Husky Air

TEAM A2K - SUBMISSION
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HUSKY AIR PILOT ANGELS
Business Case and Project Infrastructure

Submitted by: Team A2K
UMUC ITEC 640

Friday, February 17, 2012


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Table of Contents
Business Case
1.0 Introduction and Project Name 4
2.0 Project Team 4
3.0 Project Description... 4
4.0 Measurable Organizational Values
Desired Area of Impact.. 6
Desired Value of the Project... 7
Metric & Timeframe for Achieving MOV ... 8
Summarized MOV..... 9
5.0 Alternative Analysis
Total Cost of Ownership. 11
Total Benefits of Ownership.. 12
Alternative A (Status Quo) 13
Alternative B (COTS) 14
Alternative C (Custom).. 14
NPV Calculations... 15
6.0 Recommendation .................................................................. 16

Project Infrastructure
1.0 Introduction and Project Name ............................................. 19
2.0 Project Team ......................................................................... 19
3.0 Measurable Organizational Values ....................................... 19
4.0 Resource and Cost Estimates ................................................ 21

Reference Listing .......................................................................... 24


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Husky Air Reservation
System Business Case


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1.0 Introduction and Poject Name
Team A2K has been hired to work on the Husky Air Reservation System project in order to
build a software system to track Husky Air Pilot Angel volunteers, store pilots basic information,
total hours, certifications, and ratings. The Business Case is intended to provide senior
management with the information needed to make a decision about the viability of the proposed
project effort. This document will demonstrate the methods and rationale used in determining the
benefits and quantifying the estimates (Marchewka, 2009, p. 42). Several alternatives will be
assessed and a final recommendation will be provided.
2.0 Project Team
The following table provides a list of the project team members assigned to Team A2K.
Name Contact Information
Natasja K Allen natasja.allen@gmail.com
Rhonda R Barnhart diveman.barnhart@gmail.com
Tamame J Bunger bran_cam@hotmail.com
Ronald R Cingle ronald.cingle@us.army.mil
Jason E Connelly jeconnelly1976@yahoo.com
Zachary Robert Fellers zachfellers@hotmail.com
Abiola O Isola kikeisola@yahoo.com
Adrian E Justis justis602@hotmail.com
Michael K. Kapombe MichaelKapombe@westat.com
Michael Francis Kelly mkelly@hst.nasa.gov
3.0 Project Description
Husky Air is a fixed base operator (FBO) facility providing a wide range of aviation
services to its clientele. Husky Air has a growing reputation in the Midwest area, in particular for
its charter service, maintenance, and flight instruction. As a FBO, Husky Air provides:
Business jet, propjet, helicopter, and propeller aircraft charter
Refueling
Airframe, engine, propeller, and avionics maintenance
Aircraft rental
Flight instruction
Pilot supplies

In addition to its regular aviation business, Husky Air provides the community with a
charitable service call Pilot Angels. People with health issues that require them to travel for

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medical treatment are assisted by volunteer private pilots through Husky Air. In addition, Pilot
Angels will transport donor organs, supplies, and medical personnel.
Husky Air, consisting of a staff of 23 employees composed of pilots, mechanics, and office
staff, currently uses a manual paper-based system to coordinate the air transportation efforts of
Pilot Angels. A pool of pilot volunteers is kept in a file folder. If a hospital or person with a
medical or financial hardship contacts Husky Air, information about the traveler and the details
of the request are recorded onto paper forms. Once all information is recorded, Husky Air
contacts volunteer pilots from the pool of volunteers stored in the file folder to determine their
availability and ability to satisfy the request. Although a volunteer pilot may be willing and
available for a Pilot Angel flight, the aircraft may not have the range or weight-carrying
requirements. The current process in use is inefficient since many pilots may have to be
contacted until a pilot and suitable aircraft can be found.
Husky Air is currently in need of a computer-based system to track its Pilot Angels
volunteers. The proposed initiative is the development a Husky Air Reservation System (HARS)
to keep track of all Pilot Angels volunteer pilots to include their name, address, phone numbers,
as well as their total hours, certifications and ratings. The system will also have information
about the type of aircraft such as the type of plane, aircraft identification number, whether the
aircraft is single or multi-engine, its capacity for carrying passengers and the number of aircrafts
each pilot owns. The HARS will also provide easy input, storage, and output of information
about the people, hospitals, clinics, and organ banks who request the information about the
patients, their passengers, and specific needs to help match volunteers with the request for
transport. In addition, The HARS will fully automate much of the scheduling process by
providing a tool for collaboration between all parties involved, in addition to a flight tracking
utility that will help in the effort to recognize Pilot Angels volunteers for their contributions.
Moreover, the system will allow Husky Air a list of all Pilot Angeles flights to include:
The pilot who flew the flight
The passengers on board
The plane that was used
The total time of the flight
The distance and destination of the flight
The date and time of the flight
The total fuel used
These objectives will be achieved by Husky Air Reservation System (Marchewka, 2009, p. 29-
30).
4.0 Measurable Organizational Values
A business case provides an analysis of the business value, several alternatives for
achieving the projects MOV, the feasibility of the alternatives, as well as their costs, benefits,

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and risks. (Marchewka, 2009, p.69). A key part of the Business Case is defining the Measurable
Organizational Values (MOVs) for the proposed project. A MOV is a measurable and
verifiable target objective that provides value to the organization and is used to evaluate the
projects success. (Marchewka, 2009, p. 44-45). The MOVs will be broken down by their
desired area of impact, the desired value of the project, the appropriate metric to measure
success, and the timeframe. A summary of the MOVs will then be provided.
Desired Area of I mpact
According to McHugh & Associates (1998), Fixed Base Operator (FBO) is an individual,
firm or corporation leasing space and operating at the airport and providing one or more general
aircraft services to the public, such as maintenance, storage, ground and flight instructions, etc.
FBOs provide a wide range of services at an airport, and FBOs have heavily discounted rents for
office and hangar space in exchange for the promise to buy certain volumes of fuel. Repair
shops and charter services are other services an FBO can offer, but the underlying objective is to
offer as many services as possible to increase the sale of fuel (Larson, 2008).
As FBO, Husky Air is focused on improving their Pilot Angels program. Although this is a
volunteer program, it is becoming a highly visible program within the Midwest community.
Therefore it is critical to Husky Airs business reputation that the program is run as efficiently as
possible. While the major impact of the project will be in operations, the success of the project
impacts Husky Airs business strategy as well.
The success of this project will have a favorable impact on Husky Airs business
operations. Once implemented, a computer based system will help streamline operations and
reduce costs. Improvements to the current process used to match potential customers with
company aircraft and pilots will make the process more effective (better match of aircrafts to
client needs) and more efficient (faster response to requests for assistance). As their computer
based record keeping system evolves improvements to the supply chain operations may be
realized with the implementation of a company intranet accessible to suppliers who are critical to
inventory needs, such as suppliers of fuel and aircraft parts. The improvements made in the Pilot
Angels program can serve as a prototype in other business operations areas.
A successful and highly regarded Husky Air Reservation System (HARS) will generate
word of mouth advertising and help to grow Husky Airs visibility as a full service provider in a
competitive market. The success of the Husky Air Reservation System (HARS) is in effect good
advertising for Husky Air and should help provide a competitive advantage in the health services
industry. Indeed, word of mouth success might lead to new and possibly unexpected business
opportunities. Running a highly visible and successful charity program to gain a foothold in a
strategic business area is at once a creative and game changing approach to competition within
the market. Building a successful relationship with the communities they serve through such a
program highlights the companys commitment to their customers and should only serve to

