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Post Office Counters Ltd
Transaction Information Processing (TIP)
Project
Working Papers for the Interim TIP
Business Case
Author: Paul Uden
Dave Perkins
Approved: Ruth Holleran
Date: 10 October 1996
Document No.
Version: 02
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g{TIP) Project interim TAP Working Papers
Page
Sunk Costs 4
ae 8
Option A
Index 9
Description 10
Summary of Costs and Benefits 10
Benefits 10
Costs 10
Discounted Cash Flow Statement if
Option B
Index 2
Description 13
Benefits 13
Casts 14
Discounted Cash Flow Statement 15
Option C
index 16
sscripti 17
Summary.of Cosis and Benefits 7
Benefits 17
Casis at
Discounted Cash Flow Statement 22
Option D
Index 23
Descripti 34
Summary of Costs and Benefits 24
Benefits 24
Costs 28
Discounted Cash Flow Statement 30
Alternative Platform 31
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‘Transaction Infomation Processing (TIP) Project, terion TIP Working Pagers
Ady: Fundin, 2
Index 32
Option A 33
Option B 34
Option C 36
Qption D 38
Concurrences
‘Transaction Information Processing (TIP) Project .Anierin TIP Working Papers
SUNK COSTS
The Project has incurred sunk costs to the 13 November 1996 as follows:
ho
Prior to the Prototype Phase
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829.0
Prototype Phase
1547.8
Total Sunk Costs
2376. 8
a 2
‘The sunk costs prior to the Prototype phase are stated on the current MaPEC authority P3461
serial no. 30689 as £829.0k non-recoverabie.
Prototype Phase
The costs of the Prototype Phase to 13 November 1996 (based on a Project cost forecast
made on 3 October 1996) are £1547.8k.
Revenue
POCL Staff 333.7
External Staff 945.7
it 169.9
Other Non-Staff ABS
TOTAL 1547.8
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‘Transaction Information Processing (TIP) Project Interien TIP Working Papers
Summary of Options
tome how w/
‘The following table gives «brief outline ofthe four options for consideration:- frp reyatsd
: B & outline of the pti : AU cor” queued
ov
awy
CTP. BES Development
An alternative (CTP) development to provide a bespoke
interface directly into CBDB for automated benefits
encashment data only and retain cash account for all other
transactions.
Net (Cost) - (£215.0k)
I interface directly into CBDB for automated benefits
TIP.BES Development
An alternative TIP development to provide a bespoke
encashment data only and retain cash account for all other
transactions.
Net Cost/Benefit -Nil
TIP BES & Cash Account Development
A TIP development to provide a bespoke interface directly
into CBDB for cash account data and automated benefits
encashment data,
Net Benefit - £72.9k
A TIP development to provide a bespoke interface directly
into CBDB that is based on receiving detailed transaction
level data from Pathway.
Net Cost - £(66.4k)
Keys:
CTP - Client Transaction Processing (Processing Systems Transition Team)
CBDB - Counters Business Database
BES - Benefits Encashment System {a part of the Paihway system)
TIP - Transaction Information Processing
PATHWAY - Private Finance Initiative Consortium developing the outlet system.
P Beveloping BES System ‘apiial
A Development 35.0
Database conversion 20.0
Staff Costs 45.0
Data Collection &
Operational Testing 50.0
Software Maintenance 20.0
215.0 (215.0)
TIP BES Development [TTF Developing BES System 822 I POCL Stat 366
B External Staff 120.3
System Support Costs 169
Non-Staff 83
182.2 182.2 oe)
TIP BES and Cast: 1. TIP Developing BES System 182.2 I POCL Staff 59.4
c Accaunt Development I 2. Cash Account Keying 150.4 I External Staff 195.6
3. Cash Account Processing Resource 36.6 I System Support Costs 275
Non-Staff 13.6
369.2 296.1 79
FP Inierim TTP Developing BES System 182.7) POC Saif oS
D Development 2 Cash Account Keying 150.4 I External Staff 300.9
3Cash Account Processing Resource 36.6 I Systems Support Costs 42.3
4.Client Benefits 20.0 I Non-Staff 20.9
389.2 455.4 (66.4)
6
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Transuctinn Information Processing (TI) Project Interim TIP Working Papers:
SU
182.2
System
2. Cash Account Keying 150.4 150.4
3 Gash “Account Processing 36.6 36.6
Resource
4, Client Benefits 20.0
TOTAL NIL 182.2 369.2 389.2
wip reference 10 13 Ww 24
1. This benefit is generated as a result of if being a minimum requirement to take Benefits
Agency encashment (BES) data only from the Pathway system and process if to enable the
reconciliation of automated transactions for settlement to the client until Full TIP is
implemented. i.e. at least either Option A or Option B have to be adopted.
Because of this minimum requirement each option avoids the cost of doing one or other of
these two options as an alternative solution.
