The project team estimated costs over an expected $3-$year life as follows:

Cost ElementYear $0$Year $1$Year $2$Year $3$Acquisition cost $($new software and implementation$)$$ $400,000$Operating cost $($annual licenses, upgrades, support$)$$ $50,000$$ $50,000$$ $50,000$Training$ $10,000$$ $5,000$$ $5,000$$ $5,000$Lost productivity during implementation$ $20,000$Total$ $430,000$$ $55,000$$ $55,000$$ $55,000$

After interviewing managers at other firms that have already implemented similar BI systems, the project team then estimated that the initiative would have the following risks.

Risk DescriptionProbabilityMitigation StepsManagers will not use the system, resulting in:$$Top management support; incentives to use the systemRevenue growth of $3\%25\%$Inventory turnover increase of $5\%25\%$