Project Scorecard for Grand IT department’s IS Proposal

Goal Measure
Organizational
Increase cash flow each Compare costs with and without the project for
Contribution year for next five years. five years showing positive present value.
Cost of Current System Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 5-Yr 
Total
Payroll Adm. 2 @ $30,000 60,000 61,800 63,654 65,564 67,531 69,556 328,105
Salary
Payroll Adm. $60,000 x 15% 9,000 9,270 9,548 9,835 10,130 10,433 49,216
Benefits
1,108 1,142 1,176 1,211 1,247 1,285 6,061
Payroll Adm. (50/2030 hrs) x
Overtime $30,000 x 1.5
Software 5% increase @ 3,000 3,150 3,308 3,473 3,647 3,829 17,407
Upgrades yr
IT Personnel 20% x $40,000 8,000 8,240 8,487 8,742 9,004 9,274 43,747
Wages
IT Personnel $8,000 x 15% 1,200 1,236 1,273 1,311 1,351 1,391 6,562
Benefits
 
Total Annual 82,308 84,838 87,446 90,136 92,910 95,768
Cost
Total Cost for next 5 years 451,098

Cost for New System Year Year 1 Year 2 Year 3 Year 4 Year 5  Total
0
Payroll Adm $30000 @ 3% 30,900 31,827 32,782 33,76 34,778 164,052
Salary 5
Benefits $4,500 @ 3% 4,635 4,774 4,917 5,065 5,217 24,608
Setup Fees 2,000 - - - - 2,000
$50 fee per 24 periods x 1,200 1,260 1,323 1,389 1,459 6,631
payroll $50
$1.00 fee per paycheck (24 4,800 5,040 5,292 5,557 5,834 26,523
periods x 200 employees)
Total Annual 43,535 42,901 44,314 45,77 47,288
Cost 6
Total Cost for next 5 years 223,814
Annual Cash Savings from 41,303 44,545 45,822 47,13 48,480 227,284
Outsourcing Payroll 4

User Goal Measure

Have inquiries for payroll Log inquires each payroll.
Satisfaction questions drop to two or less
per payroll.
Payroll administrator will IS support person will eliminate time on Payroll and IS
require no support from the IS issues. Responses to employee requests from the
department outsourcing company are guaranteed within 48 hours.
 Operational Goal Measure
Error free payrolls at least 75 percent of the Log the payroll changes made for
Performance time due to audit trail report that is verified corrections.
for all changes, and each manager’s review
and approval of department online
timesheets.
Payroll related Federal and State tax returns Log filing dates of payroll related tax
will be filed on time without overtime. This returns. Check payroll administrator’s
includes issuing W-2’s to employees. overtime records for time-periods
prior to filing dates.

Adaptability & Goal Measure

The new payroll system will be First payroll will be issued on target date.
Scalability operational on the date planned.
Interface with Human Resources A satisfactory operational test will be
system will be completed with first performed two weeks prior to first live
payroll. payroll.
Claims made by The Payroll Company A system audit will indicate if Payroll
will be evaluated every six months for Company performs as claims and continues
performance and satisfaction. to meet the needs of the Grand Company.

LEGEND
- Organizational Contribution
- User Satisfaction
- Operational Performance
- Adaptability & Scalability
EXERCISES

5-11 The Grand Company averages around 200 employees each pay period. They have departments for
manufacturing, administration, sales, marketing, customer service, and information systems.

Currently the company issues a payroll semi-monthly. The company has full-time, part-time, salaried and
hourly employees. Sales people earn commissions based on total sales, and bonuses based on meeting budgeted
sales goals. For payroll calculations, the company uses 2030 hours as the number of work hours each year.

The payroll is administered by two full-time employees who earn $30,000 per year plus benefits which average
15 percent of their salary. All employees typically receive a three percent (3%) increase in pay on January 1
each year.