2. These benefits arise from there being a decreasing need to key Cash Accounts in the Data
Processing Unit (DPU) as the Pathway system rolls out,
They have been calculated based on the total DPU staff cost adjusted for the proportion of
key depressions devoted to Cash Accounts.
3. If there are less Cash Accounts then these will neither need to prepared for the DPU
tinised, ‘phone copies taken and batched) nor amalgamated and filed afterwards.
4, The client benefit arises from the Department of National Savings (DNS) requirement to
receive transaction level data from September 1997. Without a TIP solution the files would
have to transferred to the DNS direct from Pathway. The estimated cost of doing this has
been included as avoided Pathway development cost based on 22m DNS transaction per year.
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Transaction Information Processing (TIP) Projes Imerim. TIP Working Papers
Sammary_of Costs
UL Capital 45.0
2, POCL Staff % 150.0 36.6 59.4 9LS
3. External Staff 120.3 195.6 300.9
4. System Support 20,0 16.9 27.5 42.3
5. Non-Staff 8.3 13.6 20.9
TOTAL 215.0 182.1 26. 5.4
wip reference 10 13 21,22 28,29
1. Capital costs are attributable to the acquisition of a server on which to run the CTP BES
development, There are no capital costs for Options B - D which run on the iP mainframe.
2. POCL staff are required to manage the project, manage the interfaces, develop the system
and test the development.
3. External Staff are being used from both iT and Sema to ensure the partnership
relationships with these suppliers and the transfer of relevant skills. They will work together
on project management, analysis and design, development, testing, operational testing and
ongoing system maintenance.
4. System Support costs are related to the ongoing costs of operating the developed system
such as service support, contingency and disaster recovery.
5, Non-Staff costs are related to the requirements of the POCL staff.
* ‘The breakdown of these soft casts between POCL staff, External staff and other non-
staff has not been fully defined on this option.
‘Trmtsaction Information Processing (TIP) Projec:
Interim TIP Working Rapers
OPTION A_INDEX
Description
Summary of Costs and Benefits
Benefits
Cost Avoidance of TIP Developing BES System
Costs
Discounted Cash Flow Statement
PAGE
10
10
10
il
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‘Transaction Information Processing (TIED Braiect inverim TIP Working Paper
OPTION A
An altemative CTP development to provide a bespoke interface directly into CBDB for
automated benefits encashment data only and retain cash account for all other transactions.
1. TIP Developing BES System 0.18 I Capital 10
Development i6
Database Conversion iG
Staff Cosis 16
Data Collection & Operational Testing 16
Software Maintenance 16
TOTAL t
Benefits
There are no benefits associated with this option.
Costs
A system is currently being developed within CTP to process automated transaction data for
the Pathway Initial Go-Live (IGL) . These costs represent those to extend and operate the
system to support the Pathway roll out beyond IGL. The costs of the CTP development
assume that negligible capital cost will be incurred for the IGL release. Thereafter a server
would be required and the datahase would have to converted from an Access to a SQL
version to expand the capacity of the system beyond IGL,
They are based on the Project Initiation Document (PID) for the CTP BES project.
Additional c have been included by the TIP Project Team as soft estimates for data
collection (e.g. comms, routing), operational testing and software maintenance which were
not costed in the PID.
Capital 45.0
Development 35.0
Database Conversion 20.0
Staff Costs 45.0
Data Collection & Operational Testing 50.0
Software Maintenance 20.0
Total 215.0
10
The following DCF statement shows how this option affects the overall TIP Project which
originally revealed a Net Present Value of (£22k).
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Capital “BOE. SAE 28ST 5 ks “RA 10535
Reverse “48.8 [BSSL ST S.a SID I BBS I SEIS I BG01 8
Cost Adjusimenis
Capital “45.8
evelopment 8
Database Conversion “20.8
Staif Costs "45.8
Data Collection & Op, Tet 308
Sofiwate Maintenance “285
Nei Adjusted Cash Flow BEE FET I SEE SFT I GRGT I ROL I GFE [STS
NPV Gd AEIGL I SSE) BRST [SES ATES [3860.2 Sate I 4122.
Gunmilative NEV ES “ig30.1 I 7675.1 I 161388) 1579.9 I TistLT I 7750.9 I 4334.9 I 2185
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Transaction Information Processing (TIPS Profes interim TIP Working Papers
OPTION B_ INDEX RAGE
Description 13
Suramary.of Costs and Benefits 13
Benefits 13
Cost Avoidance of TIP Developing BES System 13
Costs 14
POCL Staff 14
External Staff 14
System Support Costs 14
Non-Staff Costs 15
Discounted Cash Flow Statement 15
12
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OPTION B
TIP. BES DEVELOPMENT.
A TIP development to provide a bespoke interface directly into CBDB for automated benefits
encashment data only and retain cash aceount for all other transactions.
