Establishing OneCard Project in the University of New York Report

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Introduction

This budget is for a project, OneCard, of the University of New York. The university will implement OneCard that is linked with various departments. Being a medium sized organization, the university will have a division OneCard. The division will consist of about eight trained staff members in matters of management, maintenance and technology. This Budget will assist universities to plan out what areas need to be controlled in terms of cost of the project. This way, when the time comes for the actual results the management will be in a better position to evaluate which costs are out of place and why they are so (Schonberger, 26).

Investment Requirements and source of financing

The rationale in establishing OneCard in the university is to improve services offered to students and increase revenue for the university. For this kind of investment, an amount worth US$22,350 should be enough to begin with. Of the total investment required, the bulk or approximately 40 percent or US$9,000 is earmarked for magnet card detectors equipment. The third largest capital expenditure goes into the purchase of the necessary computer hardware and server, software and licenses. The next major capital expenditure is the copy machine, which is estimated to cost roughly US$2,000 to acquire or 18 percent of the total budget. The table below shows the breakdown of the capital expenditures for the proposed OneCard.

Estimated Capital Expenditures

Estimated Capital Expenditures

Operating income and expensesThe university will finance the whole amount of the investment. The students will incur costs of new card as well as their replacement. The other possible financing strategy for the OneCard, project, is to require items on credit. This allows the university to conserve its cash resources since it does not need to pay for the equipment outright.

As a basis for its operational viability, the OneCard will adhere to a conservative sales forecast as reflected. In particular, the OneCard, project income and expenses projections, three operational assumptions will be made namely the projected number of students and number transactions carried out per day or per year. Operational indices will eventually be used to calculate the projected gross revenue to be generated by the OneCard project. Using the above mentioned assumptions, the total number of online hits to be generated by the network amounts to 62,500 during the first year of operations. By the fifth year, the number of hits for the neat is projected to rise to 89,000. At 30 percent capture rate, the estimated gross sales for the first year would amount to roughly US$1million. By the fifth year, annual turnover is forecasted to increase to US$2.27 million.

Revenue Forecast for the Proposed OneCard

Year 1Year 2Year 3Year 4Year 5
Number of online Hits620,500692,800763,500830,000890,000,000
Average US$ per hit0.70.70.80.80.9
Estimated gross revenue434,350484,960610,800664,000801,000

After the projected revenue has been determined, the next step would be to identify the other entries included in the projected income statement. These are as follows:

Budgeted Income Statement for the First Year of Operations (in US$)

Income Statement EntriesYear 1% to Sales
Revenue434,350100.0%
Operating Expenses
Wages140,4008.2%
Office Rent50,0000.5%
Utilities280000.2%
Online hosting25000.002%
Office Supplies8,0000.5%
Miscellaneous Costs15,0000.5%
Depreciation40000.04%
Total Operating Expenses255,90025.5%
Net Income178,45022.8%

Projected Cash Flow Statement

While the income statements show the results of operations, the more vital accounting information lies in the cash flow statement. This statement charts the movement of the actual cash in the company. In terms of operating activities, the major sources of cash to be received by the venture come from net income. Meanwhile, the main investments are the purchase of computer hardware and software equipment, as well as facilities for the office. Subsequently, a major cash infusion will come from the university’s cash investment in the venture.

Budgeted Cash Flow Statement for the First Year of Operations, (in US$)

Year 1
Operating Activities
Net Income178,450
Add: Depreciation4000
Changes in Working Capital
Cash Flow from Operating Activities182,450
Investing Activities
Purchase of Equipment(19,750)
Purchase of Office furniture, Fixtures, supplies(600)
Cash Flow from Investing Activities(20,350)
Financing Activities
Capital infusion22,500
Cash Flow from Financing Activities22,500
Total Cash184,600
Cash Beginning of the Year
Cash End of the Year184,600

Salaries of Key Personnel

The operations and technical personnel will monitor website traffic under the supervision of the operations manager, who reports to the university management. The key personnel will be given salaries for their work.

Salaries of Key Personnel

EmployeesNumberTotal/Month
(in US$)
Total/Year
(in US$)
Technicians22,60031,200
Office Assistants46,00072000
Operations11,60019,200
Maintenance11,50018,000
Total87,500140,400

The key operating personnel needed to sustain the OneCard are:

  • System Technician – directly reporting to the university administrator, the network technical manager will handle the day-to-day operations administration and operation of the network. The website technical manager shall also be responsible for ensuring technical quality control and maintenance duties;
  • Office assistants – will assist the system implementation and management for the university.
  • Operations manager – in charge of management and scheduling of technical staff in various staff members
  • Maintenance- maintenance of the system

The key personnel will be recruited based on their academic and professional experience. Significant weight will be given to their relevant work experience in a related job. Character-wise, the personnel will be evaluated on their ability to handle pressure, work in a fast-paced environment, loyalty and commitment to the university.

Emergency and contingency planning

The insurance would cover the computers, the facilities, the furniture, the office equipment and production equipment, for this OneCard would need backup suppliers to help replace damaged equipment. As for the data and the software that would be on the computers themselves, backing them up in another system would be very helpful when they have to perform a system recovery(Schonberger, 115).

There are several advantages for outsourcing facilities management. The first is that it will help to reduce overhead costs. The reduction of costs from outsourcing will allow OneCard to pay a simple fee to the company in which they are outsourcing the work. Another way it helps reduce the costs is through payroll. Outsourcing is important as it ensures availability of work force and resources at reduced costs.

Another advantage to outsourcing work, they could give better results. A specialist firm that just thrives off the type of work outsourced to them may be able to provide higher quality, faster, or safer services. Furthermore, outsourcing work will increase flexibility in the workplace.

There is a big relationship between productivity and the utilization of resources. With low productivity, there is a low utilization of resources. When you have a high utilization of resources, productivity is at its peak. Lastly, as productivity begins to wane, the utilization of resources is at its peak.

As it applies to most assets, OneCard is only valuable insofar as it could be utilized well to achieve university goals. It involves a critical approach in leveraging available knowledge, and adding its value through profitable management. Perhaps it was for lack of effective utilization of knowledge as a resource that many project fail to achieve their goals.

Recommendation

The financial fore-casting can ensure that the appropriate results are realized from OneCard. The other issue is to do with the software complexity nature which may pose great problems to the university mission. There is the need to have necessary decisions in solving most of these issues that may arise with the OneCard. Once all these recommendations and suggestions have been taken into consideration with future projects, it is likely that it would be possible to come up with newer systems and approaches that can be successfully applied in implementation.

Works cited

Schonberger, Richard. Operations Management – Customer Focused Principles. New York. : Irwin publications, 1997.

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