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Research School of Accounting and Business Information

Systems

GROUP ASSESSMENT COVER SHEET


Student Names & ID Numbers:
MohD Adel AlSharif
Steven Portelli
Mohammad Tapal
Zhen Zeng

u5454956
u5148337
u5849005
u5345816

Course Code: INFS7040


Tutors name: Dr Armin Haller
Tutorial Day/Time: Tuesday 12:00 pm, Group 7C
Assignment No: 1
Title: Business Case Report Project
Word Count: _____________________
Due Date: 16 Oct 2915
Date Submitted: ____________________
We hereby confirm that the work contained in this assignment is solely our own,
except for reliance on material that is identified and cited according to accepted
academic practice.
We have read and understood the ANUs Code of Practice for Student Academic
Honesty.

Signed:

Date: 11 Oct 2015

Signed:

Date: 11 Oct 2015

Signed:

Date: 11 Oct 2015

Signed:

Date: 11 Oct 2015

| AN U C O LLE G E O F B U S I N E S S AN D E C O N O M I C S

ICT investment business case


electronic check-in and room access
system
Crowne Plaza Hotel Canberra

October 2015

INFS7040 group assignment


Moh'D Alsharif - u5454956
Steven Portelli - u5148337
Mohammad Tapal - u5849005
Zhen Zeng - u5345816

Contents
1.

Introduction..............................................................................................3

2.

Overview...................................................................................................4
Vision...........................................................................................................4
Organisational objectives............................................................................4

3.

Business case...........................................................................................5
Objectives....................................................................................................5
Outcomes....................................................................................................5
Benefits........................................................................................................5
Project governance......................................................................................6

4.

Situational analysis and problem statement............................................7


Operating environment................................................................................7
Problem statement......................................................................................8
Gap analysis................................................................................................9

5.

Assumptions and constraints..................................................................10

6.

Identification and analysis of options.....................................................11


Identification of options.............................................................................11
Recommendation of options......................................................................16

7.

Implementation strategy........................................................................17
Implementation risks and risk management for Option 3..........................18

8.

Project preparation.................................................................................21
Sources and References.............................................................................21

Appendix A: Project Governance Model........................................................24


Appendix B: Process overview......................................................................25
Appendix C: Work Breakdown Structure.......................................................28
Appendix D: Schedule and Milestones..........................................................29
Appendix E: Cost model and estimates, including NPV.................................31

1. Executive Summary
This document outlines the business case for implementation of an
electronic check-in and room access system at Crowne Plaza Hotel
Canberra.
The Crowne Plaza Hotel Canberra specialises in providing high-end
accommodation for business travellers. To remain competitive, Crowne
Plaza Hotel must continue to refine its focus on convenience and customer
service.
The existing manual check-in process is time-consuming for staff, and
guests can spend long periods of time waiting in line to check-in. This
sometimes results in complaints and can result in the need for
compensation.
Three options are assessed to address the problem:
1. No change to current practices.
2. Implementation of a Key Card Mobile System (KCMS) for check-in
and room access using an enterprise cloud located off-site.
3. Implementation of a KCMS using an enterprise server located onsite.
The aim of the Key Card Mobile System (KCMS) is to enhance the
customer experience and customer service provided by the hotel. The
project will see the replacement of the automation of the check-in process
and room access system. The KCMS will allow guests to use a mobile
application to check-in and receive a barcode. The barcode will provide
electronic access to their room. The application will integrate with Crowne
Plaza Hotel Canberras existing reservation system (ERP system). ASSA
ABLOY will build and supply services for the KCMS.
Option 3 is considered the best option to deliver on this aim as it will
reduce guests wait times during the check-in process, KCMS will also freeup the front-desk staff for better customer service, reduce guest
complaint levels and compensation level should decline.

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An onsite server provides greater data security and better privacy


protection of guests information. The significant capital investment
required for the hardware and facilities should be offset by the flexibility
gained through an on-site enterprise server and the reduced data security
risks. Security and guest privacy are critically important to the hotel.
The NPV for Option 3 is $151.98 million and is 29.55% greater than the
NPV for Option 1.

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2. Introduction
Crowne Plaza Hotel is part of the Intercontinental Hotel Group (IHG)
international chain, one of the world's largest hotel group by number of
rooms. The Crowne Plaza Hotel specialises in providing high-end
accommodation for business travellers. This focus provides Crowne Plaza
Hotels with the opportunity to tailor their product, offering comprehensive
business services and meetings facilities. Crowne Plaza Hotel continues to
find innovative solutions to improve their guests experience.
Technology remains at the centre of Crowne Plaza Hotels growth,
providing guests with the conveniences of home and the environment to
do business. Technology continues to offer ways to increase productivity
and free-up time for leisure. A recent focus for Crowne Plaza Hotel has
been the development of a sophisticated service and application to make
it easier to find, book and manage accommodation. Guests can manage
reservations, get hotel updates and offers, find and book hotel rooms and
view their reward points balance.
To remain competitive, Crowne Plaza Hotel must continue to refine its
focus on convenience and customer service. As such, the existing manual
check-in process at Crowne Plaza Hotel no longer aligns with the
companys strategy and should be automated where possible.
To maximise Crowne Plaza Hotels investment in technology and the flowon benefits to guest, the company should now consider expanding the
accommodation management service and ICT application. This expansion
would include the implementation of an electronic room key system,
managed through a mobile application.
The implementation of a Key Card Mobile System (KCMS) will provide two
direct strategic outcomes for Crowne Plaza Hotel:

allow front-of-desk staff to spend more time on customer service


reduce guest wait times and complaint volumes

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ensure that rival companies of Crowne Plaza Hotel are not seen
to be innovating quicker or providing a better product for
business travellers.

This business case focuses on the Crowne Plaza Hotel Canberra and
outlines what would be required to implement the KCMS, and the potential
benefits of installing the system.

