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Lower Capital Expenditures by Delaying Special Projects or Sharing Their Costs. Challenge: Action: Make capital expenditures affordable. We have placed expensive special projects on hold until the third quarter. We will wait and see how the market develops, reassessing if we should restart, continue to hold, or cancel altogether. We are also looking into a joint venture with another company to see if we can share expenses. On the bright side, we are working closely with major suppliers to trim expensive parts from our designs and to use more standard components. Our goal is a 5% drop in capital spending. Vice president of finance, manufacturing, 500 employees, New York.

Newly produced output is counted as part of GDP as soon as it s produced, even before the output gets sold That makes keeping track of the money associated with new production a little tricky For example, as soon as construction on a new house is completed, its market value of 300,000 (or 1 million if you live in London) is estimated and counted as part of GDP right then, even though the house may not be sold for months Suppose construction was completed on 29 December 2008, adding 300,000 to 2008 s GDP If the house is subsequently sold on 21 February 2009, it doesn t count in 2009 s GDP because double counting isn t allowed When sold, the house is considered old property and not new production.

Table 1-2

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Economists just say that the property right to this (now old) house has changed hands from the builder to the new owner Because trading old assets obviously involves no new production, it doesn t count in GDP This accounting convention applies to firms producing any sort of output good whatsoever If Sony produces a TV on 31 December 2008, the value of that TV is counted in 2008 s GDP, even though it won t be sold to a customer until the following year A handy way to think about this is to imagine that Sony builds the TV and then, in effect, sells it to itself when it puts the TV into inventory This sale is what is counted in GDP for the year 2008 When the TV is later sold from inventory to a customer, the process is just an exchange of assets (trading the TV for cash).

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The fact that output is counted when produced, rather than when sold, is a red flag when interpreting GDP statistics to gauge the health of the economy..

Compliance with the architecture allows for better risk management of development projects. Beginning with the use of the project-start architecture, the risk of the project result not fitting into the larger picture has been strongly reduced. After all, if the project adheres to the project-start architecture, the result is guaranteed to fit in with the information systems as a whole. Compliance thus ensures better coordination among all IT components. The project-start architecture also reduces the chances of IT elements creeping in that should be classified in the category of hobbyhorse, with hidden costs such as training, needing a special maintenance group, and delays caused by unfamiliarity. Using business cases also reduces risks. As business and IT jointly draw up the business case, the chances of misunderstandings and differences of interpretation are much smaller. The various parties involved experience the process of creating a business case together and, therefore, know why certain choices have been made. In addition, the involvement of technical specialists ensures from the start that the requirements and wishes drawn up can actually be met. The fact that projects are only started to achieve a clearly formulated business objective, which fits in with the other business objectives of the organization, and that decision making takes place on the basis of business-economic grounds, greatly reduces the chances of embarking on the wrong projects. This means that fewer projects will be discontinued prematurely because it is clear that they are not useful or there is no longer a budget. Finally, the risk of IT solutions being impossible to maintain or only at high costs is also reduced. After all, maintenance is part of the projectstart architecture. Using standards limits the number of development environments to be maintained and, for that reason, keeps them manageable and affordable.

2.1 2.2 2.3

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