

1.2.10 Expenses for materials article

Table 12 - Scope of the program content to be indexed:
№ The volume content of the program, MB Index
1 System volume in MB. vS
2 The volume of shell programs, applications (exe) vP
3 The amount of text in a textbook MB. (html) vT
4 The volume of images in MB (jpg, bmp, gif) vK
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5 The volume of streaming video in MB (avi, mpeg) vM

6 The volume of sound (wav, mp3, mid) vZ
7 Volume animation in MB (swf, 3dmax) vA
8 Amount of additional data files (dat) vD

vS = vP + vT + vK + vZ + vM + vA +vD
System volume in MB determines the type of information
carrier, which subsequently will be recording software.

Table 13 – Determining the value of the data carrier

№ Conditions Media type Value, tenge
1 If vS <= 1,4 MB (1400 Дискета 50
kB)
2 If 1,4 MB < vS < 700 CD-R 60
MB
3 If 700 < vS < 4200 MB DVD-R 120
4 If vS > 4200 MB Tailor-made From 500

The volume of electronic information vS-learning system for

programming will be 650 MB.
To store selected CD-R 60 tenge.
Preview edition of disks is 100 pcs.
Total cost of the CD - 100 * 60 = 6000 tenge

2. Estimated total cost of the development of ITS

Table 14 – Full cost estimates to develop an ITS

№ Cost item Altogether,
tenge
1 Calculating the cost of text content EITS 9173
2 Opportunities shell application program 16500
3 Multimedia content information and training 57000
system
4 Development of program design 35000
5 Translation into the Kazakh language 60000
6 The costs to the article material costs 6000
Total: 258643

Intellectual work = 258643

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3. The effectiveness of the development of ITS

3.1 Market analysis

Analyzing the market, we can conclude that in the Software
large number of potential buyers in the field of education.
The software product is embedded in training institutes of
computer science, in KazNTU, the Republican Training Center of
additional education for distance learning.

3.2 The number of potential customers

Circulation: 1000 Copies

3.3 Calculating the 1 copy:

Calculating the cost of CD is produced by dividing the sum of
the costs of the planned edition CD.
Total Expenses = 756338 tenge
Circulation = 1000 cop.
Rrime cost = 756 338/1000 = 756,3 tenge (Exp/circ)
Market Price = Prime cost + MarkUp + VAT
VAT (12%) = (Prime cost + MarkUp) * 10,8 /100
MarkUp = 30%
Market Price = 1064,924 tente

3.4 Profit
Revenue of development = Total Expenses + Intellectual work +
VAT = 1124599,7 tenge
Revenue of sales (copies) = Market price * Circulation =
1000*1064,924 = 1064924,9 tenge
Gross profit (development) = Revenue of development -
Total Expenses
Gross profit (copies) = Revenue of copies - Total Expenses
Gross profit (development) = 1124599,7 – 756338
Gross profit (copies) = 1064924,9 - 756338
Net profit (dev) = Gross profit (development) – Tax
Net profit (copies) = Gross profit (copies) – Tax
Tax = Social Tax + Pension Tax + VAT
Net profit (dev) = 1124599,7 – (756338+ 1124599,7*10,8/100)
= 246804,3
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Net profit (copies) = 1064924,9 – (756338+ 1064924,9

*10,8/100) = 193574,3

These calculations showed that the sale of the development of

information and training system is not profitable, because development
costs is much higher than the market value of development. The cost
of developing the first embodiment has been high since hired experts,
purchased computer equipment and software.
In the second embodiment, the cost of development - less since
developed a tutorial on the architecture is not very complicated.
Therefore economically more profitable to sell no development
program, and shelf software on CD in the n-copies.

3.5 Payback period

Payback period = Total Expenses / Market Price
Payback period = 756338 / 1064,924 = 710

The payback period is 710 copies to cover all current costs.

3.6 Profitability
Cost-effectiveness is obtained as the ratio of profit to cost, where
the profit can profit used book value, net profit, profit from the sale of
products as well as profits from the different activities of the
enterprise. In the denominator as the costs can then be used as the
value of fixed and current assets, revenues, production costs of equity
and debt, etc.
Profitability (dev) = Net profit (dev)/ Total Expenses *100% =
32,6 %
Profitability (copies) = 25,6%

3.7 Analysis of the economic efficiency

Economic efficiency of the implementation of this system IOS -
a large city with a population of about 1 million. People can be
determined only approximately, by estimation. In particular, the editors
of the magazine "Education" investigated the potential market for this
product, which has resulted in an assessment of the cost-effectiveness
of the use of this system.
The results showed that under favorable circumstances, the
introduction and use of this system will allow the optimal distribution
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of budget funds directed to, say, the salary of teachers by using this
electronic-learning system in the education system.
We should not forget that in addition to the economic efficiency
of this system can lead to important social effects.
Assessment of the social impact of the application of the
system. It should be noted that the introduction of the system
contributes to important social effect - to increase the level of
education of the population, student achievement, provides a more
rational social support for vulnerable people with low incomes, helping
to reduce social tension in society.