Observe how project delays affect payback period

The spreadsheet for Fig. 11.7 provides the data that was used to produce that Figure. It shows cumulative net benefits becoming positive after month 11. Note that the data is in thousands of dollars.

1. Assume there is a 10% cost overrun. Approximately long will the payback period be delayed? (Represent the cost overrun by multiplying all the numbers in row 3 by 1.1.)

2. Assume that the project falls behind schedule in month 4 and management decides to hire two more programmers from a consulting during months 5 through 8 to complete the technical parts of the work. Each has a salary (including overhead) of $7000 per month. Increase the costs incurred during these months by $14,000 and see how much the payback period is delayed.

3. Based on the mythical person month, explain why the calculation in question 2 may understate the costs.

Back to Internet and Hands-On Exercises

Main Page About the Book Student Resources Instructor Resources Contact Us