Summary.of Costs and Benefits
External Staff EEC)
System Support Costs oT ta
Non-Staff WA AS
TOTAL 182.2
Benefits
ai
External Staff
System Support Costs 16.9
Non-Staff 8.3
TOTAL 182.2
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Transaction Information Processing (TIP) Project tntterim TIP Working Papers
Costs
As mentioned previously these costs represent 40% of the totals in Option D.
POCL Staff
Project Manager BPC8 1 769 23 19 3400
Testing Manager BPCO 1 606 23 80 11200
Interface Manager BPCo i 606 23 34 4800
Development Manager CMI 1 526 23 23 2800
Analysts CM2 2 A0T 23 77 14400
Total 36600
External Staff
‘These costs are based on competitive quotes obtained from iT.
i Management : : 12.2
Familiarisation 28
Analysis and Design 58
Development 270
Test 15.4
Operational Test 13,7
Maintenance 3h4
Consultancy 12.0
Total External Staff i 120.3
These costs are based on a quote obtained from iT and are the costs of running the system
once it goes live excluding maintenance costs which are included in the staff costs above.
These costs are based on volume of system usage.
ppo
Contingency
Disaster Recovery
Total System Support 16.9
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Non-Staff Costs
The non-staff cost forecasts are based on typical levels of expenditure for the number of staff.
The figures represent 40% of the nan staff totals for Option D.
Training Aids/Grants 1600
Reward & Recognition 70
Computer Hardware 140
Computer Software 1800
Furniture/Fittings Maintenance i?5
Telephone Rental 185
Print & Stationery SiS
Travei & Subsistence 3529
Hospitality 490
Miscellaneous Other 40
Total 8344
Discounted Cash Flow for Option B
‘The following DCF statement shows how this option affects the overall TIP Project which
originally revealed a Net Present Value of (£22k).
Discount Rate
Capital 255.0 2505.4 2045.0 +225,0 z 33.0 “68.47 1052.5
Revenue “HV731 A880 85519 799.4 6535.9 I 6835.9 I 6810.9 I BO6LO
Lost Adigatments
POCL Staff 226.6 32.9
External Staff A203 108.3.
‘System Support “16.9
Benelit Adiustments:
~ POCL Staff, 36.6 “32.9
~ External Staff, 1203 108.3
- System Support 16.9
Net Adjusted Cash Flow “P2501 “T0234 I -10896.8 5744 64BO9 (68O29 I 6742.6 I OTIS
NPV EW “3250.1 “C219 I B87 7 AGES SUBS [3860.2 I 3416.0 I ata 5
Cumulative NPV GR) “3230.1 FSGS I TS94E FP “15539.8 [TAZ [7560.9 dis 9 BIS
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Transaction Information Processing (TIP) Project Interim TIP Working Papers
OPTION C_INDEX PAGE
Deseription 17
Summary of Costs and Benefits 7
Benefits 17
Cost Avoidance of CTP Developing BES System 17
Cash Account Keying 17
Cash Account Processing Resource 19
Costs 2
POCL Staff val
External Staff 21
System Support Costs 2h
Non-Staff Costs 22
Discounted Cash Flow Statement 22
16
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Transaction Information Processing (LIP) Project
OPTION C
A TIP development to provide a bespoke interface directly into CBDB that is based on
receiving detailed transaction level data from Pathway.
Summary. of Costs and Benefits
1. TIP Developing BES System POCL Staff :
2. Cash Account Keying 150.4 I 17 ‘Exeral Staff 195.6 I 2i
3. Cash Account Processing Resource 366 I 18 System Support Casts 233i
Non-Suaft 136 I 22
TOTAL 369.2 296.4
Benefits
Cost avoidance of TIP Developing BES System
POCL St
_ External Staff
System Support Costs
Non-Staff
TOTAL
Cash Account Keying.
The cost per Cash Account of keying is based on the fact that 73% of key depressions in the
Data Processing Unit are Cash Account related. The total staffing cost of the DPU including
the relatively high proportion of agency labour was £332,231 in the quarter April - June 1996
when 205939 Cash Accounts were keyed. This equates to a cost of £1.18 per Cash Account.
Example
In week ending 09/11/97 a total of 6111 office cash accounts are planned to be automated
which will result in a processing saving cost of £7197 (at £1.18 per Cash Account.)