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enhance their business reputation. This in turn should act as a catalyst for increasing the
companys market share.
The table below reflects the priority of the potential areas of impact for this project:
Rank Potential Area of
Impact
Desired Impact
1 Operational
Ensuring that operations are streamlined and more
effective
Replace manual process with more efficient automated
process.
2 Financial
Increase fuel sales from more pilots joining Pilot Angels
program
Increase profit margins from improved corporate image
3 Customer
Improve customer services to both pilots and patients
Transaction processes are more effective and efficient
4 Social
Educating everyone about the pilot angels and their
program, leading to an increase in business
Support a larger number of patients
Reduce delivery time of donor organs
5 Strategic
Taking advantage of cause related marketing to increase
market share (already in progress)

Desired value of the Project
At the moment more than ever, Husky Air needs to invest in order to help its business run
more efficiently. Husky Air wants to improve how they operate Pilot Angels by upgrading to a
computer based system that matches clients with pilots. In other words, they want to build a
better interface for the clients and pilots. The value gained from doing the program better will be
realized as the new model propagates to other business areas within Husky Air. The new system
should help office personnel to administer the Pilot Angels program in a similar manner to what
they do now, but without the time-consuming manual processes. Less effort will be needed to
locate information about pilots and their availability because it will all be stored and accessed in
one place. The data will be accessible with just a few mouse clicks.
Another value gained by improving the process is that the process of matching clients with
pilots will be more efficient and therefore faster. There is an implied risk in the Pilot Angel
program that arises from the fact that some of the medical cases they become involved with are
going to be time critical. For example, the transport of donor organs in a timely manner may
have life or death consequences in some cases. Since the program is tied so closely to the Husky
Air business reputation, there is real value added in improving process efficiency.

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In summary, the values can be categorized as Bigger, Better, Faster, Cheaper, or Do More:
1. Bigger: Husky Air wants to increase the size of the Pilot Angels program by recruiting
more pilots, maintaining contact information and flight specific particulars of the
patients, and reaching out to more medical facilities that would require the charitable
service.
2. Better: Husky Air wants to be more efficient at maintaining pilot and aircraft data as well
as scheduling charter and Pilot Angels flights. They want to move from paper records to
digital records.
3. Faster: Husky Air wants to be able to quickly scan pilot, aircraft, charity client, medical
facility, etc. data to schedule charter and Pilot Angels flights.
4. Cheaper: Husky Air wants a system that will reduce steps and increase productivity when
searching for a pilot and aircraft for Pilot Angels requests.
5. Do More: The proposed computerized tracking and scheduling system will provide data
and process requests for the non-profit Pilot Angels program and for the for-profit FBO.
This will increase overall revenues, provide benefits to their customer base; pilots that
rent and own small aircraft, and help them reach out and service more medical hardship
patients in need.
Appropriate Metric & Timeframe for Achieving MOV
Working with hospitals, health care agencies, and organ banks, the Pilot Angels program
currently provides transportation services for patients, medical personnel, donor organs, and
medical supplies each year. Current operations require a lead time of 7 to 10 business days in
order to match potential clients with pilots and aircraft. Reducing this overhead to 3 days
(including weekends for emergency cases) will lead to an improvement of better than 50% in
response time. In addition, Husky Air captures only about a third of the information they would
like to retain from each flight or pilot request. An improved operations approach increases their
data acquisition capability by nearly 70%.
The visibility of the Pilot Angel program in the Midwest coupled with a successful,
efficient operational approach offers Husky Air the opportunity to leverage this success in their
strategic business plan and gain a competitive advantage. With improved data acquisition
capabilities, it will be possible to track new business opportunities back to Pilot Angel
participants. Husky Air should see an increase of 3% per year in new business opportunities
obtained from Pilot Angels referrals or associations.
Response time should be improved by 50% as soon as the new approach goes into
operation. Data Acquisition capability should improve immediately as well, however, there will
be a lag time for the measureable since data has to accrue before measurements can be taken.

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Gains should be evident within the first 6 months of operation. Gains in new business
opportunities attributable to the Pilot Angel program of 3% should be measureable after 18
months of operation. The new computer system (HARS) will reduce average flight scheduling
completion times by 50% (from an average of 48 hours to no more than 24 hours), increase the
number of Pilot Angels customers and volunteers by 30%, decrease overall annual spending by
15%, increase sales by 10%, and increase the annual revenue growth rate to 20% within 3 years
of the project completion with an expected advantage for at least 6 years. The resulting
efficiencies should also allow the addition of more services to the Pilot Angels program.
The use of Husky Air Reservation System will create the above results by fully automating
most of the activities involved in the current Pilot Angels scheduling process and allowing for
alternative methods of communicating with volunteer pilots, patients, and medical parties.
Additionally, the HARS will allow Husky Air to manage additional volunteer pilots, which
would create opportunities to double the number of flights conducted each week without any
impact on staffing and current workloads. By improving the effectiveness of Pilot Angels,
Husky Air will receive an increased market share of 10% and increase current annual growth
(revenue) rates by 20% within the first 3 years of HARS completion. Assuming that the Pilot
Angels program has already helped improve the corporate image and increase sales, an improved
system is estimated to provide a 10% increase in sales. Once the new system is implemented,
office employees will need to be placed in new positions within the company within 6 months. It
is assumed that Husky Air will be responsible for retraining or repositioning displaced
employees within the company.
Summarized MOV
The following table summarizes the MOV statements for this project:

Desired Area of
Impact
Desired Value Metric Time Frame
Social Promote brand name in community: support a
larger number of patients

Increase the number
of patients by 30%
12 months

Customer Improved customer service and overall
customer experience

Reduced waiting time
for finding flights by
50%
12 months
Financial Reduced expenditures

Increased profit and reduce cost by reducing
the time it takes to schedule an appointment.

