← VCE Software Development U3O2

Project reason: reducing costs

A reason to build software: it lowers an organisation's running costs by saving staff time, paper, errors and equipment, so the development cost is repaid over time.

Part of: VCE Software Development - U3O2 - Analysis and Design — Module 4

Understanding Project reason: reducing costs in VCE Software Development U3O2

What it does: The software costs $20,000 to build but saves $24,000 over 3 years, so the development cost is repaid and the project reduces costs overall. Automatic checks stop incorrect entries, which means less time and money spent finding and fixing mistakes later. Automating manual data entry frees up staff hours, which is a labour saving. Reducing costs is about lowering ongoing expenses. Copying competitors or finding market gaps are different project reasons. Removing paper forms cuts printing and paper costs, which is a reduction in waste. $15,000 x 3 = $45,000, which is more than $40,000. The upfront cost is repaid by long-term savings.

Common mistakes: Labour saving is hours saved multiplied by the hourly wage, not added to it. It should be weekSaving ← hoursSaved * wage. The saving is the old paper cost minus the new paper cost. Subtracting the other way gives a negative number. It should be saving ← oldPaper - newPaper.

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Learning
Duo
A bakery builds an online ordering system so staff no longer type phone orders by hand. Which cost is mainly being reduced?
Equipment purchase costLabour cost (staff time)
Matches
The software costs $15,000 to build, so it reduces costs straight away.
↓
This ignores that the development cost must be repaid first. Savings build up over time, so costs only fall once the total saving passes the build cost.
Applying
Meanings
Term
reducing costs
Meaning
A reason to build software: it lowers an organisation's running costs by saving staff time, paper, errors and equipment, so the development cost is repaid over time.
Practice
BEGIN PaybackWeeks
Testing
Gaps
weeklySaving ← hoursSaved hourlyRate
Check Answer
Spots
3wage ← 30
4weekSaving ← hoursSaved + wage

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Quick Questions

1. A bakery builds an online ordering system so staff no longer type phone orders by hand. Which cost is mainly being reduced?
A. Labour cost (staff time) ✓
B. Equipment purchase cost
Automating manual data entry frees up staff hours, which is a labour saving.
2. Which statement best describes 'reducing costs' as a reason for a software project?
A. The software copies a competitor's product to win customers
B. The software lowers the organisation's running costs over time ✓
Reducing costs is about lowering ongoing expenses. Copying competitors or finding market gaps are different project reasons.
3. A school replaces printed permission forms with an online form. Which type of saving is this?
A. Increased development cost
B. Reduced waste (paper and printing) ✓
Removing paper forms cuts printing and paper costs, which is a reduction in waste.
4. A company spends $40,000 on new software that saves $15,000 a year. What is true about this project?
A. The development cost is repaid in under 3 years ✓
B. The software can never be cost effective
$15,000 x 3 = $45,000, which is more than $40,000. The upfront cost is repaid by long-term savings.
5. Which is an example of reducing errors to save money?
A. Validation that stops wrong prices being entered, avoiding refunds ✓
B. A bright new logo on the login screen
Fewer data errors mean fewer refunds, corrections and rework, which lowers costs. A logo does not change running costs.

Match the Pairs

Automated payroll replaces 6 hours of manual entry each week → A labour saving: software does repetitive work, so the organisation pays for fewer staff hours
Online forms replace printed enrolment packs → Reduced waste: less paper, printing and postage is bought each year
A project is worth building when the long-term saving is greater than the development cost → Development cost $20,000 < Saving $8,000 x 3 years
Software can reduce the cost of errors by checking data automatically → Validation rule: stock quantity must be 0 or more
The software costs $15,000 to build, so it reduces costs straight away. → This ignores that the development cost must be repaid first. Savings build up over time, so costs only fall once the total saving passes the build cost.
Reducing costs means the new software makes the business earn more sales. → This confuses cost reduction with increasing income. Reducing costs means lowering spending on staff time, paper, errors or equipment.

Key Term

reducing costs
A reason to build software: it lowers an organisation's running costs by saving staff time, paper, errors and equipment, so the development cost is repaid over time.

Fill in the Blanks

1. weeklySaving ← hoursSaved * hourlyRate
Hint: Type the arithmetic operator that multiplies staff hours saved by their pay rate.
2. paperSaved ← pagesBefore - pagesAfter
Hint: Type the arithmetic operator that finds how much paper use dropped.
3. IF totalSaving > devCost THEN OUTPUT "Worth building" END IF
Hint: Type the comparison operator that checks whether total savings are greater than the development cost.
4. paybackYears ← devCost / yearlySaving
Hint: Type the arithmetic operator that divides the development cost by the yearly saving.
5. total ← 0 FOR month ← 1 TO 12 total ← total + monthlySaving
Hint: Type the pseudocode keyword that sets the end value of the loop counting the months of savings.

Spot the Error

Question 1
A devCost ← 12000
B hoursSaved ← 20
C wage ← 30
D weekSaving ← hoursSaved + wage
Line D — Labour saving is hours saved multiplied by the hourly wage, not added to it. It should be weekSaving ← hoursSaved * wage.
Question 2
A oldPaper ← 800
B newPaper ← 100
C saving ← newPaper - oldPaper
D OUTPUT saving
Line C — The saving is the old paper cost minus the new paper cost. Subtracting the other way gives a negative number. It should be saving ← oldPaper - newPaper.
Question 3
A payback ← devCost / yearSaving
B IF payback > 3 THEN
C OUTPUT "Worth building"
D END IF
Line B — A short payback period means the development cost is repaid quickly, so the project is worth building. The test should be payback < 3, not payback > 3.
Question 4
A total ← 0
B FOR week ← 1 TO 52
C total ← weekSaving
D END FOR
Line C — The loop must add each week's saving to the running total. Assigning weekSaving overwrites the total every time. It should be total ← total + weekSaving.
Question 5
A totalSaving ← yearSaving + 3
B net ← totalSaving - devCost
C OUTPUT net
Line A — Savings over three years are the yearly saving multiplied by 3, not increased by 3 dollars. It should be totalSaving ← yearSaving * 3.

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