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Data specification for utility GIS and corresponding cost benefits in the year 2002


However, on the first year of investment, "Utility F" will achieve a saving of 2% of the cost of last mile infrastructure as against "Utility C", computed at of 2% of Rs 30 Cr , being Rs 0.6 Cr. Also, every year from the date of implementation of the GIS, the "Utility F" will also save 40% on the cost of maintenance of the network as against a non-GIS Utility, computed at 40% of Rs 2 Cr per year, being Rs 0.8 Cr.

Initial Investment
Cost of GIS Facility 75


Financials after 2 Year
Net Investment 46
Add 14% cost 6
Saving in Maint. -40
Net Cost 12


Financials after 4 Year
Net Investment -26
Add 14% cost -4
Saving in Maint. -40
Net Cost -108
 Financials after 1 Year
Investment 75
Add 14% cost 14
Saving in Maint. -40
Net Cost 46


Financials after 3 Year
Net Investment 12
Add 14% cost 2
Saving in Maint. -40
Net Cost -126


Financials after 5 Year
Cost carried over 38
Add 14% cost 5
Saving in Maint. -30
Net Cost -37

With the cost of funds pegged at 14%, following will be the cost/benefit achieved by "Utility F" over the period of five years:

Whereas, "Utility C" will be spending much less during the first year, yet get a 20% saving on maintenance cost (i.e. Rs 40 Lk).



However, growing needs and technological developments will demand that this company ports its GIS to "Fine" product by the fourth year. This upgrade, as per the discussions we have had earlier, is likely to be in the order of Rs 108 Lk.

The graph below shows the investments and paybacks of "Fine" and "Course" products.

Conclusion
The following conclusions can be drawn from the analysis above:
  • While the "Fine Mapping" is twice as expensive as the "Coarse Mapping", it pays for the entire investment in a matter of two years and brings in a 2X profit (after fully amortizing the investment) before 5 years of operation.
  • This may be reason why utilities operating in countries with abundant resources go for "Fine" product, even though the initial investment is much higher.
  • Other than this, if we also consider the commercial benefits that "Utility F" will enjoy due to having a superior GIS (and hence better customer relationship), the balance is further tilted towards building a GIS with the "Fine" product
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