Improve corporate image and increase
business

15% reduction in
overall expenditures
due to automation
Reduce scheduling
time by 80%
10% increase in fuel
sales
12 months

18 months

Within first year
of operation


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Strategic Expand customer base through partnerships

Improved effectiveness and increased
regional recognition of Pilot Angels

Gains in new business opportunities
attributable to the Pilot Angel program and
Expansion of services

Increase number of
partnerships with
hospitals, health care
agencies, and organ
banks by 20%

Increase number of
volunteer pilots by
30%

Increase market share
in region by 10%
36 months

36 months

36 months
Operational Reduced response and completion times in
matching medical requests and proper
volunteer support

Lower operation costs and operational
efficiencies and effectiveness.

No more than 24
hours
70% increase in data
acquisition capability.
50% reduction in
office personnel

6 months

6 months

6 months

All these MOVs can be combined into two MOVs statements:
MOV1: Implementing the Husky Air Reservation System (HARS) will result in a 10% increase
in market share which will result in a 20% increase in revenues within one year of completion of
the new system and to continue for at least three years. The increase in market share will come
via the following areas: 1. Average flight scheduling completion times reduced by 50% (from an
average of 48 hours to no more than 24 hours). 2. Increase in the number of pilot angels
customers and volunteers by 30% due to the promotion of Husky Air in community and
partnerships with hospitals and other organizations. 3. Increase in flights by 30% (patients and
customers) due to the ability to better schedule appointments and therefore 80% reduction in
missed flights: 40% of the increased flights will come from new pilots angels attracted to husky
air because of the improve system and 60% will come from existing pilots expanding to new
businesses. 4. And decrease in overall annual spending by 15%.
MOV2: Implementing the Husky Air Reservation System (HARS) will result in 50% reduction
in office personnel in charge of the pilot angels program within 6 months of completion of the
new system and will remain reduced for at least 5 years. The reduction of office personal in
charge of scheduling will come via the introduction of the improved automated system which
will automate the current pilot angels scheduling process and flights tracking system.

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5.0 Alternative Analysis
Several alternatives were considered for Husky Airs Pilot Angels software system. Husky
Air could either choose to maintain the status quo (Alternative A), purchase a software package
(Alternative B), or build a custom system (Alternative C). The status quo option is known as the
base case alternative, which describes how Husky Air would perform if it chose not to
implement a new system and instead stay with its current manual, paper-based system
(Marchewka, 2009, p. 51). In order to assess each of the alternatives, the total cost of ownership
and the total benefits of ownership will be considered.

Total Cost of Ownership
The costs of each of the alternatives needs to be considered, including the costs to acquire,
develop, and maintain the system. This includes a list of all possible cost impacts during the
course of the life of the system (Marchewka, 2009, p. 52-53). These costs include:
Direct or up-front costs: Costs that have a specific product or service that is purchased
such as hardware, software, telecommunications equipment, setup costs, and consultant
fees (Marchewka, 2009, p. 53)
Ongoing costs: Costs that will be incurred throughout the life of the project, such as
salaries, licensing fees, and customer support fees (Marchewka, 2009, p. 53)
Indirect Costs: Costs that a project might incur, such as loss of productivity, quality
assurance, or reviews (Marchewka, 2009, p. 53)

The table below lists each of the initial costs associated with each of the three alternatives:
Explanation Alternative
A
Alternative
B
Alternative
C
Project Staff
(personnel)

B development team:
Database Admin + Data
Analyst + Benefits and
project manager, 14 weeks
(560 hours each)
C All development team
(DBA, Data Analyst, and QA
Tester + project manager, 14
weeks (560 hours each)
0.00 83,300.00 110,260.00
Hardware 3 PCs, Workstations,
Server, network, Router,
Firewall, Switch, Ethernet
Cables, UPS
0.00 8,438.00 8,438.00
Software B Standard FBO Manager
for $7500.00, MySQL
license per year for 2000
(MySQL Editions, 2012), and
0.00 10,700.00 3,200.00

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development tools support
per year ($1,200 per year)
(Oracle Support, 2012)

C MySQL license per year
for 2000 (MySQL Editions,
2012), development tools
support per year ($1,200 per
year) (Oracle Support, 2011)

Training
2 day On site training @
$600 per day
0.00 0.00 1,200.00
Project team resources Office space, utilities,
technology, communications,
0.00 10,355.00 10,355.00
Maintenance
support
@$385/year. 0.00 385.00 385.00
Computer Technician (part time) 23.75 per hr - 80
hours
0.00 1,900.00 1,900.00
Total 0.00 115,078.00 135,738.00

In the table above alternative A cost the least amount but is also the least reliable and will
eventually increase in expenses in order to maintain the status quo system. Alternative B costs
more than alternative A and is more reliable, and very efficient. But will require addition
expense to meet all the needs of Husky Air. Alternative C costs the most initially, however, it
will require the least expense (primarily maintenance) in the future and meets all the needs of
Husky Air.
Total Benefits of Ownership
The total benefits of ownership are defined as the benefits offered during the course of the
life of the system (Marchewka, 2009, p. 53). The new system will not only improve the
efficiency of this program, but also provide new services, such as recognizing volunteers for
their contributions.
TBO for all three alternatives are focused on the following:
Increasing high value work
Improving accuracy and efficiency
Improving decision making
Improving customer service

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The table below shows the ratings from 1 to 5 based on the importance of the benefits for each
alternative; 1 being the lowest rating and 5 the highest rating. Alternative C has the highest
rating following by alternative B and then alternative C in regards to being efficient, improving
accuracy, customer service and decision making.
Total Benefits of Ownership
Direct, Indirect, Ongoing
Benefits
Alternative A Alternative B Alternative C
Track of all pilots 1 4 5
Type of aircraft 2 4 4
Clients/Passengers Info. 3 5 5
Hospitals/Clinics/Organ
Banks
3 5 5
Flight information 3 5 5

The table below lists the Net Present Value (NPV) of Alternative A, Alternative B, and
Alternative C based on the total net cash flow, and 8% discounted cash flow estimates. Total
Net Cash is computed based on total estimated revenues minus total cost of the project.