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3. Overview
Investment in Crowne Plaza Hotel Canberras customer service is critical
for company success. This report outlines an investment project to further
enhance positive guest interactions with the company.
The project will implement a Key Card Mobile System (KCMS).
Implementation of the project will see the automation of the check-in and
room access system. Guests will be able to use an application on their
mobile phone to check-in and receive a barcode on their phone that will
provide electronic access to their room. The application will provide the
guest with the details of their room number. The application will integrate
with Crowne Plaza Hotel Canberras existing reservation system (ERP
system).
Design and planning of the project are focussed on Crowne Plaza Hotel
Canberra. If successful, there is potential for the project to be applied to
all of IHG 4,700 properties in almost 100 countries.

Vision
The aim of the project is to enhance the customer experience and
customer service provided by the hotel.
The system will allow guests to control their experience at the hotel and
reduce waiting times for hotel services. The KCMS will see a significant
reduction in human resources required for the manual check-in procedure,
freeing up the front desk staff to provide better customer service.

Organisational objectives
Crowne Plaza Hotels focus is to encourage repeated stays at their hotel
chain by business travellers. As such, all investment and decisions should
be to support Crowne Plaza Hotels focus strategy.
Implementation of a KCMS aligns with Crowne Plaza Hotels objectives and
strategic plan. A KCMS will contribute to the companys trend of improving
customer services through technology.

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4. Business case
Objectives
Objectives of the project are:
1. Increase guests loyalty
2. Increase occupancy rate
3. Increase revenue

Outcomes
The anticipated outcomes of the project are:
1.
2.
3.
4.
5.
6.
7.

Reduced check-in time


Increased customer service
Increased guests loyalty
Increased competitive advantage
Reduced number of front desk staff and consequently reduced cost
Increased revenue
Increased staff retention rate

Benefits
The project should result in non-financial and financial benefits.
Non-Financial Benefits
1. Streamlined front-desk operations, reducing costs and freeing up the
front desk team to focus on other important aspects of guest
service.
2. New hotel experience. Guests book room using their mobile phone
or device. Then, they can use the phone to check-in.
3. Skip front office desk (no queues): When they arrive, they can go
straight to their room and use their own smartphone to open the
door. No need for keys or key cards. No need to wait in a queue at
the front desk after a long journey.
4. Better guest experience: Mobile Access builds customer loyalty as
well as the hotels image and brand.
5. Revenue and Cost: More efficient operations that reduce cost and
drive revenue, improved profitability and increased competitiveness.
Financial Benefits
1. 8% increase in sales.
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2. 10% decrease in HR cost.

Project governance
The business case has been prepared by Group 7C (Project Champion), to
seek funds from IHG (Funder), in order to implement the KCMS project in
Crowne Plaza Hotel. The business case will be presented to the general
manager of Crowne Plaza Hotel who is the project sponsor.
The project will adhere to clear project governance protocols. The project
manager will coordinate project implementation and will report to the
project sponsor and steering committee. Reference groups and
assurances advisors will be used to ensure the project is informed and
considered. A complete project governance structure is provided in
Appendix A.

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5. Situational analysis and problem statement


Operating environment
Crowne Plaza Hotel is a five-star hotel located in Canberra city. It is a 5storey hotel with 296 rooms. A large proportion of Canberras potential
hotel guest are made up of business travellers, including government
workers. While Crowne Plaza Hotel is well positioned to capture the
business traveller, there is strong competition in Canberra. The Canberra
Crowne Plaza Hotel is over 25 years old, and there are several new hotels
located in the same geographic area. The situation of the hotels
environment reinforces the need for Crowne Plaza Hotel to continue to
find ways to encourage business travellers to stay in the Hotel.
Competitors have begun to rollout mobile check-in options, though some
still require a physical key-card to gain access to the room.
The organisational structure of the Hotel includes the general manager,
human resources, finance, sales and marketing, procurement, functions
and conferencing, food and beverage, reservation and front desk.
A SWOT analysis of the external and internal business environment is
shown in Table 1.
Table 1 - SWOT Analysis

Internal

Strengths

Strong brand name and international hotel chain.


IHG is one of the worlds largest hotel groups with
professional management, and experienced IT
personnel.
Weaknesses
High cost and low staff retention rate. In particular,
front desk staff is overwhelmed and under
continuous work pressure due to lengthy and
manual check-in procedures and resulting guest
complaints.
Opportunities New Information Technology solutions can be
implemented which reduce cost, increase guests
and staff satisfaction.

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External

Threats

Stiff competition in Canberra with other hotels


such as Hilton, Accor, Marriot and Hyatt. Those
hotels are implementing technology projects to
attract guests and take better market share.

The current hotel information system is a major ERP server connected to


an ERP system. A number of areas, including finance, human resources,
functions, food and beverage, reservations and front desk, uses the ERP
system. The Reservation and Front Desk functions are interrelated
because the booking goes through the ERP server to the reservation
system and then generated at the front desk system to perform the
check-in and check-out process.
The current business process model is presented in Appendix B.

Problem statement
The check-in process is lengthy and the procedure is manual, it includes:
guests arrives to front desk, waits in queue, identification, looking up
booking, filling out check-in form, provide credit card and issuing key-card.
The time-consuming check-in process creates a problem from two
perspectives:
the hotel must use staff to conduct the manual check-in process,
which reduces the time staff can spend on other customer service
activities, and

guests can spend long periods of time waiting in line to check-in. This
sometimes results in complaints and the need for compensation.

To help address the problem, the existing manual check-in process at


Crowne Plaza should be automated.
Analysis of problem
Crowne Plaza Canberra consists of 296 rooms, with five front desk
receptionists. The average check-in time is 5 minutes. Thus, every
receptionist needs 4.92 hours every day to check-in 296 rooms. See
calculations in Table 2.

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Table 2 - check-in time for every receptionist

Room
s

Average
check-in
time /guest

296

5 minutes

Total time in
minutes / day
(296*5)
1480

Total
time in
hours /
day
24.6

minutes/day

h/day

Receptioni
st

Check-in time for


every receptionist
(24.6/5)

4.92 hours a day

The project will:

eliminate up to 4.92 hours of dedicated staffs time


free-up the front desk staff for customer server
reduce the number of required staff at the front desk from 5 to 3
introduce a service that other hotels are installing.