16/03/97 94
23/0397 126 id]
30/03/97 160 188
6/0497 200 236
17
‘Transaction Information Processing (TIP) Proje:
Interim TEP Working Papers
13/04/97 200 236
20/04/97 200 236
27104197 200 236
84/05/97 200 236
11/05/97 200 236
18/25/97 200 236
25/05/97 200 236
01/06/97 260 236
08/06/97 457 538
15/067 714 841
22/06/97 O71 1144
29/06/97 1228 1446
06/07/97 1485 1749
1307/97 1742 2052
20/07/97 1999 2354
2107/97 2256 2657
03/08/97 2513 2959
10/08/97 770 3262
17/08/97 3027 3565
2408/97 3284 3867
31/08/97 3541 4170
7/09/97 3798 A473
14/09/97 4055 4775
21/09/97 4312 3078
28/09/97 A569 S381
OS5/10/97 4826 5683
12/10/97 5083 5986
19/0/97 5340 6289
26/10/97 5597 6591
OZAL97 5854 6894
O9/1/97 6lll 7197
16/11/97 6368 7499
23/11/97 6625 7802
30/1/97 6882 8105
O7/2ZA7 Fi39 8407
14/12/97 7396 8710
21297 7653 9013
28/1297 7910 9315
Total 150396
18
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There are costs associated with paper Cash Accounts, i.e. resource required to prepare
manual Cash Accounts for the Data Processing Unit (DPU), namely scrutiny, batching and
the obtaining of telephone copies if Cash Accounts are missing, Following the keying there is
a further process to amalgamate Cash Accounts to produce period data and the filing. These
processes occupy an element of Postal Assistant resource within Client Transaction
Processing.
Three CTP Regional Cash Account teams deemed to give a fair representation .NT and East
AngliaSSWW and NE were used to obtain the processing costs utilised in the table. The
costings were derived by taking staff costs applicable to the above work during the period
April to June 1996 inc. and dividing it by the volume of work carried out to arrive at a cost
per account of 0.29p.
Example
In week ending 09/11/97 a total of 6111 office cash accounts are planned to be automated
which will result in a processing saving cost of £1753 (at £0.29 per Cash Account.)
16/03/97 23
23/03/97 120 34
30/03/97 160 46
06/04/97 200 57
13/04/97 200 57
20/04/97 200 57
27/0497 200 57
04/05/97 200 57
11/05/97 200 57
18/2597 200 57
25/05/97 200 37
01/06/97 260 57
08/06/97 457 131
15/06/97 74 205
22/06/97 97h 279
29/06/97 1228 352
06/07/97 1485 A26
13/07/97 1742 500
20/07/97 1999 573
27/07/97 2256 647
O308/97 2513 72h
10A 2770 795
17/08/97 3027 868
24/08/97 3284 942
31/0897 3541 1016
O7709/97 3798 1089
14/09/97 4055 1163
21/09/97 Ecir4 1237
19
‘Transaction Information Processing (TIP) Prefect Interim TIP Working Rapers
28/09/97 4569 i311
05/1087 4826 1384
12/10/97 5083 1458
19087 5340 1532
26/10/97 5597 1606
297 5854 1679
9/11/97 61 1753
16/97 6368 1827
23/1197 1900
30/11/97 1974
O71 2/97 2048
14/12/97 2122
21297 2195
28/12/97 2269
Total 36629
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‘Transaction Information Processing (TIP) Project.
Costs
Costs for this option are estimated to be 65% of Option D.
ROCK Staff
Luerim TIP Working Papers
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Project Manager BPCS 1 769 23 31 5500
Testing Manager BPCO 2 606 23 65 18100
Interface Manager BPC9 1 606 23 87 7900
Development Manager CMI 1 526 23 37 4500
Analysts CM2 3 407 23 83 23400
Total 59400
‘These costs are based on competitive quotes obtained from iT.
Project Management .
Familiarisation 4.6
Analysis and Design OA
Development 43.9
Test 25.0
Operational Test 22.2
Maintenance S12
Consultancy 19.5
Total External Staff 195.6
‘These costs are based on a quote obtained from iT and are the costs of running the system
once it goes live excluding maintenance costs which are included in the staff costs above.
Costs are based on the volume of system usage.
Service Support
Contingency 14,2
Disaster Recovery Lo
Total System Support 27.5 I
ai
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‘Transaction Information Processing (TIP} Project, Interim TIP Working Papers
Non-Staff Costs
The non-staff cost forecasts are based on typical levels of expenditure for the number of staff
invelved
Training Aids/Granis 2600
Reward & Recognition Lid
Computer Hardware 228
Computer Software 2925
Furniture/Fittings Maintenance 285
Telephone Rental 300
Print & Stationery S11
Travel & Subsistence 3734
Hospitality 798
Miscellaneous Other 65
Total 13560
Discounted Cash Flow for Option C
The following DCF statement shows how this option affects the overall TIP Project which
originally revealed a Net Present Value of (£22k).