ALTERNATIVE A (STATUS QUO)

Year 0 Year 1 Year 2 Year 3 Year 4
Operating revenue

Aircraft maintenance
$1,123,345 $1,011,010 $909,909 $818,918 $737,027
Charter services
$925,751 $833,176 $749,858 $674,873 $607,385
Aircraft sales
$1,125,394 $1,069,120 $1,015,660 $964,877 $916,633
Fuels sales
$162,915 $146,623 $131,961 $118,765 $106,888
Hangar rental
$137,518 $123,766 $111,389 $100,250 $90,225
Flight instruction
$82,863 $78,719 $74,783 $71,043 $67,490
Total revenue $3,557,786 $3,262,414 $2,993,560 $2,748,726 $2,525,648

Operating expenses

Payments to suppliers
$769,516 $792,601 $816,380 $840,871 $866,097
Contractual services
$363,625 $369,079 $374,616 $380,235 $385,938
Repairs and maintenance
$225,572 $220,070 $225,572 $228,956 $232,390
Materials and supplies
$201,762 $207,815 $214,049 $220,471 $227,085
General & Administrative $201,121 $203,132 $205,164 $207,215 $209,287
Rent to Airport $79,591 $79,591 $79,591 $83,570 $83,570
Depreciation
$45,899 $46,817 $47,754 $48,709 $49,683
Total expenses $1,887,086 $1,919,105 $1,963,126 $2,010,027 $2,054,050

Net Cash Flow $1,670,700 $1,343,309 $1,030,434 $738,699 $471,598


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Summary: Steady decreases in operating revenue accompanied by rising increases in operating costs.
Husky Air would see losses of 10% /yr in aircraft maintenance, sales, and hangar rentals, and 5%/yr
in charter services and flight instruction business.

ALTERNATIVE B (COTS)

Operating revenue

$1,123,345 $1,089,645 $1,122,333 $1,156,004 $1,190,684
Charter services
$925,751 $897,978 $924,917 $952,665 $981,245
Aircraft sales
$1,125,394 $1,091,632 $1,058,883 $1,027,116 $996,303
Fuels sales
$162,915 $158,027 $153,286 $150,220 $147,215
Hangar rental
$137,518 $123,766 $111,389 $100,250 $90,225
Flight instruction
$82,863 $80,377 $81,181 $82,805 $85,289
Total revenue $3,557,786 $3,441,425 $3,451,989 $3,469,060 $3,490,961

Operating expenses

$769,516 $792,601 $816,380 $840,871 $866,097
$363,625 $369,079 $374,616 $380,235 $385,938
Repairs and maintenance
$225,572 $228,956 $232,390 $237,038 $241,778
$201,762 $207,815 $214,049 $220,471 $227,085
General & Administrative $201,121 $207,154 $200,939 $194,910 $189,062
Rent to Airport $79,591 $79,591 $79,591 $83,570 $83,570
Depreciation
$45,899 $46,817 $47,754 $48,709 $49,683
Total expenses $1,887,086 $1,932,013 $1,965,719 $2,005,804 $2,043,213

Net Cash Flow $1,670,700 $1,509,412 $1,486,270 $1,463,256 $1,447,748

Summary: Purchase of a COTS package (FBO Manager, $7500) and IT equipment ($1500
for three workstations) are completed to make the Pilot Angel program more efficient. The
upgrade helps create a strategic advantage for Husky Air due to the programs visibility. Aircraft
maintenance and sales decrease at significantly lower rate (3%/yr). The charter services and
flight instruction business decreases 3% the first year then rebound to gains of 3%/yr as a result
of the increased awareness of product due to the favorable impression created by the efficient
Pilot Angels operation.
ALTERNATIVE C (CUSTOM)

Operating revenue

$1,123,345 $1,089,645 $1,122,333 $1,156,004 $1,190,684
Charter services
$925,751 $897,978 $924,917 $952,665 $981,245
Aircraft sales
$1,125,394 $1,091,632 $1,058,883 $1,027,116 $996,303
Fuels sales
$162,915 $158,027 $153,286 $150,220 $147,215
Hangar rental
$137,518 $123,766 $111,389 $100,250 $90,225
Flight instruction
$82,863 $100,377 $111,181 $82,805 $85,289
Total revenue $3,557,786 $3,461,425 $3,481,989 $3,469,060 $3,490,961

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Operating expenses Year 0 Year 1 Year 2 Year 3 Year 4
$769,516 $792,601 $816,380 $840,871 $866,097
$363,625 $369,079 $374,616 $380,235 $385,938
Repairs and
maintenance
$225,572 $228,956 $232,390 $237,038 $241,778
$201,762 $207,815 $214,049 $220,471 $227,085
General &
Administrative
$201,121 $207,154 $200,939 $194,910 $189,062
Rent to Airport $79,591 $79,591 $79,591 $83,570 $83,570
Depreciation
$45,899 $46,817 $47,754 $48,709 $49,683
Total expenses $1,887,086 $1,932,013 $1,965,719 $2,005,804 $2,043,213

Net Cash Flow $1,670,700 $1,529,412 $1,516,270 $1,463,256 $1,447,748

Summary: Implementation of a custom application developed at a cost of ~$135K the first year
is completed to make the Pilot Angels operation more efficient. The upgrade helps create a
strategic advantage for Husky Air due to the programs visibility. Aircraft maintenance and sales
decrease at significantly lower rate (3%/yr). The charter services and flight instruction business
decreases 3% the first year then rebound to gains of 3%/yr as a result of the increased awareness
of product due to the favorable impression created by the efficient Pilot Angels operation.
Total Net Cash Flow
Alternatives Year 0 Year 1 Year 2 Year 3 Year 4
A 1,670,700 1,343,309 1,030,434 734,699 471,598
B 1,670,700 1,509,412 1,486,270 1,463,256 1,447,748
C 1,670,700 1,529,412 1,516,270 1,463,256 1,447,748

Discounted Cash Flow= (Net Cash Flow) / (1 + Discount Rate)
year

NPV CALCULATION FOR ALTERNATIVE A (8% Discount Rate)
Time Period Calculation Discounted Cash Flow
Year 0 1,670,700 1,670,700.00
Year 1 1,343,309/(1+0.08)
1
1,243,804.63
Year 2 1,030,434/(1+0.08)
2
883,431.07
Year 3 734,699/(1+0.08)
3
583,094.44
Year 4 471,598/(1+0.08)
4
346,763.24

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NPV 4,727,793.38
NPV CALCULATION FOR ALTERNATIVE B (8% Discount Rate)
Year 0 1,670,700 1,670,700.00
Year 1 1,509,412/(1+0.08)
1
1,397,603.70
Year 2 1,486,270/(1+0.08)
2
893,191.11
Year 3 1,463,256/(1+0.08)
3
1,161,314.29
Year 4 1,447,748/(1+0.08)
4
1,064,520.59
NPV 6,187,329.69