Gap analysis
The hotel objectives are to increase guests loyalty to increase the
occupancy rate. Consequently, it is expected that this will lead to an
increase in revenue. However, current practices lead to lengthy and
manual check-in procedures. Guests complaints are increasing due to the
long queues, and they are switching to other hotels. As a result, the
occupancy rate is not reaching the hotels target and the hotel loses
bookings and revenue. On the other hand, the front desk staff are also
exhausted because they spend hours processing check-ins and fail to
deliver the customer service guests expect.
By automating the check-in procedures: KCMS will greatly reduce queues,
and reduce pressure on front desk staff. Guests will be satisfied and their
loyalty should increase. Eventually, the occupancy and the revenue should
increase and the hotels objectives met.

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6. Assumptions and constraints


Analysis conducted for the Business Case considers a number of
assumptions and constraints.
Assumptions:

the new server will be compatible with the hotel IT infrastructure


the new KCMS will be compatible with the hotel existing ERP
system
the mobile application will be compatible with most android and
iPhones
the hotels IT personnel will have the expertise to install and
maintain the new hardware (e.g. the server) and software with
some support from the supplier
hotel maintenance personnel have the skills to install and
maintain hardware (e.g. new electronic door locks) with some
support from the supplier.
supplier will supply the required hardware and software on time
and within the budget.
supplier is reliable and has expertise into the ICT industry
budget will be sufficient from the project
a series of costing and calculation assumptions have been made
to calculate costs, return and NPV. These financial assumptions
can be viewed in Appendix E.

Constraints:

time: transition from old system to new system


space: hardware must be installed on premises
reliance on external service providers
competition in the hotel industry and technology advancements
may change in ways not anticipated by this business case,
constraining the benefits available to the project.

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7. Identification and analysis of options


Identification of options
Three business investment options are considered.
Option 1
Option 2
Option 3

No change to current practices.


Implementation of a KCMS using an enterprise cloud (offsite).
Implementation of a KCMS using an enterprise server (onsite).

Option 1 current practice (no change)


It is important to assess whether existing processes are satisfactory and
whether possible investment may be too risky or costly to justify a
change.
As shown in Appendix B, the current business process model (BPM) follows
these steps:
1.
2.
3.
4.

Guest arrives to the hotel


Guest walks to the front desk
Guest waits in queue
Guest starts check-in procedures which is 5 minutes on average:
a. Guest identification
b. Booking identification
c. Arrival registration form
d. Room allocation
e. Processing payment
5. Guest is issued by a key-card
Option 1 presents the continuation of existing practices. Guest will
continue to check-in at the front desk and guest will be required to wait in
line to be served. This option has the benefit of continuing with existing
practice, where guests are familiar with what their experience they will be
and staff will not have to go through a period of change.
The manual check-in process has worked well for the hotel over the years
and cannot be refined. It is efficient and practical as a manual solution and
has a very low risk of failure.

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However, continuing with existing practices will lead to a number of disbenefits. Long check-in lines will not be resolved and guest complaint
levels will remain higher than acceptable. In addition, rival companies will
continue to leverage technology and gain a competitive advantage over
Crowne Plaza Canberra. Competitors have already begun rolling out
mobile check-in solutions, which could become increasingly attractive to
business travellers looking for convenience and flexibility.
The status-quo is estimated to cost the company $2.9 million in 2015,
with this value increasing in future years.
To continue with this option, the return is estimated to be $ 26.07 million
in 2015 with a Net Present Value (NPV) of $117.31 million (see Appendix E
for calculations).
Option 2 KCMS enterprise cloud
To address the problems created by a lengthy, manual check-in process,
Option 2 proposes to install a mobile check-in system referred to as KCMS.
The system will use an enterprise cloud service to store data and process
mobile bookings. ASSA ABLOY will build and supply services for the KCMS.
Guest must download KCMS application on their mobiles phones or tablets
in order to receive the Mobile Key-Card when they make a booking. The
process for Option 2 is presented in Figure 1.

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Figure 1 relationship flow of options 2 KCMS using enterprise cloud

To shift to Option 2, the hotel will require physical and cultural change.
New door locks will be installed on all doors and affected stuff will have to
be trained in new areas.
An enterprise cloud will create a significant risk to security of guest
information and room access information. Data security and guest privacy
is critical to the hotel. An off-site server may generate too great a risk for
the hotel even when considering the likely benefits gained from
implementing Option 2.
A contract manager will be required to oversee the service level
agreement with the infrastructure-as-a-service operator.
The total initial investment for Option 2 is $400,142 (refer to Appendix E).
There is an annual cloud service fee of $43,416 and an initial project
investment cost of $0.4 million in 2015.
Total cost to the hotel in 2015 to implement Option 2 is estimated to be
$3.15 million.
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Option 2 is estimated to have a return of $28.13 million in 2015 and a NPV


of $151.79 million.
Further cost and benefit calculations are presented in Appendix E.
Option 3 KCMS enterprise server
Option 3 will implement the same elements as Option 2 with the
replacement of the enterprise cloud with an on-site enterprise server. As
such, Option 2 and Option 3 offer similar benefits and limitations.
The key difference between Option 2 and Option 3 is that an on-site
enterprise server will provide the hotel with increased control and
protection of their guests data and decreased risk for guest information
to be compromised.
An onsite server also provides greater flexibility to the hotel for future
customisation.
This option will require significant capital investment for hardware and
facilities. The on-site enterprise server will require a dedicated storage
location. Hotel ICT staff will require training to maintain and troubleshoot
the server.
The total initial investment for Option 3 is $350,530 (refer to Appendix E).
Total cost to the hotel in 2015 to implement Option 3 is estimated to be
$3.10 million.
Option 3 is estimated to have a return of $28.18 million in 2015 and a NPV
of $151.98 million.
Further cost and benefit calculations are presented in Appendix E.
The process is presented in Figure 2

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Figure 2 relationship flow of options 3 KCMS using enterprise server

As shown in Appendix B; The new Business Process Model follows two


instances:
Instance 1
1. Process stars
2. Guest make a booking using KCMS Application from mobile phones,
tablets, or computers.
3. Booking requests goes through to the hotel ERP server.
4. ERP server check for availability.
5. If there are no available rooms; a notification is sent back guests
with rejection.
6. If approved; the ERPS server generates the booking to KCMS server
in order to issue a confirmation number and the Mobile Key-Card.
7. Process ends
Instance 2
1.
2.
3.
4.

