Charter Financial Bank operates three branches in a southeasterncity. Ray Copper, Vice-President of Information Technology at thebank, has recently been charged by the bank’s
president to develop a Website to promote bank services, toprovide access to customer account information, and to allowindividuals to apply online for loans and credit cards. Ray decidedto
assign this project to Rachel Smith, one of two directors in theinformation technology group. Since Charter Financial did notcurrently have a presence on the Web, Ray and Rachel agreed
that an appropriate starting point for the project would be forthe project team to benchmark existing Websites in order to gain abetter understanding of the state-of- the-art in this area. Atthe
conclusion of their first meeting, Ray asked Rachel to prepare arough estimate of how long this project would take and how much itwould cost if it were pursued at a normal pace. Noting that
the president appeared particularly anxious to launch theWebsite, Ray also requested that Rachel prepare a time and budgetestimate related to launching the Website as quickly aspossible.
During the first project team meeting, the team identified sevenmajor tasks associated with the project. The first task was tobenchmark existing Websites. The team estimated that
completing this task at normal pace would likely require 10 daysat a cost of $15,000. However, the team estimated that this taskcould be completed in as few as seven days at a
cost of $18,750 if the maximum allowable amount of overtime wasused. Once the benchmark study was completed, a project plan andproject definition document
would need to be prepared for top management approval. The teamestimated that this task could be completed in five days at a costof $3,750 working at a normal pace or in three days
at a cost of $4,500.
When the project received the approval of top management, theWebsite design could begin. The team estimated that Website designwould require 15 days at a cost of $45,000 using no
overtime or 10 days at a cost of $58,500 using all allowableovertime.
After the Website design was complete, three tasks could becarried out simultaneously:
(1) developing the Website’s database,
(2) developing and coding the actual Web pages, and
(3) developing and coding the Website’s forms.
The team estimated that database development would require 10days and cost $9,000 using
no overtime, but could be completed in seven days at a cost of$11,250 using overtime.
Likewise, the team estimated that developing and coding the Webpages would require 10 days and cost $15,000 using no overtime orcould be reduced by two days at a total cost of
$19,500. Developing the forms was to be subcontracted out andwould take seven days at a cost of $8,400. The organization thatwas to be used to create the forms does not provide an
option for paying more for rush jobs. Finally, once the databasewas developed, the Web pages coded, and the forms created, theentire Website would need to be tested and debugged. The
team estimated that this would require three days at a cost of$4,500. Using overtime, the team estimated that the testing anddebugging task could be reduced by a day at a total cost of$6,750.
QUESTIONS
1. What is the cost of completing this project if no overtime isused? How long will it take
to complete the project?
2. What is the shortest amount of time in which the project canbe completed? What is
the cost of completing the project in the shortest amount oftime?
3. Suppose that the benchmarking study actually required 13 daysas opposed to the 10
days originally estimated. What actions would you take to keepthe project on a
normal schedule?
4. Suppose the President wanted the Website launched in 35 days.What actions would
you take to meet this deadline? How much extra would it cost tocomplete the project
in 35 days?
