Case Example - Metropolis International Airport
Metropolis International Airport is expanding. Two major airlines have selected Metropolis as a new major hub or base of operations. A new terminal is nearing completion. With the expected increase in traffic, the airportís director authorized development of a new Gate Management Decision Support System.
Scene: Frank Demillio, Project Manger in charge of the Gate Management Scheduling DSS project, is meeting with Airport Operations Manager Benjamin Pierce to discuss progress. The systems analysis and design phases of the project have been completed, and Frank is seeking approval to implement the system. Letís join the meeting in progress.
Frank: As you can see, weíve designed a system that can fulfill all your stated requirements, including those specified after the initial project charter. Furthermore, the new system will include a Microsoft Windows user interface. All of your staff are familiar with Windows-based PC tools.
Ben: So you moved the entire application to the PC?
Frank: No, just the user interface and basic input data validation. Your database and business data processing will still be done on the host computer. But to your staff, the entire application will look and feel like a PC application.
Are there any questions?
Ben: Iím quite impressed. The system design is everything you promised, and then some. But letís get to the bottom line, Frank. How much is this going to cost me? It seems more ambitious than the original estimates.
Frank: To implement the system, we estimate that it will cost $45,000. And the system will cost $4,500 per year for maintenance and enhancement.
Ben: And how much have we spent up to this point?
Frank: About $12,000 for requirements analysis and system design. Weíve also done some prototypes, if you care to see them.
Ben: Not right now. Iím just the sponsor. I trust the usersí feedback on such matters. Letís see, according to my notes, the original estimate was $39,500, including analysis and design. The new estimate is $45,000 + 12,000óabout $57,000! Thatís quite an increase.
Frank: Agreed. But your people increased the requirements as the project progressed. Also, we feel the Windows-based design will result in a faster learning curve and lower maintenance costs. Also, the $12,000 for analysis and design canít be recovered, so we shouldnít consider it in our decision on whether to proceed.
Ben: I agree that the project shouldnít be continued or canceled based solely on the money spent so far. However, I disagree that the money is irrelevant. If the project is continued, I should think that the new system would eventually pay for itself. How long until all costs are recovered.
Frank: You should start receiving benefits immediately after implementation.
Ben: But how many years or months will pass before the lifetime benefits exceed the lifetime costs?
Look, I can probably allocate the funds you need to complete the system. But I also have managers asking for other things. Why should I give the money to you and not to them?
Frank: I donít understand, Ben. You and your staff commissioned this project. The proposed system will meet your needs.
Ben: Frank, youíre a marvelous computer professional, but you donít always understand the economics of business and information.
Based on a minicase in Whitten, Jeffrey L., L. D. Bentley, and V.M. Barlow. Systems Analysis and Design Methods (3rd ed.), Burr Ridge, IL: Irwin, 1994, p. 811.