Question

You manage a small team of developers that works on internal projects for your company. You have two potential projects your team has the opportunity to work on. For the first project (Project A), your company has provided you an initial set of application features asked you to develop a cost estimate for the application. Below is some standard data on the team:

Project A

Description	Number
Number of team members	5
Developer Cost per person per day	$80
Work units required for project	150
Ideal schedule length	4 months
Work unit completion	25 units per month per team
Projected cost savings	$2,000,000

For every month Project A is off schedule, the cost to the business is an additional $50 per developer per day from the end of the ideal schedule length to project delivery.

The other project (Project B) requires your team to develop a smartphone-based application. Your team is relatively new to smartphone app development, so their work unit completion rate is lower. Project B is a small application and only requires 90 work units. The company has provided you with sketches of the application and is asking you to provide an estimate.

Project B

Description	Number
Number of team members	5
Developer Cost per person per day	$80
Work units required for project	90
Ideal schedule length	6 months
Work unit completion rate	15 units per month per team
Projected cost savings	$2,500,000

Project B does NOT apply any penalties for late delivery, as this project has an extended timeline.

Your supervisor has asked you to determine the feasibility of both projects, provide a cost estimate, and determine which project would be best for the business.

**Note: Work units are small pieces of functionality in a project. Completing all work units completes the project

Answer 1

Project A

Computation of Net Cost Savings

Work units required for project = 150

Work unit completion per month = 25 units per team

No. of months required = 150 / 25 = 6 months

Ideal Schedule length = 4 months

Extended schedule = 2 months

Cost for ideal schedule = 5 members * $80 per day * 120 days

= $48000

Cost for extended schedule = 5 members * $130 per day * 60 days

= $39000

Total Cost for the project = 48000 + 39000 = $87000

Cost Savings = $2,000,000

Net Cost Savings = 2000000 - 87000 = $1,913,000

CONCLUSION: The project is feasible.

Project B

Work units required for project = 90

Work unit completion per month = 15 units per team

No. of months required = 90 / 15 = 6 months

Ideal Schedule length = 6 months

Extended schedule = 0 months

Total Cost for the project = 5 members * $80 per day * 180 days

= $72000

Cost Savings = $2,500,000

Net Cost Savings = 2500000 - 72000 = $2,428,000

CONCLUSION: Project B is feasible.

Project B should be preferred since it has a higher cost savings among the two.