Process starts
Guest arrives to hotel and heads straight up to the allocated room.
Guest swipes mobile on the door-lock system on the door.
A notification is generated to inform KCMS server to activate the
Mobile Key-Card.
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5. KCMS server activates the Mobile Key-Card instantly.


6. Process ends: Guest enters the room.
The mobile application will be designed to remove the need for any
human contact during the check-in and room access process.

Recommendation of options
A comparison of key considerations between the options is presented in
Table 3.
Table 3 summary of key advantages, disadvantages and stakeholder impacts
for each section.

Option 1
Advantages

Stability
Data
security
Low risk

Option 2
Provide better
service
New customer
experience
Higher revenue
Lower HR cost

Disadvantages High HR
cost
Reduced
competitiv
e
advantage

Stakeholder
Impact

No risk of
failure

Option 3
Provide better service
New customer
experience
Data security
Higher revenue
Lower HR cost

Security risk

Dependence on ASSA
ABLOY
High annual fee for
High capital cost
cloud server
Dependence on IT
personnel
Risk of project
failure
Take risk on project

Risk of project failure


Take risk on project

Option 3 presents a great opportunity to maintain and grow the hotels


competitive advantage and reduce staff investment in the check-in
process. While this option initially requires significant capital invest, an
enterprise server will provide the hotel with flexibility and will greatly
reduce data security risks. Security and guest privacy are critically
important to the hotel.
The return for Option 3 in 2015 is $28.18 million and is 8.09% greater than
the return for Option 1 ($26.07 million). The NPV for Option 3 is $151.98
million and is 29.55% greater than the NPV for Option 1 ($117.31 million).
Option 3 is recommended for implementation.

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8. Implementation strategy
The KCMS project consists of the following deliverables (outputs):

Key Card Mobile System KCM


o KCMS Lock System
Wireless card
RFID: Radio Frequency Identification
Built-in Software
o KCMS Server
o KCMS Software
o KCMS Mobile Application
o KCMS Integration
o Training
o Marketing

The Work Breakdown Structure is available in Appendix C.


The lock system, server, software, and mobile application will be
purchased from external supplierASSA ABOLY
(http://www.assaabloyhospitality.com/). However, the internal IT hotel staff
will perform the installation and integration.
Implementation of the KCMS includes:

the new KCMS server will be integrated into the current ERP server
the new KCMS software will be integrated into the ERP software
the electric readers (KCMS lock system) will be installed on all room

doors of the hotel


the mobile application will be installed by whoever would like to

make bookings
the communication between the Lock System, the KCMS server, and

the mobile application will be through built-in wireless cards


the KCMS software will control the whole system.

There will also be training for the front desk and reservation staff on how
to use the KCMS software. Most importantly, the marketing campaigns will
focus on the new check-in procedures to attract more customers.
The project is proposed to last for three months from 1st November2015
until 31st January 2016. There will be three milestones during the project:
the first milestone is on 30 November 2015 when testing the server, the
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second milestone on 31 December 2015 when launching the Mobile


Application, and the third milestone on 9 January 2016 when the entire
system is tested. The schedule, milestones and tasks are shown in the
Appendix D.

Implementation risks and risk management for Option 3


Risk Analysis
Ten potential risks have been identified as follow:

R1: ERP server downtime: The ERP will be switched off during the

integration, which may cause errors, delays and confusion in data.


R2: ERP system downtime. ERP system will be switched off during

the integration, which may also cause delays and errors.


R3: Some room-doors not compatible with the new lock-system; new

doors may need to be purchased.


R4: Internal IT staff unable to install new system: Internal IT staff
may not be able to install some parts of the new system, which will

cause delays and budget overrun.


R5: Delays from suppliers: Suppliers may not deliver on time and

could affect the schedule.


R6: Low quality hardware and software: The quality may not be as

expected, causing the system to be unstable or unreliable.


R7: Noise pollution: Noise when installing the system. The IT staff
will be using the front desk area to install the new system, this will
cause noise and untidy hotel image. Guest may switch to other

hotels.
R8: Scope creep: The scope may be changed due to the existence of
other options in the project (cloud computing); this will cause cost

and schedule overrun.


R9: Project not attracting guests. The project may not attract more

guests and that will lead to revenue deficiency.


R10. Guests are not using the new service. Guests may not use the
new booking system and the queues will remain the same.

Analysis of the risks is shown in Table 4.

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Severity

Table 4 - Likelihood and Severity Matrix

Likelihood
High
High
Medium
Low

Medium

R1,R2

Low
R4,R8

R3,R5

R6

R7

R9,R10

The red highlighted risks are the most serious risks and highest priority,
the yellow highlighted risks are medium priority, and the green
highlighted risks are low priority. Detailed interpretation of the Likelihood
and Severity Matrix:

High likelihood and High severity: R1 ERP server downtime. R2 ERP

system downtime.
Medium likelihood and Medium severity: R3 Room-doors not

compatible with the new lock-system. R5 Delays from suppliers.


Low likelihood and High severity: R4 Internal IT staff unable to install

new system. R8 Scope creep.


Low likelihood and Medium severity: R6 Low quality hardware and

software.
Medium likelihood and Low severity: R7 Noise pollution.
Low likelihood and Low severity: R9 Project not attracting guests.
R10 Guests are not using the new service.

Risk management
The risks will be managed by applying risk strategies, including mitigation,
avoidance, transfer and risk acceptance. Mostly importantly, the highly
severe and likely to occur risks (ERP downtime - R1 & R2) will be mitigated
by applying the best IT professionals at the hotel at the time of server and
system downtime. This will minimise the time of installation and errors
and the time taken to get the system back online as soon as possible.