NPV CALCULATION FOR ALTERNATIVE C (8% Discount Rate)
Year 0 1,670,700 1,670,700.00
Year 1 1,529,412/(1+0.08)
1
1,416,122.22
Year 2 1,516,270/(1+0.08)
2
1,299,957.13
Year 3 1,463,256/(1+0.08)
3
1,161,314.29
Year 4 1,447,748/(1+0.08)
4
1,064,520.59
NPV 6,612,614.23

The estimates from this table show that Alternative C has the greatest NPV when compared
to Alternative A and Alternative B. The custom built database system is the superior alternative
for Husky Air Pilot Angles. It provides long term cost effective solutions for its current situation,
and will be most proficient at handling Husky Air specific needs.
6.0 Recommendation
After comparing alternative solutions, it is evident that if Husky Air continues with the
status quo, the manual equipment and flight lesson system, Husky Air will not be able to fulfill
the strategic plan to increase market share. They will also not fulfill an operational plan to
increase operational efficiencies and effectiveness. The status quo restricts operational
complexity and thus limits future growth. The current system does not have the ability to

17

efficiently track information about the customers, the equipment and the pilots. It is a time
consuming system for scheduling equipment and flight lessons. With the manual system,
employees can easily make errors. The status quo will not require any substantial capital outlay
in the near term but definitely restricts operational efficiencies and increase market share in the
long term.
Husky Air can purchase an electronic Reservation System from a vendor. This alternative
is better than maintaining the status quo. A reservation system from a vendor will have
limitations in that modules or components may or may not fit the current business model. The
modules may or may not be adapted, but if so, this will add expense to the project. To purchase
a package reservation system from a vendor will be less expensive than a customized reservation
system.
Husky Air can contract to have a reservation system built from a software development
vendor. While this option will be the most expensive, it will provide maximum customization
that will allow Husky Air to track all of the information it needs to and interface with an
accounting system. Given growth projections, it is felt that Husky Air revenues will increase
over a three year period.
Although the initial design and implementation of the custom design is much higher
than the COTS system, the support and upkeep of the system is cheaper than that of the COTS
system. The custom system will likely take up to six months to design and has a higher initial
startup cost but the training; installation of the program will be part of the design cost. A2K
recommends that Husky Air choose a custom design option for the HARS.


18

Husky Air Reservation
System Project Infrastructure


19

1.0 Introduction and Poject Name
Team A2K has been hired to work on the Husky Air Reservation System project in order to
build a software system to track Husky Air Pilot Angel volunteers, store pilots basic information,
total hours, certifications, and ratings.
2.0 Project Team
The following table provides a list of the project team members assigned to Team A2K.
Name Contact Information
Natasja K Allen natasja.allen@gmail.com
Rhonda R Barnhart diveman.barnhart@gmail.com
Tamame J Bunger bran_cam@hotmail.com
Ronald R Cingle ronald.cingle@us.army.mil
Jason E Connelly jeconnelly1976@yahoo.com
Zachary Robert Fellers zachfellers@hotmail.com
Abiola O Isola kikeisola@yahoo.com
Adrian E Justis justis602@hotmail.com
Michael K. Kapombe MichaelKapombe@westat.com
Michael Francis Kelly mkelly@hst.nasa.gov
3.0 Project Measurable Organizational Value
The following table provides a summary of the MOVs by listing the desired areas of
impact and desired values, and the metrics and time frames associated with each:

Desired Area of
Impact
Desired Value Metric Time Frame
Social Promote brand name in community: support a
larger number of patients

Increase the number
of patients by 30%
12 months

Customer Improved customer service and overall
customer experience

Reduced waiting time
for finding flights by
50%
12 months
Financial Reduced expenditures

Increased profit and reduce cost by reducing
the time it takes to schedule an appointment.

Improve corporate image and increase
business
15% reduction in
overall expenditures
due to automation
Reduce scheduling
time by 80%
10% increase in fuel
sales
12 months

18 months

Within first year
of operation

20

Strategic Expand customer base through partnerships

Improved effectiveness and increased
regional recognition of Pilot Angels

Gains in new business opportunities
attributable to the Pilot Angel program and
Expansion of services

Increase number of
partnerships with
hospitals, health care
agencies, and organ
banks by 20%

Increase number of
volunteer pilots by
30%
Increase market share
in region by 10%
36 months

36 months

36 months
Operational Reduced response and completion times in
matching medical requests and proper
volunteer support

Lower operation costs and operational
efficiencies and effectiveness.
No more than 24
hours
70% increase in data
acquisition capability.
50% reduction in
office personnel

6 months

6 months

6 months

All these MOVs can be combined to two MOVs statements:
MOV1: Implementing the Husky Air Reservation System (HARS) will result in a 10% increase
in market share which will result in a 20% increase in revenues within one year of completion of
the new system and to continue for at least three years. The increase in market share will come
via the following areas: 1. Average flight scheduling completion times reduced by 50% (from an
average of 48 hours to no more than 24 hours). 2. Increase in the number of pilot angels
customers and volunteers by 30% due to the promotion of Husky Air in community and
partnerships with hospitals and other organizations. 3. Increase in flights by 30% (patients and
customers) due to the ability to better schedule appointments and therefore 80% reduction in
missed flights: 40% of the increased flights will come from new pilots angels attracted to husky
air because of the improve system and 60% will come from existing pilots expanding to new
businesses. 4. And decrease in overall annual spending by 15%.
MOV2: Implementing the Husky Air Reservation System (HARS) will result in 50% reduction
in office personnel in charge of the pilot angels program within 6 months of completion of the
new system and will remain reduced for at least 5 years. The reduction of office personal in
charge of scheduling will come via the introduction of the improved automated system which
will automate the current pilot angels scheduling process and flights tracking system.

