4.3.6.4.1

Purpose

Effective Date:

August 1, 1996

	This section contains the policies and guidelines for preparing an Economic Feasibility Plan related to the use of credit, debit cards or other electronic and technological means of transferring both funds and information. Use of these alternative methods for receipting or disbursing moneys requires that they be cost beneficial.
4.3.6.4.1.a	A plan is required for pilot projects outlining the scope and purpose of the pilot.
4.3.6.4.1.b	A separate plan is required for permanent implementation of the project.

4.3.6.4.2

Policy

Effective Date:

August 1, 1996

Each agency must submit an Economic Feasibility Plan to the Office of Financial Management (OFM) for approval prior to implementing the use of credit, debit cards or other electronic and technological means to receive or disburse moneys. The Economic Feasibility Plan must be submitted at least ten days prior to implementation of the new process or procedure.

4.3.6.4.3

Plan Description

Effective Date:

August 1, 1996

	An agency must submit an Economic Feasibility Plan to OFM for approval prior to implementation of credit, debit card acceptance or any other electronic and technological means of transferring both funds and information. The plan should present varying options for implementing the proposed plan and show a comparison of the different options to the existing method. Plans will vary in their content, depending on the scope of the project and impact on an agency’s business processes.
4.3.6.4.3.a	Large and more complex projects that would materially impact an agency’s operations require submission of a plan. Materiality is defined in terms of what influences or makes a difference to a decision maker and is usually based upon human judgment. In determining materiality to affect an agency’s operation, the following factors are to be considered:
	Level of change or activity;
	Account balance before and after change;
	Source of funds;
	Type of change;
	Type of account;
	Security of the new process.
	The following are guidelines for preparing an Economic Feasibility Plan. Agencies may follow this format depending on the scope and extent of the project.
4.3.6.4.3.a(1)	Receipt Project Plan. The Receipt Project Plan may include the following for each year of the project:
	Estimated amount of receipts expected to be collected using the new method.
	Estimated number of transactions expected using the new method.
	Estimated savings from using the new method including, but not limited to: labor savings, if any; improved efficiencies in operations; reduced costs in dealing with NSF checks; increased earnings by depositing the funds in the bank sooner; and costs avoided by implementing the project.
	Project fixed costs including, but not limited to, one-time costs incurred to implement the project and any new on-going facilities fixed costs.
	Project variable costs including, but not limited to, on-going labor costs and expected discount fees paid to the bank, if any.
	Increased fees, if any, expected to be passed on to the customer or client.
	Net estimated impact of the project which is equal to estimated savings and increased fees, less new fixed and variable costs.
4.3.6.4.3.a(2)	Disbursement Project Plan. The Disbursement Project Plan may include the following for each year of the project:
	Estimated amount of disbursements expected to be paid using the new method.
	Estimated number of transactions expected using the new method.
	Estimated savings from using the new method including, but not limited to: labor savings, if any; improved efficiencies in operations; and costs avoided by implementing the project.
	Project fixed costs, including but not limited to, one-time costs incurred to implement the project and any new on-going facilities fixed costs.
	Project variable costs, including but not limited to, on-going labor costs and other variable costs involved, if any.
	Net estimated impact of the project which is equal to estimated savings less new fixed and variable costs.
4.3.6.4.3.b	Small projects that have minimal impact on an agency’s operation do not require a plan. However, agencies should present and submit a business case rationale to OFM for approval prior to implementation of the requested method.
4.3.6.4.3.c	EDI applications that are not related to the flow of financial/accounting transactions require approval only when the project exceeds $50,000 start-up costs, or when the costs are not absorbed in an agencies current operations.
4.3.6.4.3.d	The forms that follow provide guides for preparing an Economic Feasibility Plan. This is the suggested format, but agencies have the option of expanding the forms depending on project scope.

Economic Feasibility Plan - Option # PDF File