Discount Rate
rigingl TP RectsPaymis
Capital 550 2805.4 ~2045,0 225.0 55.0 “330
Revenue TST Aa RSET SG. 8535. I BBISS
Sasi Adasen
POCL Staff 594 53.6 j
External Staff 195.6 176.04
System Soppart L378
‘Benelli Adiusmenis ;
= BOCE Siatf 366 329
~ External Staff, 120.3 108.3
7 System Support 16s
Cash Account Keyin; 150.4
Cash Account Processing 466
i
Net Adjusted Cash Flow 1712305 “F215 I 103311 574.4 6480.9 6802.9 6742.6 SUGS
NPV (fk) 1236.4 8358.5 -8235,9 A08.9 4TiB.B 3860.2 3416.0 4122.5
Cumulative NPV (oko 12304 ~7588.6 I -15824.5 I -15415.6 I -14296.9 I -7436,7 I -4020.1 10.8
22
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‘Transaction Information Processing (TYP) Project Interim TEP Working Papers
Description 24
Benefits 24
Cost Avoidance of TIP Developing BES System 24
Cash Account Keying 24
Cash Account Processing Resource 26
Client benefits 27
Costs 28
POCL Staff 28
External Staff 29
System Support Costs 29
Non-Staff Costs 29
Discounted Cash Flow Statement 30
23
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BISIB “9B 17202 FAX 91248 218252 TIP pRoaRcT Bonz
The following DCF statement shows bow this option affects the overall TIP Project which
originally had a Net Present Value of (£22k),
‘98/9 1996/97
: e
0.8929 V O7972 I O78
“s ie
ck en Ek) Baa I ao Ra TSS
“4418.0 [8581S [755.4 BIS] G85 I RIGS BOSLS
824
Extemal Sai? (US, 27584
Non Staff ig.at
‘Systern Support. az Tt
Benxlit Adjasiments it
~ POCL Stalf 386 ag
External Steff T2035 2108.3
~ System Support i 6s)
Cash Account Keying “ mc ed ~
Gash Aceawal Processing EXSMICAE eer. SB Odeneks)
Client Benefits ee
‘Net Adjusted Cash Flow iG [Pas teres area S481. I 88S B7aeo [STS
LRBY (Eh) 1712365 6493.4 8125.0 408.9 AEBS I 3860.27 34t6.0 7 4t22 5
Cumulative NPV ES) SME) “FIORE I TSRAFS I 154366 I “TT319.8 I 7458.6 [403.7
¢ a
+o f A ‘4
x ad wilamte TE ane ey ol
is
36
31/10 196 17:06 TR/BX NO. 1283 P.002 Pd
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‘Transaction Information Processing (TIP) Project Interns TIP Working Papers
OPTION D
A TIP development to provide a bespoke interface directly into CBDB that is based on
receiving detailed transaction level data from Pathway.
Summary.of Costs and Henefits
St
2. Cash Account Keying 150.4 I 34 Extemal Staff 39 TBS
3 Gash Account Processing Resource 366 I 3 System Suppor Costs se5 [RB
4. Client Benefits 36.5 37 Now Staff STS
TOTAL 3B. B56
External Staff 120.3
System Support Cosis 16.9
Non-Staff 8.3
TOTAL 182.2
Cash Ac Kevi
The cost per Cash Account of keying is based on the fact that 73% of key depressions in the
Data Processing Unit are Cash Account related. The total staffing cost of the DPU including
the relatively high proportion of agency labour was £332,231 in the quarter April ~ June 1996
when 205939 Cash Accounts were keyed. This equates to a cost of £1.18 per Cash Account,
Example
In week ending 09/11/97 a total of 6111 office cash accounts are planned to be automated
which will result in a processing saving cost of £7197 (at £1.18 per Cash Account.)
09/03/97 40 47
16/0307 86 94
230307 1207 Tai
300307 160 iss
06/0497 200 26
13/0407 260 236
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‘Transaction Information Processing (TIP) Project, Anserim. TP Working Papers
20/04/97 36
26497 200 236
04/0597 260 236
110597 200 236
18725597 300 336
25057 200 236
OTO687 300 236
08/0697 457 538
130697 7ia Bai
220697 O77 Tiad
290697 1238 er
080797 1485 1749
130707 1742 2052
20/07/97 1959 2354
270797 3256 3657
030897 3513 3939
100887 2770 3263
TPOBNF 3027 3565
240897 3284 3867
3170897 354i 4176
OFDSN7 3798 4473
LSAT 4055 a775
210997 432 5078
280597 i 4569 5381
08/087 4826 5683
i207 5083 5986
19/10/97 / 3340 6289
26CAT I 5597 6591
0217 5854 6894
OAIA7 iil 7157
i687 6368 7499
23/1197 6625 7802
30/1197 8882 8105
OTAZ87 7139 8407
T4207 7396 8710
2AZ67 7653 9013
BABA 7910 9315
Total 130356
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There are costs associated with paper Cash Accounts, i.e. resource required to prepare
manual Cash Accounts for the Data Processing Unit (DPU), namely scrutiny, batching and
the obtaining of telephone copies if Cash Accounts are missing. Following the keying there is
a further process to amalgamate Cash Accounts to produce period data and the filing. These
processes occupy an element of Postal Assistant resource within Client Transaction
Processing.
Three CTP Regional Cash Account teams deemed to give a fair representation NT and East
Anglia,SWW and NE were used to obtain the processing costs utilised in the Table. The
costings were derived by taking staff costs applicable to the above work during the period
April to June 1996 ine. and dividing it by the volume of work carried out to arrive at a cost
per account of 0.29p.
