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Development Expenses

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  • Pages: 5
  • Word count: 1087
  • Category: Economics

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a. The largest
Software costs would likely be the largest expense, since it is custom designed.
b. The most difficult to estimate
The cost feasibility for software development would be difficult to estimate.
c. Not included in Figure 10-28
Security was not included and would need to be addressed. Feasibility is also not covered, which would include the schedule, technical and organizational aspect of the project. 10-7.Which operational expenses are likely to be,

a. The largest
People. The cost of salaries, contractor fees, customer support personnel and training would be the largest expense once the program was up and running. b. The most difficult to estimate

Software. The maintenance and bug fixes always occur when a new program is implemented. Also, healthcare changes in the law might occur and would need to be addressed quickly. c. Not included in Figure 10-28

Security and Privacy are major issues. Healthcare law requirements and privacy concerns would be an important part of the program and need to be addressed.

Considering operational expenses,
a. Which operational costs depend upon the number of doctors and the frequency of their use, and which do not? Depend – Software and People. The software platform for the doctors would have to be easy enough to use in their busy day and still keep up with the patient information that they need. People is another area that would be important since this would include salaries and support staff. Not depend – Procedures. Customer support would probably not be needed by the doctors.

b. Which operational costs depend upon the number of patients and the frequency of their use, and which do not? Depend – Procedures and People.
Patients would need to have access to Procedures for customer support on problem resolution, and People, since patients would also have to been seen for follow-up visits and exercise regimens. Not depend – Data. Patients would not care how their data is stored, only that they have access when they need it.

c. Which operational costs depend upon the number of health club users and the frequency of their use, and which do not? Depend – Software. Health clubs would want a software platform that is easy to use and access. The PRIDE system would have to be developed so that minimal training would be needed to use the platform and also have the information needed to help the customer. Not depend – People. The health club not be involved with the office staff or doctors, so this area would not be a factor for them.

d. How would a potential investor use answers to questions 10-8 a-c for assessing the long-run costs if PRIDE is successful? As seen in the above answers, the Software and People are the most important patient, doctor, and health club facing areas that would be extremely important and probably the most costly. But these areas are the key factors in the PRIDE system. If the system worked well, was easy to use, and had accurate and reliable data, this could be an extremely cost effective way of managing a patient’s recovery and exercise progress. Other areas such as Hardware and Procedures are also important since the PRIDE platform couldn’t run unless the hardware were adequate, and of course, procedures would have to be written for all areas as well as a good training program.

Suppose Dr. Flores has told your investor that he is willing to hire Maggie and other experts as needed to fully investigate any two sources of costs. a. Of the cost sources in Figure 10-28, which two would you choose? Justify your choice. Software and Data would be the most important areas to focus on since these are the key to everything. The software would have to be built so that it is easy to use for internal staff as well as external users. The platforms would have to be designed with the user in mind so that whoever is using it, doctor, patient or health club, it would make sense, and have the correct data. The data would have to be reliable or everyone would lose faith in the system and not use it. Also, since healthcare laws change all the time, the software would have to be adaptable to changes.

b. List and describe criteria you would use for assessing the completeness and accuracy of the response. Make sure that each task was seen through to completion.

Suppose you decide, using data that we do not yet have, that the PRIDE upside potential is large enough to justify the investment risk, if the cost estimates are accurate. They might be quite accurate, but then again, they could be low by a factor of 3 or even 5. How would you advise the investor who hired you? I would tell the investor to use his best judgement. Since I could not be assured of the accuracy of the costs involved in this project, I would be hesitant to offer an opinion on this.

Suppose the investor who hired you tells you that you haven’t done your job if you can’t get closer that a factor of 3 to 5 in your assessment of their cost assessment. How would you respond? There are too many unknown variables involved when developing a customized system to be able to give you a hard cost number. There are always problems that arise that can’t be foreseen until the program is developed and implemented.

Assume that some of the costs are simply not knowable, by anyone, however skilled they are, at the time if the analysis. A good example is the cost of adapting PRIDE software to changes in healthcare law. Did you include any such costs in your answer to questions 10-9? If so, are you wasting Maggie’s time and Dr. Flores’ money by asking questions about them? How would you advise your investor to consider such costs? No, the questions that are asked during the planning and development phase of the SDLC, are very important in designing the platform. The experts, such as Dr. Flores, would know much more about what needs to be addressed by the program than a contract programmer who might not have all the needed information. Changes in healthcare regulations would be one example of an underlying issue that might not be understood by a programmer. So, all aspects of the program need to be thought of and discussed for the program and cost estimates to be more accurate.

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