# 12. How do we calculate three-year GRC total cost of ownership?

Add software, external delivery, internal labour and transition costs over the same period. Keep cash expenditure, allocated internal effort and optional exit scenarios visible separately.

**Desk-proposed formula:**

`Three-year TCO = subscriptions + implementation + internal setup + ongoing administration + separately charged services/infrastructure + dual-running + other planned transition costs`

The following is a **hypothetical USD example**, not a supplier quote:

| Cost item | Assumption | Three-year cost |
|---|---|---:|
| Software | USD 150,000 annually, no increase | USD 450,000 |
| External implementation | One-off | USD 150,000 |
| Internal setup | 800 hours × USD 75 | USD 60,000 |
| Administration | 60 hours/month × 36 × USD 75 | USD 162,000 |
| Legacy dual-running | Assumed transition cost | USD 30,000 |
| **Total** | | **USD 852,000** |

In this example, software, implementation and dual-running total USD 630,000; allocated internal labour adds USD 222,000. Internal labour is not automatically incremental cash expenditure.

The example excludes separate connector, support, tax, storage and AI charges. A real model must price them or explicitly mark them unresolved.

Run sensitivities for delayed cutover, increased administrator effort and renewal increases. For example, an assumed 5% annual subscription increase makes the three software years USD 150,000, USD 157,500 and USD 165,375: **USD 472,875**, rather than USD 450,000.

Do not automatically assume an exit in year three. Show exit expenditure as a separate scenario unless replacement is part of the approved plan.