Example
In week ending 09/11/97 a total of 6111 office cash accounts are planned to be automated
which will result in a processing saving cost of £1753 {at £0.29 per Cash Account.)
03/
16/03/97
23/03/97
30/0397
06/04/97
13/04/97
20/04/97
270497
04/05/97
11/05/97
18/25/97
25/05/97
0106/97
08/06/97
1506/97
22/06/97
2906/97
06/07/97
13/07/97
2007/97
2007/97
03/08/97
1G/08/97
1708/97
24/0897
3108/97
79/97
14/09/97
21997
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“Transaction Information Processing (TIP) Project Inwerim TIP Working Papers
28/09/97 4569 13th
05/10/97 A826 1384
12/10/97 5083 1458
19/10/07 5340 1532
26/10/97 5597 1606
OZAL/97 5854 1679
D8/11/97 oll 1753
16/1107 6368 1827
23/11/97 6625 1900
30/11/97 6882 1974
07207 F139 2048
14/12/97 7396 2122
21/12/97 7653 2195
28/12/97 FAO 2269
Total 36629
Client Benefit
‘The client benefit arises from the Department of National Savings (DNS) requirement to
receive transaction level data fram September 1997. Without a TIP solution the files would
have to transferred to the DNS direct from Pathway. The estimated cost of doing this has
been included as avoided Pathway development cost.
‘The formula provided by the Automation Development Team (ADT) is:
No. of transactions * Scorecard weighting for link to clients * Price per service point
22m * 1 * 0.265 = £58300 per year
or £20000 (September to December 1997) ie £58300 * 4/12.
Pathway would not wish to establish links to a client for such a short time and may therefore
seek an additional one-off charge to cover set up costs if they did not see the transaction
related charge covering their investment.
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‘Transaction Information Processing (TIP) Proiect, interim TIP Working Papers
Costs
ROCL Staff
The POCL staff costs are based on the formation of a discrete POCL team devoted to Interim
TIP although it will not occupy 100% of all their time as shown in Table 2. The period of
work will run from mid-November to the end of April 1997. The staff numbers include four
temporary CM2 recruits te the project in addition to current template. The staff rates have
from been derived from information obtained from the POCL Finance Executive
Management Accounts.
l L 3 Z
_ Testing Manager BPC9 i 606 23 100 27861
“Interface Manager BPCo 1 606 23 50 6969
Development Manager CMI i 526 23 100 12098
Analysts MZ 4 407 23 0037448
_TOTAL 91450
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External Staff
These costs are based on competitive quotes obtained from iT.
Familiarisation aa
Analysis and Design 14.4 I
Development 67.6
Test 38.5
Operational Test 34.2
Maintenance 78.7
Consultancy 30.0
Total External Staff 300.9
System Support Costs
‘These costs are based on a quote obtained from iT and are the costs of running the system:
once it goes live excluding maintenance costs which are included in the staff costs above.
Cosis are based on the volume of system usage.
I Service Support
I Contingency 218
Disaster Recovery 3.8
Total System Support 42.3
The non-staff cost forecasts are based on typical levels of expenditure for the number of staff
involved.
Training Aids/Grants 4000
Reward & Recognition 175
Computer Hardware 350
Computer Software 4500
Furniture/Fittings Maintenance 438
Telephone Rental 462
Print & Stationery 787
Travel & Subsistence 8822
Hospitality 1227
Miscellaneous Other 100
Total 20861
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Transaction Information Processing {TH Project. sinner TP Working Papers
Discounted Cash Flow for Option D
The following DCF statement shows how this option affects the overall TIP Project which
originally revealed a Net Present Value of (£22k).
Discount Rate
Grginal TP Reina
Capital BSG) 2605.4 [2045.0 2250 “35.0 33.6 ~68.4 I 1652.5
Revenue “TT7ST “ASRS [BESTS 794 6535.9 I 6835.9 I 6810.9 I 8061.0
Cost Adiusiments
POCL Stat STS a24
‘External Stalf 3009 [276.84
System Support “A23
Benefit Adjustments
POCL Staff 36.6 329
+ Extemal Staff. 120.3 -108.3
~ System Support 165
Cash Account Keying 10.4
Cash Account Processing 36.6
[Client Benefits 2.0
i
CNet Adjusted Cash Flow “12307 =7258.9 I -16203.3 5744 6480.9 I 0802.9 I 8742.6 I 9113S
NPV iid “1230.1 “6481.2 I 8134.0 408.9 AUIBS I 3860.2 I 3416.0 [41225
Camulative NPV (Bo AZ301 TALS 15845.2 I -15436.4 FASTA I -AD4.S Bia
f
slepe ee
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Transaction Information Processing (TIP) Prnject, watiigrin TIP Working Papers
Consideration was given to the implementation of the TIP solutions on an alternative Hewlett
Packard (HP) hardware platform. This is initially attractive as there would be less conversion
work to achieve a production system from the prototype constructed on the same platform.