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9. Project preparation
This business report was prepared as a result of a concerted effort by
Moh'D Alsharif, Steven Portelli, Mohammad Tapal and Zhen Zeng.
Following is a brief schedule showing the work done by each group
member in the completion of this report.
Team Member
Moh'D Alsharif

Steven Portelli

Mohammad Tapal
Zhen Zeng

Tasks Completed
Implementation strategy
The business case and situational

assessment
Problem statement
Business processes maps and steps
Report review
Introduction
Overview
Assumptions and constraints
Description and analysis of options
Report review
Project preparation
Development of presentation slides
Cost and financial analysis of options
References and sources

Sources
Our research into the business case has revolved around how to create a
business opportunity and competitive advantage for Crowne Plaza
Canberra by the implementation of the latest ICT in the form of key card
mobile systems (KCMS).
The financial reports of Crowne Plaza and their competitors were analysed
to gain a better understanding of how the Crowne plaza could benefit
financially by implementing this latest ICT development.
Our group member, Moh'D Alsharif has previously worked at Crowne Plaza
as a night manager. He has been a key source of information and has
provided contacts for within the organisation for further information.
The supplier for our KCMS technology, ASSA ABLOY has been contacted on
several occasions for information and quotes.
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The data is also drawn from the global website which shares revenue,
daily occupancy rate, and average rate for all the hotels worldwide
www.strglobal.com.
Online journal and articles have been taken into account to assess how
ASSA ABLOY and the KCMS can help create an opportunity for Crown
Plaza.

References
Alibaba 2015, Alibaba, viewed 10 September 2015,
<http://www.alibaba.com/trade/search?
fsb=y&IndexArea=product_en&CatId=&SearchText=vingcard+hotel
+lock+rfid>.
Assa Abloy 2015, Assa Abloy, viewed 10 September 2015,
<http://www.assaabloyhospitality.com/en/aah/com/products/hotel/m
obile-access/>.
Australian Bureau of Statistics 2006, The cost of training Australia's
workers, Australian Bureau of Statistics, viewed 10 September 2015,
<http://www.abs.gov.au/ausstats/abs@.nsf/Previousproducts/1301.0
Feature%20Article152004?
opendocument&tabname=Summary&prodno=1301.0&issue=2004&
num=&view>.
Capterra 2015, Capterra, viewed 10 September 2015,
http://www.capterra.com/hospitality-property-managementsoftware/spotlight/13824/roomMaster/InnQuest%20Software>.
Dell 2015, Dell, viewed 10 September 2015,
<http://configure.ap.dell.com/dellstore/config.aspx?
c=au&cs=aubsd1&l=en&model_id=poweredget630&oc=u421604au&s=bsd&fb=1&vw=classic >.
Imason 2015, Imason, viewed 10 September 2015,
<https://www.imason.com/mobile-app-calculator>.
Intercontinental hotels group 2010, Annual Report and Review 2010,
Intercontinental hotels group, viewed 7 September 2015,
<http://www.ihgplc.com/files/reports/ar2010/docs/ihg_annual_report
_2010.pdf>.
Intercontinental hotels group 2011, Annual Report and Review 2011,
Intercontinental hotels group, viewed 7 September 2015,
<http://www.ihgplc.com/files/reports/ar2011/docs/IHG_Report_2011.
pdf>.
Page 26 of 45

Intercontinental hotels group 2012, Annual Report and Review 2012,


Intercontinental hotels group, viewed 7 September 2015,
<http://www.ihgplc.com/files/reports/ar2012/docs/IHG_Report_2012.
pdf>.
Intercontinental hotels group 2013, Annual Report and Form 20-F 2013,
Intercontinental hotels group, viewed 7 September 2015,
<http://www.ihgplc.com/files/reports/ar2013/docs/IHG_Report_2013.
pdf>.
Intercontinental hotels group 2014, Annual Report and Form 20-F 2014,
Intercontinental hotels group, viewed 7 September 2015,
<http://www.ihgplc.com/files/reports/ar2014/files/IHG_Report_2014.p
df>.
Marriott International Inc 2014, Annual report 2014, Marriott International
Inc, viewed 7 October 2015,
<http://files.shareholder.com/downloads/MAR/828225050x0x819614
/987062C0-247A-422A-B2EE-5A76FF60E1ED/Marriott_2014AR.pdf>.
Rackspace 2015, Rackspace, viewed 10 September 2015,
<http://www.rackspace.com/en-au/calculator>.
The Australian 2013, Smartphone mobile check-in starts at Sydney
Harbour Marriott, to be rolled out at hotels across Australia, The
Australian, 27 November, viewed 7 October 2015,
<http://www.theaustralian.com.au/news/smartphone-mobilecheckin-starts-at-sydney-harbour-marriott-to-be-rolled-out-at-hotelsacross-australia/story-e6frg6n6-1226769747438>.
6S Marketing 2015, 6S Marketing, viewed 10 September 2015,
<http://digitalmarketingcalculator.com>.

Page 27 of 45

Appendix A: Project Governance Model

Project Funder Intercontinental Hotel Group (IHG)

Steering Committee
Reference Groups (Advisors)

IHG (COO)
IHG (CFO)

IT Consulting Services

Assurance Counsellors
Operation Manager
Front Desk Manager

Project Sponsor Crowne Plaza Canberra

Project manager
IT Manager at Crowne Plaza

Project team
Internal
Procurement officer
IT Personnel
Financial officer

External (Contractors)
Suppliers

Page 28 of 45

Appendix B: Process overview

Page 29 of 45

Appendix C: Work Breakdown Structure

Page 30 of 45

Appendix D: Schedule and Milestones


WBS

Deliverables (outputs)

Start

Finish

Mileston

Key Card Mobile System - 01/11/20

31/1/201

1.1

KCMS
Hardware

15
1/11/201

6
30/11/20

1.1.1

5
Lock System (wireless card, 1/11/201

15
30/11/20

es

RFID, Built-in Software)


1.1.1. Identify Suppliers

5
1/11/201

15
10/11/20

1
1.1.1. Purchase Lock System

5
11/11/20

15
20/11/20

2
1.1.1. Install Lock System

15
21/11/20

15
30/11/20

15

15

Page 31 of 45

WBS

Deliverables (outputs)

