ACF/ACC2400 Assignment: Building a business case using ROI analysis
Semester 1, 2017
Background to the study and the assignment task
In 2008 San Francisco International Airport (known by its three-letter airport code, SFO) had announced a $383 million plan to renovate and reopen Terminal 2. Assistant deputy director of aviation security Kim Dickie and her team had selected Quantum Secure’s SAFE software suite as the new Terminal 2 credentialing system, but she needed to develop a business case quickly that would substantiate the feasibility of the purchase. Given the time constraints, Kim Dickie decided to outsource the task of developing a business case to an external consultant (You). To facilitate the analysis of Return-on-Investment (ROI) into Quantum Secure’s SAFE software, a junior staff member of your consulting team created a template called ‘ROI_analysis_template.xlsx’.
Your task as a consultant is to use the template prepared by the junior staff member of your consulting team to run ROI analysis, and based on the results, to create a feasibility report that Kim Dickie could present to the senior management of SFO.
Rationale and learning objectives assessed: The purpose of this assignment is to give you practice in developing a business case for senior management, that would provide an independent opinion on whether it is feasible for the company (SFO) to invest in the new product.
In this individual assessment, you will have to show your understanding of how return-on-investment (ROI) calculations work, with an emphasis on identifying incremental effects. You are expected to decide how to use results from similar entities making similar purchasing decisions to estimate the incremental benefit of a proposed solution. To address this goal, you will have to identify and use the best data available in making assumptions. It is important to note that certain decisions in this assessment piece will require your judgement rather than a simple ‘search & input’ exercise. You will the have to substantiate your choices in the report for senior management.
In terms of the learning outcomes shown in the unit guide, this assessment task tests your achievement of all objectives of this unit, i.e.:
Objective1: examine the role of business processes and the use of accounting information systems in capturing and managing information that support the needs of stakeholders; Objective2: analyse and evaluate the design of business processes and accounting information systems;
Objective 3: explain the importance of internal controls and recommend internal controls that cover key business processes and support the achievement of goals; Objective 4: synthesise design principles to develop financial models that assist in decision making (this objective is covered only to a certain extent as you are not supposed to design a financial model per se, but to populate an existing model with the data from the case (sometimes using your judgement) and to use the resulting model for the purposes of analysis and decision making);
Objective 5: apply problem solving and communication skills to analyse, evaluate and interpret accounting data.
1. Determine the correct inputs into the Quantum Secure ROI Calculations Spreadsheet (use the file ROI_analysis_template.xlsx).
2. The cells of the spreadsheet have been protected by the junior member of your consulting team to prevent them from altering the formulas that are set up to streamline calculations. When filling in the spreadsheet, you were advised by the member of your team to focus on inputting those cells with double-line borders and a grey fill. When inputting figures into those cells, they should appear in blue italicised font, you’ve been told, and the green font cells will automatically recalculate based on their inputs. While you are generally happy to follow those rules for the sake of time, and concentrate on ROI calculation based on the material presented in the case, you decide to check the calculations in the logic of the template once again. Hence, before populating the template you run a quick check to notice that while the formulas used to calculate each line of savings seem to be correct and properly implemented, you have certain doubts for the last section of the spreadsheet (raws 59-64). You have a clear sense that something is not quite right in this section of the spreadsheet, so the first thing that you put in your diary is to double-check whether this part of the spreadsheet contains any errors (you will have to do it before moving to the next part of the spreadsheet).
3. After the spreadsheet is checked, you are required to populate the entries into the spreadsheet based on your knowledge of the business case, communicated to you by Kim Dickie. A complete account of the background knowledge available to you can be found by following this link: https://cb.hbsp.harvard.edu/cbmp/pl/62326725/62326727/a530e4987652006ff3b63eb1cff1a09 7
4. Based on the results obtained in your ROI analysis, you are required to produce a feasibility analysis report, structured around the expected labour cost savings, material cost savings, recordkeeping accuracy savings, and increased compliance and compatibility cost savings expected after the Quantum Secure’s SAFE software suite is introduced. The following bottom-line measures (from the spreadsheet) would be also highly useful in making up the business case:
Total Cash Outflows for Purchase Total Savings from Purchase Net Cash Flow from Purchase Discounted Cash Flow from purchase IRR from Purchase NPV of Purchase
Structure of the Feasibility Analysis Report for Senior Management Title page Executive summary Table of contents Purpose Background Assumptions made when conducting ROI analysis Results of the Analysis Recommendations Supplementaries (if any) Reference list (if any references are used) Appendices (if any)
Marks: Criteria for marking*: This assignment is worth 20% of your total marks. A large part of the assignment mark will be attributed for the quality of your analysis performed in the spreadsheet, the ability to substantiate the input choices, and the output results presented in the Feasibility Report for Senior Management. The mark breakdown per high-level tasks (your work on the spreadsheet & the report) is as follows:
Mark breakdown per task Task Marks
A. Spreadsheet review & input
B. Feasibility Analysis Report
C. Bonus Mark** 1 (is not included in the total word count)
Total 20 * See the last section of this document (“Marking rubrics”) for a more detailed outline of the marks. ** See the last of the marking rubrics at the end of this document for more details.