21

4.0 Resources and Cost Estimates
Based on requirements of the PAMS Project, the following resources will be required to
complete the project:
People (Salary quotes from Indeed.com (2012) with added 25% benefits)
Role Function Cost Hourly Rate
Project Manager Responsible of planning,
execution, the overall
accomplishment of the project,
and Tasks assignment
$89,000/ yr +
$22,250 benefits

$53.75
Database Administrator Responsible for the design,
implementation, maintenance
and repair of an organizations
database.
$81,000/yr +
$20,250 benefits
$48.75

Data Analyst Responsible for documenting
business processes, analyzing
data, designing and creating data
reports to help managers in
decision making
$78,000/yr +
$19,500 benefits
$46.25
Computer Technician Set up computer workstations in
facilities and provide help-desk
assistance
$40,000/yr +
$10,000 benefits
$23.75

Quality Assurance Tester Responsible for testing the
system for usability, errors, and
functionality.
$73,000/yr +
$18,250 benefits
$44.75

Technology
1. Hardware At the conclusion of the project this equipment will be transferred to Husky
Air along with the software as a complete package.
a. Workstations (3) Vostro 460 Slim Tower with Windows 7 Pro 64 bit, MS
Office Pro 2010: $649 per workstation with monitor (Vostro 460 Mini Tower,
2012)
b. Database server: Dell Power Edge T410: $1149 (Database Server Solution, 2012)
c. Network Switch: Power Connect 3524 Switch: $325. (Power Connect, 2012)
d. Cat5e network cabling (500 ft. bulk): $80.00. (500ft. Cat5E, 2012).
e. Firewall: $664 (Barracuda Networks, 2012).
f. Uninterruptible Power Supply for server 60 minutes, APC Smart-UPS 2200VA
LCD 120V : $830 (APC.com, Smart-UPS 2200VA, 2012)

22

g. Uninterruptible Power Supply for firewall 64 minutes, APC Smart-UPS 750VA
LCD 120V: $320 (APC.com, Smart-UPS 750VA, 2012)
h. Uninterruptible Power Supply for workstations 53 minutes, APC Smart-UPS
1000VA LCD 120V: $435 (APC.com, Smart-UPS 1000VA, 2012)
2. Database Software License MySQL requires a yearly licensing fee that includes access
to various features, upgrades, and support. The yearly fee is $2,000 for the standard
edition (MySQL Editions, 2012).
3. Telecommunications software Free Tiny Chat teleconferences and
FreeConferenceCalls.com for conference calls
4. Voice/Data plan - $119.98/month per user. (Unlimited Calling and Email Plans, 2012).
5. Printer/Fax/Copier: $350 (IntelliFax-4100e B-Class Laser Fax, 2012)
6. Microsoft Project Standard 2010: $399 (Project Standard 2010 Full Retail Box, 2012).

Facilities

1. Office space for development and testing: $1025/month, $6150 for 6 months in Chicago
area near DeKalb Municipal Airport
2. Utilities for office space: $300/month (Whitefenceindex.com, 2012).
3. Conference Room when on site at Husky Air for meetings
Other
Office supplies: $100 per month

The table below provides details for the resource costs:
Item Total
Number Cost ea. Total Cost
Personnel
Project Manager - per hr (inc.
benefits) - 14 wks 560 $ 53.75 $ 30,100.00
Database Administrator - per hr
(inc. benefits) - 14 wks 560 $ 48.75 $ 27,300.00
Data Analyst - per hr (inc. benefits)
- 14 wks 560 $ 46.25 $ 25,900.00
Quality Assurance Tester - per hr
(inc. benefits)- 14 wks 560 $ 44.75 $ 25,060.00
Computer Technician (part time) -
per hr - 80 hours 80 $ 23.75 $ 1,900.00
Subtotal $ 110,260.00
Hardware
Workstation 3 $ 649.00 $ 1,947.00
Database Server 1 $ 1,149.00 $ 1,149.00

23

Network Switch 1 $ 325.00 $ 325.00
Bulk cable - 500 ft. 1 $ 80.00 $ 80.00
Firewall 1 $ 664.00 $ 664.00
UPS for server 1 $ 830.00 $ 830.00
USP for firewall 1 $ 320.00 $ 320.00
UPS for workstation 3 $ 435.00 $ 1,305.00
Subtotal $ 6,620.00
Software MySQL License - one year 1 $ 2,000.00 $ 2,000.00
Internet service + phone/month 6 $ 75.00 $ 450.00
Project Team
Resources
Voice/data plan 6 $ 120.00 $ 720.00
Printer/Fax/Copier 1 $ 350.00 $ 350.00
Laptop 1 $ 786.00 $ 786.00
MS Project Standard 1 $ 399.00 $ 399.00
Subtotal $ 2,705.00
Facilities
Office space lease -per month 6 $ 975.00 $ 5,850.00
Utilities - per month 6 $ 300.00 $ 1,800.00
Subtotal $ 7,650.00
Other Office supplies - per month 6 $ 100.00 $ 600.00
Subtotal $ 600.00
Total Cost $ 129,835.00

5.0 The Scope Management Plan
The project requires to be completed according to the particular structure. In order to
create the most appropriate structure, deliverable structure chart (DSC), use case diagram
(UCD), and scope change process must be created, developed, and appropriately revised if
necessary.
Deliverable Structure Chart
HARS is a complex system that requires thorough approach to its creation. In addition, its
paper-based analog that is in action now can still be used to assure continuity of Husky Air
operations. Therefore, it has been decided to choose prototyping model to develop HARS. The
system has to be utterly reliable so each phase must be tested and revised until full compliance
with initial requirements. DSC should be as follows:

24

Use Case Diagram

Scope Change Process
HARS
Busines
s Client
Commu
nity
Client
Health
Care
Client
provide information about
available pilots and carriers
organize data input and
output related to health care
services
organize data input and
outpur related to community
services
monitor business
activities
Pilot
Mechani
c
Office
Staff
Executiv
e
automate scheduling
process

25

As it has been already mentioned, the proposed initiative of the HARS development
should provide Husky Air with the opportunity to control and monitor all business, community,
and health care assistance activities. Currently, the system should be able to provide the
following functionality: keep track of all Pilot Angels volunteer pilots to include their name,
address, phone numbers, as well as their total hours, certifications and ratings; have information
about the type of aircraft such as the type of plane, aircraft identification number, whether the
aircraft is single or multi-engine, its capacity for carrying passengers and the number of aircrafts
each pilot owns; easy input, storage, and output of information about the people, hospitals,
clinics, and organ banks who request the information about the patients, their passengers, and
specific needs to help match volunteers with the request for transport; automate much of the
scheduling process by providing a tool for collaboration between all parties involved, in addition
to a flight tracking utility that will help in the effort to recognize Pilot Angels volunteers for their
contributions.
However, it might require changed to be made during the development process.
Therefore, change requests are necessary to improve and optimize the project during every phase
of its development. The process of change requests evaluation is as follows:

Yes
No (ad hoc)
No Yes
Planning
documents
Requested change Change sensible?
Assess impacts Planning scenarios
Updated panning
documents
Implement change Approve change? Regect change