Start

Finish

Mileston
es

1.1.2

1/11/201

30/11/20

1.1.2. Identify Suppliers

5
1/11/201

15
10/11/20

1
1.1.2. Purchase Server

5
11/11/20

15
20/11/20

2
1.1.2. Install Server

15
21/11/20

15
27/11/20

3
15
1.1.2. Integrate KCMS server into ERP 28/11/20

15
30/11/20

4
server
1.1.2. Test Server

15
30/11/20

15
30/11/20

5
1.2

Software

15
1/12/201

15
e1
31/12/20

KCMS Software

5
1/12/201

15
31/12/20

1.2.1. Identify Suppliers

5
1/12/201

15
10/12/20

1
1.2.1. Purchase Software

5
11/12/20

15
15/12/20

2
1.2.1. Install Software

15
16/12/20

15
20/12/20

3
15
1.2.1. Integrate KCMS software into 21/12/20

15
26/12/20

4
ERP system
1.2.1. Test software Integration

15
27/12/20

15
31/12/20

5
1.2.2

15
1/12/201

15
31/12/20

1.2.2. Identify Suppliers

5
1/12/201

15
10/12/20

1
1.2.2. Purchase Application

5
11/12/20

15
15/12/20

2
1.2.2. Integrate App into ERP server

15
16/12/20

15
25/12/20

3
1.2.2. Launch App

15
26/12/20

15
31/12/20

4
1.3

15
1/1/2016

15
e2
10/1/201

1.2.1

KCMS - Server

Mobile Application

KMCS System Integration

Mileston

Mileston

Page 32 of 45

WBS

Deliverables (outputs)

Start

Finish

Mileston
es

1.3.1

Integrate the entire KCMS into 1/1/2016

8/1/2016

1.3.2

the Hotel ERP system


Test the entire system

9/1/2016

10/1/201

1.4

Training

11/1/201

6
e3
31/1/201

1.4.1

Organize Staff Training

6
11/1/201

6
20/1/201

Conduct Staff Training

6
21/1/201

6
31/1/201

Marketing

6
1/1/2016

6
31/1/201

1.4.2
1.5
1.5.1

Implement the new check-in 1/1/2016

6
31/1/201

process

into

marketing

Mileston

campaigns

Page 33 of 45

Appendix E: Cost model and estimates, including NPV


Data in this report is calculated using following methods.
Expenses and revenues are based on 2014 levels and are calculated as
follows:
room revenue = 296 rooms * $250 (average price)
= $74,000 daily
= $27.01 million per annum.
Salaries = staff payroll (reception + concierge)
= $54,000 a month + $54,000 a month
= $1.296 million per annum.
Staff payroll (reception) = $25/h * 8 hours = $200 / shift = $200 * 3
staff = $600
= $600 * 3 shifts = $1,800 a day = $54,000 a month
Staff payroll (Concierge): = $25/h * 8 hours= $200 / shift = $200 * 3
staff = $600
= $600 * 3 shifts = $1,800 a day = $54,000 a month
General and administrative cost = around $2,500 a day
= $0.9125 million per annum.
Data from 2010 to 2015 has been used to forecast values for 2016 to 2019
(in $ million). Calculations of forecasts in this business case used the
following approach:
Firstly, calculate the moving average value of 2010-2015 and then take
the average of each two moving average values to find the central
moving average value. Secondly, identify the irregular factor by taking the
real value and divide by the central moving average value. Thirdly, use
regression model to find the intercept and slope of time and real value.
Finally, using the intercept and slope of time and real value to determine

Page 34 of 45

output value, and then multiply the irregular factor to get forecast value
of year 2016 to 2019.
Our competitor Marriott hotel has launched mobile application for customer
to check-in at all its 500 hotel in the first half of 2014. Its revenue increased
by about 8%. Therefore, it is reasonable to assume 8% increase in revenue
in option 2 and 3. The data is drawn from the global website which shares
revenue, daily occupancy rate and average rate for all the hotels worldwide
www.strglobal.com.
The front desk staff will decrease from 5 to 3, or by 60%. However, HR cost
includes the entire staff in the hotel and front desk staff are part of HR so it
should be much less than 60%. As such, a realistic percentage of the front
desk staff compared to the entire hotel staff is around a 10% decrease in HR
cost for option 2 and 3.
For options 2 and 3, we assumed 8% increase in revenue annually and 10%
decrease in HR cost. The new forecast revenue value in 2015 is 1.08
multiplied the previous forecast value,
1.084

for 2018,

1.082 for 2016,

1.083 for 2017,

1.085 for 2019. The new forecast salaries value is 0.9

multiplied by the previous forecast value.


NPV for Option 1 (nochange) in million dollars
The Option 1 forecast calculations presented in Table 5 consider a five-year
life cycle, room revenue, front-desk salaries and front desk-desk expenses,
taking into consideration annual inflation.
Table 5 - Five-Year forecast for no-change option in $million

Time

Year

0
1
2
3
4

2015
2016
2017
2018
2019

Room
Revenue
28.97
29.92
30.75
31.63
32.52

Front Desk
Salaries
1.44
1.52
1.58
1.66
1.73

Front Desk
Expense
1.46
1.58
1.62
1.69
1.77

Page 35 of 45

The cost and benefit analysis of Option 1 is shown in Table 6. The calculation
considers the total expenses for front desk expense:
In 2015, the total cost is:
= Front desk salaries + Front desk expense
= $1.44 million + $1.46million
= $2.9 million
The total benefit equals $28.97 million.
The return is:
Total Benefit - Total cost = $28.97 - $2.9 = $26.07 million.
Table 6 - Cost and Benefit Analysis for no change option in $million

Costs

2015

2016 2017 2018

2019 Total

Front desk

1.44

1.52

1.58

1.66

1.73

7.93

Front
desk
Salaries

1.46

1.58

1.62

1.69

1.77

8.12

Total
expense

2.90

3.10

3.20

3.35

3.50

16.05

Benefit

201

201

201

2018

201

Total

Room Revenue

28.9
5

29.9
6

30.7
7

31.63

32.5
9

153.79

Total

28.9
7

29.9
2

30.7
5

31.63

32.5
2

153.79

ROI

201

201

201

2018

201

Total

Costs

2.90
5

3.10
6

3.20
7

3.35

3.50
9

16.05

Benefit

28.9

29.9

30.7

31.63

32.5

153.79

Return

26.0
7

26.8
2

27.5
5

28.28

29.0
2

137.75

NPV at beginning of 2015 calculation:


26.83
26.07
NPV = 1.055 + 1.0552

27.55
28.28
29.02
+ 1.0553 + 1.055 4 + 1.0555

= $117.31

million
*The NPV calculations has used 5.5% interest rate.