The payroll software needs updating. The legacy system has the following problems:
 It does not interface with the Human Resources system, so all new hires and employee changes must be
entered twice, once into the Human Resources system, and once into the payroll system.
 The PR software does not prorate, so all changes must be made at the beginning of a payroll period, or
manually calculated.
 There is no audit trail of changes from one payroll to the next. A change made in error could go
undetected unless the employee notifies the company.
 Tax table changes require an upgrade from the software company, and they charge $1,500 each time.
The new tax laws indicate there will be changes twice a year for the next five years. The company is
expected to increase the upgrade fees by 5% each year.
 Employees have difficulty understanding their pay stubs. The payroll administrators receive an average
of 10 inquiries per payroll, mostly from bonus & commission calculations.
 The number of paychecks with errors average 4 per payroll.
 Issuing W-2’s at the end of the year is always a nightmare. They are never finished until the deadline
day since the payroll administrators are so busy with their regular duties, this overtime activity requires
ten total hours, paid at time and one-half.
 Filing Federal and State reports and reconciling them to the payroll has always been very time
consuming, and requires ten hours overtime (total) per quarter.
 Currently the IT department has one person dedicated to the administrative staff, and about 20 percent
of this person’s time is devoted to payroll and Human Resources issues. Response to non-emergency
requests often takes four weeks. The IT person responsible for payroll related issues currently earns
$40,000 per year.

The IT department is recommending that the company outsource the payroll function. The Payroll Company
claims:
 The Human Resources system will interface with the Payroll. New hire information and changes will
automatically be updated into the Payroll system and salary changes will begin on the effective date.
 The cost would be $1.00 per paycheck issued, plus $50.00 per payroll. These fees are expected to
increase by 5% each year after the first payroll year.
 There is a one-time setup fee of $2,000.
 The setup would include a commission and bonus calculator. A special report would be generated to
show each sales person’s calculation, and a company summary.
 The timesheets for each department will be online every day for managers to review. A secure report
would be issued to them with the payroll with an electronic signature required for approval.
 The payroll administrator will receive an audit trail report with all changes since the last payroll. This
will be issued in time for a final review before the payroll is issued.
 The design of the payroll stub or advice can be customized. They can include non-payroll information,
such as the number of vacation days available, or upcoming company events.
 Direct deposit is available.
 Tax returns will be generated after the last payroll of the tax period, including W-2’s.
 A free training session would be provided.
 Customer service support would be available at all times, and employee questions are guaranteed to be
answered within 48 hours.
 Upgrades and tax table changes would be seamless and invisible. The payroll department would be
notified when the changes would take place and what changes and features would be included.

In addition to the advantages offered by the payroll company, the IS department feels that only one employee
will be needed to administer the payroll function, eliminating one full time position. The IS person dedicated
to payroll will be able to devote all of her time to other projects.
Required: Using the above information, create a project scorecard for this IS proposal. Include goals for each
perspective, and show how each goal can be measured. For the Organizational Contribution perspective, detail
the net present value cash flow over the next five years for two scenarios: 1) remaining with the current in-
house method of administering payroll and 2) outsourcing payroll. Then, calculate the net present value gain
or loss assuming the company was to outsource payroll. Further assume that The Grand Company will
continue to calculate payroll as usual for the remainder of the current year, but that if it decides to outsource
payroll, it will do so starting with January 1st of the upcoming year.
 Project Scorecard for
GRAND IT DEPARTMENT’S
IS PROPOSAL

Ma. Emarla Grace S. Canoza

Stefi Mae R. Foronda
Andre O. Batac
Liberty Jane M. Mejia
Jovanni Vincent Delavin
Chloie R. Delos Santos
Nhicole S. Viray
Daniel John Z. Sotelo
Jonnalyn P. Bautista
Sharlene B. Rosario
Myra Angelic Casupang
Jim Dizon
Jemie Ventura

CSC 42
Prof. Mark Joseph Balolong