26

6.0 The Work Breakdown Structure
In general, HARS is a usual project that, however, will be implemented within the
companys distributed offices. In addition, the specifics of the Husky Airs personnel on all
levels will require extra efforts from the project training team to make sure that the system will
be used by skillful and experienced operators. Therefore, we can conclude that the peculiarities
of the project increase its overall cots.
Bottom-up estimates
The most effortful modules of the project development should be considered interface
module and database management system. They are to take the vast majority of time of the
developers. On the other hand, the development of user interfaces will require less time. In
addition, they will be continuously improved during the entire process of the project
development so the elapsed time cannot be considered in this case as the longest one.
Plan to create controllable activities
DBMS and interface modules creation will require rather substantial effort to complete
them. Therefore, the process of their development should be divided into series of smaller
activities. It will be necessary to perform because of the complexity and scale of the objectives to
accomplish. These modules should be developed in stages: basic functionality development,
additional modules, testing, improvement, closure. User interfaces for all modules can be
completed together, by one team of developers and users should test them together as well. It
will provide the developers with opportunities to improve and fix any issues at once.
Risks for activities
The project is large-scale. Therefore, the risks of different kind are inevitable. The major
risks for interface module: inability to achieve acceptable results within timeframe given for this
activity; inability to assure accurate scheduling and its analysis; and low module performance.
Therefore, in case of inability to achieve acceptable results within timeframe the schedule of the
project will have to be adjusted accordingly, since it is one of the core modules of HARS. It
means loss of time, which is unacceptable for Husky Air plans. As for the second risk, it could
be even more dangerous for the company than any other possible risk.
The core function of Husky Air is transportation, commercial and other. Therefore, if
schedule is incorrect, it is impossible to perform business activities. This risk can substantially
slow down the implementation of the entire project, so time loss is guaranteed. Finally, low
performance of the module can slow down the performance of the entire company. It can be
rather costly. As for other activities, the second biggest risk to occur is the inappropriately
designed and configured DBMS. Other modules and related activities should not be considered
in the light of risks they can provoke, since their effects are minimal.

27

The likelihood of the risks occurring can be described as follows: inability to achieve
acceptable results within timeframe given for this activity moderate; inability to assure
accurate sheduling and analysis moderate; low module performance low; and inappropriately
designed and configured DBMS low. The reason of such likelihood determination is in the
efforts applied to avoid them. Project managers team should realize these major possible issues
and be prepared accordingly.
Risk assessment Importance Likelihood
Inappropriate results within timeframe Moderate Moderate
Lack of accuracy of scheduling module Hi Moderate
Low module performance Moderate Low
Inappropriately designed and configured DBMS Hi Low

Risk reduction and contingency measures
In order to mitigate possible negative aftereffects of the risks, it will be necessary to
perform the following activities: software development team should hire only the best specialists
in the area; the most advanced methods and tools should be applied to achieve accurate and
correct results; in order to improve performance in case of its insufficiency, the additional
hardware should be acquired; the most advanced but yet balanced DBMS should be reconfigured
and installed, in addition to hiring the best specialists in this area. If risks did occur, the
following steps should be performed: the additional specialists should be hired so solve the
above-mentioned issues; in addition, more advanced hardware and software might be required to
be purchased.
Overall plans and estimates considering risks
In order to mitigate possible risks, the following activities should be included into the
project plan: it would be necessary to create the test versions of each module and evaluate the
time needed for their development; in case of moderate likelihood of risks occurrence it the
above-mentioned steps should be performed (hiring of the additional personnel, hardware
purchase, etc.). All parties involved into the software development stages should be additionally
informed regarding the importance of each issue during this stage. In case of necessity, the
development stage should be delayed for the time needed for additional training of the
developers teams.
Resources to activities

28

Project plan presupposes three major stages: creation and implementation of HARS;
development of the network infrastructure; and personnel training. The first stage will be
completed by third party, the developer of the appropriate systems. This stage will require
minimum of Husky Airs resources because the specialists of third party will be the major
resource for this stage. The second stage will be completed by the third party contractor and will
not involve resources of Husky Air as well. However, the personnel training stage will require all
personnel, regardless of the level, be available for the appropriate training sessions.
It could be difficult because Husky Air will not shut down its operations therefore, the
staff will continue work. It is the major resource constraint for the timely resource allocation for
the appropriate project completion. In addition, some part of the personnel will be on the
scheduled vacations therefore, they will not be accessible as well.
HARS will require the following resources for its successful completion: a system analyst
with a team; programmers; database designers; interface designers; network administrator team;
and training specialists. Husky Air personnel will be required as well, as it has been already
mentioned in the previous sections. These specialists will require special tools and software that
will be provided by third party (database development software, client-server software, etc.). The
system analyst and the team will work on the initial stage of the project and will combine their
efforts with programmers to create the appropriate design of HARS according to the
requirements.
Database designers will design and develop the necessary DBMS, using existing
developments of third party as well as creating new modules for this system. Network
administrator team will be necessary to create and manage network infrastructure of the future
system. Interface designers will be used by all teams on the final stages of each module creation
to develop the most appropriate and convenient interface for Husky Air stakeholders. Finally,
training specialists will teach the Husky Air personnel to use HARS. All stages will involve the
Husky Air personnel in different ways, discussed above.
7.0 The Project Schedule and Budget
Considering the above-mentioned resource constraints, the plan should be revised in
order to include the buffer zones for the deadlines of each stage completion. Due to the moderate
possibility of risks occurrence in the project of such scale, human resources might be reallocated
to solve various upcoming issues (additional staff for testing procedures, for example). In
addition, such non-project activities as assessment of the available documentation, calculation of
medical records to be transferred to the electronic form, communication with current customers
to notify regarding the situation, etc. can substantially influence the availability of Husky Airs
staff for project needs. Therefore, the time gaps should be added to each stage schedule to avoid
deadlines failure and understand the real situation regarding the time needed for project
completion.