Tim
e

Year

Room
Revenu
e

Front Desk
Salaries

Front
Desk
Expense

Profit (at the


end of each
year)

NPV

Page 36 of 45

0
1
2
3
4

2015
2016
2017
2018
2019

1.44
28.97
29.92
30.75
31.63
32.52

1.52
1.58
1.66
1.73

1.46

$117.3
1

26.07
26.83
27.55
28.28
29.02

1.58
1.62
1.69
1.77

Initial investment for Option 2 (enterprise cloud)


Table 7 - Cost estimation for option 2

WBS
#

Deliverables (outputs)

Key Card Mobile


System (KCMS)
KCMS - Hardware
Lock System (wireless
card,
RFID,
Built-in
Software)
Identify Suppliers

1.1
1.1.
1
1.1.
1.1
1.1.
1.2
1.1.
1.3
1.1.
2
1.1.
2.1
1.1.
2.2
1.1.
2.3
1.1.
2.4
1.2
1.2.
1
1.2.
1.1
1.2.
1.2
1.2.
1.3
1.2.
1.4
1.2.

Purchase Lock System

Material
s
(Hardwa
re)

Equipm
ent
(Softwa
re)

HR

19,872
3,500
9,072

3,700

Install Lock System

3,600

Cloud Server

18,705

Identify Suppliers
Purchase Server
Install Server

3,550
43,415.8 3,650
8
1,239

Test Server

3,600

SaaS
Software as a Service

15,895

Identify Suppliers
Purchase Software

Total ($)

3,400
1,495

Install Software

3,800

Integrate
Software
to
KCMS Server
Test software Integration

3,650
3,550

Page 37 of 45

1.5
1.2.
2
1.2.
2.1
1.2.
2.2
1.2.
2.3
1.2.
2.4
1.3
1.3.
1
1.4
1.4.
1
1.4.
2
1.5
1.5.
1

Mobile Application

139,600

Identify Suppliers

3,700

Purchase Application

128,800

Integrate App with KCMS


Server
Launch App

3,500
3,600

KCMS
System
Integration
Integrate the entire KCMS
into the Hotel ERP system
Training
Organize Staff Training

3,600
3,600
4,380
780

Conduct Staff Training

3,600

Marketing
Include the new check-in
process into marketing
campaigns

Cost

57,600
57,60
0
9,072

173710.
88

113,6
19

29,6401.
5
Overhead Cost 10%
29,640.1
5
General and Administrative Cost 10%
29,640.1
5
Contingency 15%
44,460.2
Total Cost
400,142
The total initial investment for the project is $400,142 (refer to Table 7), with
the breakdown of total investment as follows:

Material cost (Hardware): $9,072


Equipment Cost (Software): $173,711
Human Resource Cost: $113,619
Overhead Cost 10%: $296,401
General and Administrative: $29,640
Contingency: $44,460

There is an additional annual cloud service fee of $43,416. The project life
cycle is predicted to be five years. Table 8 forecasts the five-year room
revenue, front-desk salaries and front desk-desk expenses and adjusted for
inflation.
Table 8 - Five-year forecast for enterprise cloud option in $million

Page 38 of 45

Year

Room
Revenue

Front-Desk
Salaries

Front-desk
expense

2015
2016
2017
2018
2019

31.29
34.90
38.74
43.03
47.78

1.30
1.37
1.43
1.49
1.55

1.46
1.58
1.62
1.69
1.77

Cloud
server
annual fee
0.04
0.04
0.04
0.04

The cost and benefit analysis of Option 2 is shown in Table 9. The calculation
considers the total expenses for front desk expense. In 2015, the total cost
includes an initial project investment cost of $0.4 million. From 2016 to
2019, there is annual fee of $0.04 million for the enterprise cloud service.
In 2015, the total cost is:
= Front desk salaries + Front desk expense + Initial investment
= $1.297 million + $1.457 million + $0.4 million
= $3.154 million
The benefit (room revenue) is $31.288 million, and the total rate of return is:
Total Benefit - Total cost = $31.288 million - $3.154 million = $28.13
million.
In 2016, the total cost is:
= Front desk salaries + Front desk expense + cloud server annual fee
= $1.37 million + $1.58 million + $0.04 million
= $2.99 million
The benefit (room revenue) is $34.90 million, and the rate of return is:
Total Benefit - Total cost = $34.90 million - $2.99 million = $31.91
million.
Table 9 - Cost and Benefit Analysis for cloud sever option in $million

Costs

2015

2016

2017

201

2019

Total

Front desk

1.30

1.37

1.43

1.49
8

1.55

7.13

Front
desk
Salaries

1.46

1.58

1.62

1.69

1.77

8.12

Cloud
server
expense

0.00

0.04

0.04

0.04

0.04

0.17

Initial
annual fee

0.40

0.00

0.00

0.00

0.00

0.40

Total
investment

3.15

2.99

3.09

3.23

3.37

15.83

Page 39 of 45

Benefit

2015

2016

2017

201

2019

Total

Room Revenue

31.29

34.90

38.74

43.0
8

47.78

195.74

Total

31.29

34.90

38.74

43.0
3

47.78

195.74

ROI

2015

2016

2017

201

2019

Total

Costs

3.15

2.99

3.09

3.23
8

3.37

15.83

Benefit

31.29

34.90

38.74

43.0

47.78

195.74

Return

28.13

31.91

35.65

39.8
3

44.41

179.91

1
NPV for Option 2 (cloud computing) in million dollars
The NPV is calculated using the total initial investment of $400,142.
NPV at begin of 2015 calculation
28.53
NPV = -0.40+ 1.055

31.91
35.65
39.81
44.41
+ 1.0552 + 1.0553 + 1.055 4 + 1.0555 =

$151.79 million
*The NPV calculations has used 5.5% interest rate, 8% increase in revenue and
10% decrease in human resources cost.