Word limit: Feasibility Report for Senior Management: 1250 words. Please note, going slightly below the word limit (~1100 words) or above the word limit (up to 1500 would not result in any mark reductions).
Please note, only the following sections are included in the word count:
Resources: Case description with the background information: San Francisco International Airport and Quantum Secure’s SAFE for Aviation System https://cb.hbsp.harvard.edu/cbmp/pl/62326725/62326727/a530e4987652006ff3b63eb1cff1a097
The copyright is protected by Harvard Business Publishing, so please do not print, reproduce or share this document (see the copyright clause associated with the product for more details). Q Manual could be used as a useful guide for report writing. http://business.monash.edu/students/study-resources/related/components/qmanual.pdf (please note, Transmittal document will not be required for your submission) Part of the assignment is designed to be completed using Microsoft Excel, which is available in the computer laboratories. Thus, the case is supplemented by a template (ROI_analysis_template.xlsx) of a financial model that you are advised to use for conducting the ROI analysis. The template is located in the Moodle (Assignment 1). It is expected that you complete the model in Excel as well, although you may choose to implement it using other spreadsheet platforms, such as Google Sheets or Open Office Calc. If you decide to do so, please be mindful that most of the teaching staff are only familiar with Excel and so may not be able to provide any meaningful assistance if you choose to attempt the assignment using a competing product.
Submission: Submission is via Moodle on Friday 7 April 5:00pm
To complete the submission process you must upload your assignment file to TWO places using the links in the assessment section of the module:
Step 1 – Upload your Feasibility Report for Senior Management file to Turnitin for an originality check Step 2 – Upload your (a) completed spreadsheet with ROI analysis and (b) Feasibility Report for Senior Management to the submission dropbox for marking purposes.
Step 1 – Originality Check (Turnitin) It is mandatory for you to upload your final assignment file to Turnitin. The university is firmly committed to upholding the highest standards of academic integrity. Upon uploading your file to Turnitin you will be provided with an originality report. This will help you to identify any sections of your work that are inappropriately paraphrased and/or cited and therefore could be deemed as academic misconduct (i.e., plagiarism or collusion). Should you identify any such problematic sections within your submission, these should be rewritten into your own words and the assessment resubmitted to Turnitin for another originality check. You will be able to upload your assignment file to Turnitin multiple times and only your most recent submission will be visible to teaching staff. Note however that you can only generate one originality report per assignment within a 24 hour period . This means your first originality report should be generated within 5-15mins, but if you submit the same assignment again within 24 hours there will be a longer wait (i.e., until at least 24 hours has elapsed from the prior submission). So be sure to submit a draft early if you have concerns about the originality of your work and want to use Turnitin as a learning tool. Refer to the Library Guide on Turnitin (http://guides.lib.monash.edu/turnitin) for information and tutorials relating to academic integrity, along with detailed instructions on how to use the tool and interpret your originality report. Approach your instructor if you have any further questions or concerns about academic integrity.
Step 2 – Submission Dropbox Your final assignment file must be uploaded to the submission dropbox, where you will be prompted to accept the academic integrity statement. The file you submit to the submission dropbox will be your official submission – i.e., this is the submission that will be marked and will be used to identify your submission time. This means:
1. Late penalties will be applied based on the time logged when you submit to the submission dropbox (see unit guide for the details on late penalties).
2. If your assignment is not submitted to the submission dropbox it will not be marked, even if it has been submitted to Turnitin.
Marking rubric for spreadsheet
High Distinction Distinction Credit Pass Unsatisfactory (Fail) Spread- sheet review & input
All errors in the initial template have been identified and corrected.
A concise report documenting the identified errors and the suggested solutions (correct Excel formulae with the proper references) is presented as Appendix of the Feasibility Analysis Report.
All figures inputted into the cells with double-line borders and a grey fill reflect the data presented in the case and/or are based on reasonable assumptions.
Corrected and competed spreadsheet is submitted as a separate document.
The bottom section of the original spreadsheet template (starting from row 59 and below) still has an error which was not fixed. Cash inflows and outflows are appropriately accounted in the case. One or two figures inputted into the cells with double- line borders and a grey fill either do not satisfy the background information presented in the case or are based on highly unrealistic assumptions, given the evidence of the SAFE solution implementation by Toronto Pearson.
Multiple errors are still present in the bottom section of the original spreadsheet template (starting from row 59 and below) Some issues with appropriately accounting for cash inflows and outflows when analysing economic feasibility of the project resulting in unrealistically high or low NVP and IRR figures. Some of the figures inputted into the cells with double- line borders and a grey fill either do not satisfy the background information presented in the case or are based on highly unrealistic assumptions, given the
Meets basic requirements but contains multiple errors and unrealistic assumptions and thus cannot be used as a basis for conducting feasibility analysis without prior correction. Multiple errors in accounting for cash inflows and outflows when analysing economic feasibility of the project resulting in unrealistically high or low NVP and IRR figures. Multiple figures inputted into the cells with double-line borders and a grey fill either do not satisfy the background information presented in the case or are based on highly unrealistic assumptions, given the evidence about the
The updated spreadsheet is missing or most of the figures inputted into the cells with double-line borders and a grey fill are not substantiated by the data presented in the case and/or are not reasonable in the context of the information presented in the case.