29

Schedule is as follows:

The project will take from 14 to 21 weeks in order to complete it, test, and implement into
full working cycle of business operations. The project has a single critical path that is important
because of the following constraints: DBMS and interface modules should be created before the
scheduler module will be available to allow users test and understand the process of operations
with both modules. The project also does not have any over allocated resources.
The budget of the project consists of the following resources and their costs:

The quality of the entire project is determined by the quality of each stage completion. Of
course, one or two secondary issues with quality will not make the project fail. However, in case
of the overall low quality of execution even the best plan will not succeed. Thus, our plan
presupposes completion of each stage within the limited timeframe and involves numerous
parties. Such state of things can decrease its overall quality. The main attention should be
emphasized during the stages that concern software development and network creation.
Employees can be trained as long as it is necessary so this aspect of the plan will not affect its
quality too substantially.
8.0 Earned Value Analysis
Considering the need in thorough testing, Husky Air has decided to hire Bug Busters, an
outsourced organization that specializes on software testing. The budget of the subproject is
$12.000. The process of testing was divided into 4 stages and money was supposed to be paid
accordingly. However, several issues and overpaid second period has made the project leader

30

worried regarding the further success of the project. Therefore, the need in earned value analysis
has emerged.
Earned value analysis (EVA) (another name is variance analysis) is meant to measure and
evaluate performance of a project. The main principle of its work is to compare the planned
amount of work with the one that has been already done in order to see if the project is on track
or not. EVA was developed in the 1960s and was meant to provide government agencies with
opportunity to see whether a contractor should have progress-based payments for work. Thus, it
became a very helpful instrument for projects monitoring and control. EVA uses different
calculations and ratios in order to measure and provide the appropriate information regarding the
status of project work and its current effectiveness. Today, EVA is performed using electronic
means (computers, spreadsheet software, etc.). However, it is important to understand how to
perform calculations, know basics, and know how to interpret the obtained data. The following
three key values are usually determined on the first step of EVA:
1. Planned Value (PV) is the planned cost of work scheduled to be done in a given time
period. The amount of PV is determined by totaling the cost estimates for the activities
scheduled to be completed in the period. (Richman, 2002, p. 165). Another name of Planned
Value is the Budgeted Cost of Work Scheduled (BCWS).
2. Earned Value (EV) is the planned cost of work actually performed in a given time
period. This is a measure of the dollar value of the work actually performed. The amount of
EV is determined by totaling the cost estimates for the activities that were actually
completed in the period. (Richman, 2002, p. 165). Another name of Earned Value is the
Budgeted Cost of Work Performed (BCWP).
3. Actual Cost (AC) is the cost incurred to complete the work that was actually performed
in a given time period. The amount of AC is determined by totaling the expenditures for the
work performed in the given time period. It should include only the types of costs included
in the budget. For example, if indirect costs were not included in the budget, they should not
be included in AC calculations. (Richman, 2002, pp. 165-166). Another name of Actual Cost
is the Actual Cost of Work Performed (ACWP).
Determination of these values provides with the necessary background for further measures.
Thus, it is possible to utilize values in different combinations in order to determine the progress
of accomplished work and if it is as planned. The following variances can be measured:
Schedule Variance. Schedule variance can be calculated using the earned value and the
planned value. This variance reflects the difference between the planned and the actual
work completed. (Richman, 2002, p. 166). If a result is positive - the project is ahead of
schedule; otherwise, the project is behind schedule.
SV = EV - PV

31

Cost Variance. Cost variance can be calculated using the earned value and the actual cost.
This variance reflects the difference between the planned (budgeted) cost and the actual
cost of work completed. (Richman, 2002, p. 166). If a result is positive - the project is under
budget; otherwise, the project is over budget.
CV = EV - AC
After the completion of these calculations, we can use different indices or ratios to assess the
status and efficiency work under the project. These indicators of efficiency can give valuable
information to be used in the project control. The schedule performance index and the cost
performance index are indices that analytics use most commonly.
l. Schedule Performance Index. A ratio of performed to scheduled work gives the
understanding of the projects efficiency in the schedule. It is calculated as follows: the
earned value is divided by the planned value. If a result is greater than 1 - the project is
ahead of the schedule; otherwise, the project is behind the schedule. The analysis of the SPI
from time to time during the project can show the progress of projects performance in
comparison to the plan of the project. In addition, it can be utilized in order to build some
projections regarding the completion date of the project.
SPI = EV / PV
2. Cost Performance Index. A ratio of budgeted to actual costs gives the understanding of
the projects cost efficiency (the efficiency of spending dollars within project). It is
calculated as follows: the earned value is divided by the actual cost. If a result is greater than
1 - the project is being performed for cost bigger than planned; otherwise, the project is
being performed for cost lower than planned. For example, a CPI of .67 means that for each
$1.00 spent on the project, we produce $0.67 worth of value. (Richman, 2002, p. 166). The
analysis of the SPI from time to time during the project can show the progress of projects
performance considering costs direction.
CPI = EV / AC
As it can be noticed, these indices can give an understanding of the projects effectiveness at
each time given point. On the other hand, it is rather clear that their value is higher in case
indices are calculated periodically in order to track any trends and undertake actions if necessary.
The completion of the project can be forecasted using the following estimations:
Budget at Completion (BAC) can be defined as the estimated total cost of the project after
completion. In order to calculate it is necessary to total the cost of all activities that are
present in WBS.
Estimate to Complete can be defined as the expected additional cost that is necessary for
project completion. In order to calculate, the following operations have to be performed: it is

32

necessary to subtract the budgeted cost of work that was performed from the earned value;
then it is needed to divide the obtained number by the cost performance index.
ETC = (BAC - EV) / CPI for typical variances
ETC = (BAC - EV) for atypical variances
Estimate at Completion can be defined as the expected total cost after project completion.
The calculations are as follows: it is necessary to add the actual cost and the estimate to
complete.
EAC = AC + ETC
The appropriate calculations were performed for the subproject. The following
assumption was made for Payment 4 Actual Cost and Earned Value will remain the same as
Planned Value.

As we can see from the calculations, the project is behind the schedule and over budget. In
addition, the project is being performed for the cost lower than planned. ETC showed us that it
would require additional resources and EAC provided with information regarding final cost of
the project for both variances. The conclusion is as follows: the project will not remain within its
original budget in case work on phase 4 is not optimized and substantially improved, and, more
important, performed for less money.
Planned Value (PV) Actual Cost (AC) Earned Value (EV)
Payment 1 $1 650 $1 650 $1 650
Payment 2 $3 600 $4 300 $3 600
Payment 3 $2 900 $3 100 $1 985
Payment 4 $3 850 $3 850 $3 850
Total $12 000 $12 900 $11 085
Schedule Variance (SV) Cost Variance (CV) Schedule Performance Index (SPI) Cost Performance Index (CPI)
Payment 1 $0 $0 1 1
Payment 2 $0 -$700 1 0,837209302
Payment 3 -$915 -$1 115 0,684482759 0,640322581
Payment 4 $0 $0 1 1
Total -$915 -$1 815 0,92112069 0,869382971
Budget at Completion (BAC) Estimate to Complete (ETC) Estimate at Completion (EAC)
Typical Var $12 000 $993 $13 893
Atypical Var $12 000 $915 $13 815

33

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