Yea
r
20
15
20
16
20
17
20
18
20
19

Room
FrontRevenu desk
e
Salarie
s
1.30
31.29
1.37
34.90
1.43
38.74
1.49
43.03
1.55
47.78

Frontdesk
expens
e
1.46

Cloud
server
annual
fee

Profit (at
the end
of each
year)

Initial
investment
paid at begin
of 2015
0.40

28.53
1.58

0.04

NPV
($
m)
151.
79

0.00
31.91

1.62

0.04

1.69

0.04

1.77

0.04

0.00
35.65
0.00
39.81
0.00
44.41

Initial cost for Option 3 (enterprise server)


Table 10 - cost estimation for option 3 (Enterprise Server -on premises)

WBS
#

Deliverables (outputs)

Material
s
(Hardw

Equipm
ent
(Softwa

HR

Total
($)

Page 40 of 45

are)
1
1.1
1.1.
1
1.1.
1.1
1.1.
1.2
1.1.
1.3
1.1.
2
1.1.
2.1
1.1.
2.2
1.1.
2.3
1.1.
2.4
1.2
1.2.
1
1.2.
1.1
1.2.
1.2
1.2.
1.3
1.2.
1.4
1.2.
1.5
1.2.
2
1.2.
2.1
1.2.
2.2
1.2.
2.3
1.2.
2.4
1.3

re)

Key Card Mobile System


(KCMS)
KCMS - Hardware
Lock System (wireless
card,
RFID,
Built-in
Software)
Identify Suppliers
Purchase Lock System

19,872
3,500
9,072

3,700

Install Lock System

3,600

KCMS - Server

18,704.
6

Identify Suppliers

3,550

Purchase Server

6,666

3,650

Install Server

1,239

Test Server

3,600

KCMS Software
Software

15,895

Identify Suppliers

3,400

Purchase Software

1,495

Install Software

3,800

Integrate Software to KCMS


Server
Test software Integration

3,650
3,550

Mobile Application

139,60
0

Identify Suppliers

3,700

Purchase Application
Integrate App with KCMS
Server
Launch App
KCMS
Integration

System

128,800
3,500
3,600
3,600

Page 41 of 45

1.3.
1
1.4
1.4.
1
1.4.
2
1.5
1.5.
1

Integrate the entire KCMS


into the Hotel ERP system
Training
Organize Staff Training

3,600

Conduct Staff Training

3,600

4,380
780

Marketing
Include the new check-in
process into marketing
campaigns

Cost

57,600
57,600
15,738

130,295

Overhead Cost 10%


General and Administrative Cost 10%
Contingency 15%
Total Cost

113,61
9

259,651
.6
25,965.
16
25,965.
16
38,947.
74
350,529
.66

The total initial investment for the project is $350,530 (refer to Table 10),
with the breakdown of total investment as follows:

Material cost (Hardware): $15,738


Equipment Cost (Software): $130,295
Human Resource Cost: $113,619
Overhead Cost 10%: $25,965
General and Administrative: $25,965
Contingency: $38,948

The project life cycle is predicted to be five years. Table 11 forecasts the
five-year room revenue, front-desk salaries and front desk-desk expenses
and adjusted for inflation.
Table 11 - Five-year forecast for enterprise server in $million

Year

Room
Revenue

2015
2016
2017
2018
2019

31.29
34.90
38.74
43.03
47.78

FrontDesk
Salaries
1.30
1.37
1.43
1.49
1.55

Front-Desk
expense
1.46
1.58
1.62
1.69
1.77

Page 42 of 45

The cost and benefit analysis of Option 3 is shown in Table 12. The
calculation considers the total expenses for front desk expense. In 2015, the
total cost includes an initial project investment cost of $0.35 million.
In 2015, the total cost is:
= Front desk salaries + Front desk expense + Initial investment
= $1.297 million + $1.457million + $0.35 million
= $3.104 million
The benefit (room revenue) is $31.288 million, and the total rate of return is:
Total Benefit - Total cost = $31.288 million - $3.104 million = $28.184
million.
Table 12 - Cost and Benefit Analysis for enterprise server in $million

Costs

201

201

2017

201

201

Total

Front desk

1.30
5

1.37
6

1.43

1.49
8

1.55
9

7.13

Front
desk
Salaries

1.46

1.58

1.62

1.69

1.77

8.12

Initial
expense

0.35

0.00

0.00

0.00

0.00

0.35

Total
investment

3.10

2.94

3.04

3.18

3.33

15.6

Benefit

201

201

2017

201

201

Total

Room

31.2
5

34.9
6

38.74

43.0
8

47.7
9

195.

Revenue
Total

9
31.2

0
34.9

38.74

3
43.0

8
47.7

74
195.

74

ROI

201

201

2017

201

201

Total

Costs

3.10
5

2.94
6

3.04

3.18
8

3.33
9

15.6

Benefit

31.2

34.9

38.74

43.0

47.7

195.
1

Return

28.1
9

31.9
0

35.69

39.8
3

44.4
8

180.
74

8
6
5
5
NPV for option 3 (enterprise server) in million dollars

14

The NPV is calculated using the total initial investment of $350,530.


NPV at begin of 2015 calculation:

Page 43 of 45

28.53
NPV = -0.35+ 1.055

31.96
35.69
39.85
44.45
2
3
4
+ 1.055 + 1.055 + 1.055 + 1.0555 =

$151.98 million
*The NPV calculations has used 5.5% interest rate, 8% increase in revenue and
10% decrease in human resources cost.

Year
201
5
201
6
201
7
201
8
201
9

Room
Reven
ue

Frontdesk
Salaries

Frontdesk
expense

1.30

1.46

1.37

1.58

1.43

1.62

1.49

1.69

1.55

1.77

31.29

Initial
investment paid
at begin of 2015

NPV
($m)

0.35

151.
98

28.53

34.90

0.00
31.96

38.74

0.00
35.69

43.03
47.78

Profit (at
the end of
each year)

0.00
39.85
0.00
44.45

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