The development would therefore be lower risk. However there are a number of
disadvantages in a mid range solution:
© the acquisition of an HP platform is likely to involve capital expenditure which may be
non-recoverable in Pull TIP implementation;
* hardware leasing over a 9-12 month period equates to purchase price although it may be
possible to negotiate purchase against a guaranteed trade-in for future HP purchase within
POCL. This is a high probability, but the expenditure remains at risk and the process
would be difficult to control between individual projects;
« the total HP capital expenditure and the associated support costs would be required
regardless of the timing, duration or volume throughput of the Interim System. This is not
the case with the mainframe which is pro rata to the data volume;
* the overall cast of the midrange solution for the preferred option is £155.6k allowing for a
40% recovery on a trade-in value compared with the cost of the mainframe solution
which is £42.3k (see working paper ).
Operational Acceptance
Decommissioning i 28
Hardware (including HP suppor) 106.0
Service Support 51.0
Data Transfer 5.0
Disaster Recovery 10.0
Total Cost t 198.0
Hardware Trade In @ 40% 42.4
Net Cost 155.6
These costs are based on a competitive quote,
3k
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Transaction Information Processing {TIP} Project owned itesin TE Working Papers
Option A 33
Staff 33
Non-Staff 33
Option B 34
Staff 34
Non-Staff 35
Option 36
Staff 36
Non-Staff 36
Option D 38
Staff 38
Non-Staff 38
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Transaction Information Processing (TIP) Price tte TP Working Papers:
Option. A
In order to maintain the TIP Project Team prior to authorisation of Full TIP advance funding
of £338.3k is required as follows:
Staff 170,9 I 33
Non Staff 167.4 I 33
Total 338.3
Staff
The remaining POCL staff are being retained to work on preparing and issuing the Full TIP
Invitation To Tender. They will be required until] Post Office Board approval is obtained for
Full TIP (currently planned to be April 1997) when they will start work on the development
of Full TIP.
Project Controller CPC 1 909 17
Project Managers BPC8 2 769 17
Development Managers I BPC9 4 606 V7
Business Development I BPC I 3 606 7
Managers I
Business Analysts CMI 5 526 17 44710 I
Financial Analyst CM2 1 407 WZ 6919 I
Personal Secretary P/Sec i 324 V7 5508
Total 170850 I
There are non-staff costs associated with retaining the POCL staff above. These have been
based on expenditure rates to date with adjustments for the number of staff involved and any
specific one-off items not required again.
I Removal Expenses 2480
I Training Aids/Grants 8000
I Reward & Recognition 238
Office Equipment Maintenance 820
Computer Hardware 1550
Computer Software 7500
Furniture/Fittings 600
Furnitere/Fittings Maintenance LB
Telephone Rental 2035
Telephone Purchase 120
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‘Transaction Information Processing (TIP) Beolect,
Interim TIP Working Papers
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Print & Stationery 2011
Travel & Subsistence 22570
Imprests 1006
Contractors 30000
Hospitality —— 3135
Miscellaneous Other 1000
iT 56627
Intra Business (Recharge) 21344
Market Rent 5026
Training & DG 250
Total 167424
Option B
In order to maintain the TIP Project Team prior
of £377.2k is required as follows:
to authorisation of Full TIP advance funding
Staff 54.4 I:
Non Staff 159.1 35
TOTAL 313.5 I
Staff
The remaining POCL. staff are being retained to work on preparing and issuing the Full TIP
Invitation To Tender. They will be required until Post Office Board approval is obtained for
Full TIP (currently planned to be April 1997) when they will start work on the development
of Full TEP.
The costs have been calculated as the full cost of retaining the Project team from January to
April (17 weeks) fess the cost of the staff working on the interim TIP option (where
relevant).
For example:
Part of the BPC8 time is occupied managing Option B, quantified as £3400 for the 23 week
period from mid-November to the end of April (wip 14). £2516 of that cost (Le.
£3400*17/23) is attributable to Option B during the period January to April and is therefore
not included in the BPC8 brought forward Full TIP funding required for Option B, the
calculation being (2769717) -£2516 = £23630 shown below,
Project Controller CPC 1 I 5
Project Managers BPC8 2 769 17 (2516) 23630
Development Managers I BPC9 4 606 Ww (11840) 29368
Business Development I BPC? 3 606 7 30906
Managers
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‘Transaction Information Processing (TIP) Project, Intexime TIP Working Papers
Business Analysts CMI 5 526 We (2072) 42638
CM2 i 407 17 6919
Personal Secretary P/Sec 1 324 17 5508
Total L (16428) I 154422
Non Staff
There are non-staff costs associated with retaining the POCL staff above. These have been
based on expenditure rates to date with adjustments for the number of staff involved and any
specific one-off items not required again,
2480
Training Aids/Grants 6400
Reward & Recognition 168
Office Equipment Maintenance 820
Computer Hardware 1410
_ Computer Software 5700
I Purniture/Pintiags 600
Furniture/Fittings Maintenance 943
Telephone Rental 1850
Telephone Purchase 120
Print & Stationery 1696
Travel & Subsistence 19041
Imprests 1000
Contractors 30000
Hospitality 2645
Miscellaneous Other 960
iT 56627
Intra Business (Recharge) 21344
Market Rent 5026
Training & DG 250
Total 159080
‘Transaction Information Processing (TIP) Project nseeion TEP Werking Papers
Option C
In order to maintain the TIP Project Team prior to authorisation of Full TIP advance funding
of £298. 1k is required as follows:
I Suff
_ Non Staff 153.9
i Total 298.1
Staff
‘The remaining POCL staff are being retained to work on preparing and issuing the Full TIP
Invitation To Tender. They will be required until Post Office Board approval is obtained for
Full TIP (currently planned to be April 1997) when they will start work on the development
of Full TIP.
The costs have been calculated as the full cost of retaining the Project team from January to
April (17 weeks) less the cost of the staff working on the interim TIP option (where
relevant).
For example:
Part of the BPCS time is occupied managing Option C, quantified as £5500 for the 23 week
period from mid-November to the end of April (w/p 21). £4070 of that cost Ge.
£5500*17/23) is attributable to Option C during the period January to April and is therefore
not included in the BPC8 brought forward Full TIP funding required for Option C, the
calculation being (2*769*17) -£4070 = £22076 shown below.
3
Project Managers BPCS 2 769 (4070) 22876
Development Managers I BPC9 4 606 VW (19240) 21968
Business Development) BPC? 3 606 17 30906
Managers
Business Analysts CM1 $ 526 17 (3330) 44380
Financial Analyst CM2 1 407 VF 6919
Personal Secretary PiSec 1 324 17 5508
Total {26640} 144210
Non Staff
There are non-staff costs associated with retaining the POCL staff above. These have been
based on expenditure rates to date with adjustments for the number of staff involved and any
specific one-off items not required again,
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Transaction Information Processing (TIP) Praject I nterinn TIP Working Papers
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Removal Expenses 2480
Training Aids/Grants 5400
Reward & Recognition 124
Office Equipment Maintenance 820
Computer Hardware 1322
Computer Software A575
Furniture/Fittings 600
Furniture/Fittings Maintenance 833
Telephone Rental 1735
Telephone Purchase 120
Print & Stationery 1500
Travel & Subsistence 16836
Imprests 1900
Contractors 30000
Hospitality 2337
Miscellaneous Other 935
iT 56627
intra Business (Recharge) 21344
Market Rent 5026
Training & DG 250
_ Total 153864
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‘Transaction Information Processing (TIP) Project Entering TIP Working Papers
Option.D
In order to maintain the TIP Project Team prior to authorisation of Full TIP advance funding
of £277.5k is required as follows:
Staff
Non Staff 6 I 38
Total
Staff
The remaining POCL staff are being retained to work on preparing and issuing the Full TIP
Invitation To Tender. They will be required until Post Office Board approval is obtained for
Full TIP (currently planned to be April 1997) when they will start work on the development
of Full TIP.
The costs have been calculated as the full cost of retaining the Project team from January to
April (17 weeks) less the cost of the staff working on the interim TIP option (where
relevant).
For example:
Part of the BPCS8 time is occupied managing Option D, quantified as £7074 for the 23 week
period from mid-November to the end of April (w/p 28). £5230 of that cost (ie.
£7074*1.7/23) is attributable to Option D during the period January to April and is therefore
not included in the BPC8 brought forward Full TIP funding required for Option D, the
calculation being (2*769*17) -£5230 = £20916 shown below,
‘i
Project Managers 230) 20916
Development Managers I BPC9 4 (25744) 15464
Business Development) BPC9 3 30906
Managers
Business Analysts CMI 5 526 i? (8942) 35768
Financial Analyst CM2 i 407 7 6919
Personal Secretary PSec i 324 1? 5508
TOTAL i (39916) 130934
Non Staff
There are non-staff costs associated with retaining the POCL staff above. These have been
based on expenditure rates to date with adjustments for the number of staff involved and any
specific one-off items not required again.
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‘Transaction Information Processing (TIP) Project,
Interins TIP Working Paper:
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Removal Expenses 2480
‘Training Aids/Grants 4000
_ Reward & Recognition 63
Office Equipment Maintenance _ 820
Computer Hardware 1200
Computer Software 3000
Furniture/Fittings 600
Furniture/Fittings Maintenance 680)
Telephone Rental 1573
Telephone Purchase 120
Print & Stationery 1224
Travel & Subsistence 13748
Impresis 1000
Contractors 30000
Hospitality 1908
Miscellaneous Other 900
iT 56627
Intra Business (Recharge) 21344
Market Rent 5026
Training & DG 250
_ Total 146563
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