Nash and Myra had many conversations about the new room they were planning for their home improvement project.Myra was a bit hesitant about this project as she had another project in mind. She wanted to upgrade her kitchen with a new state-of-the-art range, oven, refrigerator, modern cabinets, marble flooring, and granite countertop. Nash felt that they would increase the value of their house with the addition of a new room. The living quarters were small compared with other homes in the subdivision, and Nash thought that the new addition would enhance the space with a more open look. Myra asked, Can you compare the two projects to see which one is better?

Nash thought about it for a second and answered, Sure! That is a great idea. Let us take a look at the two projects to select the best one.

Both of them agreed that this was the best way to break the stalemate. Nash identified a set of criteria for the selection process, which he showed Myra; she added one more factor to the set. In the end, they came up with the following selection criteria:

• Project cost;

• Project duration or schedule; and

• Value of the house.

• With the criteria, they set out to select the project for their home improvement. Both the kitchen remodeling project and the new addition project promised a greater value to their home. Nash called a Realtor who told him that when the housing market is good, the kitchen will increase their homes value more than the addition by about 50 percent; during moderate market times, the kitchen will yield a higher value by more than 80 percent than that of the new addition. With this knowledge, Nash was swayed toward the kitchen idea, and he told Myra so. Now that the value was much better with a kitchen than the addition, Nash told Myra, The kitchen will cost us twice the amount of the addition. We are sort of short on cash now. Lets take a loan. Myra said, Nash, I work in a loan office at the Regional Bank of America, and I know that the loan will cost us more than what we would make by selling our house. Nash told her, Myra, I thought that you were the one who wanted an updated kitchen! Myra told Nash, Yes, but when I figured out the cost of the kitchen, I think the new addition would be a much better idea for us right now. I could use the new room for social events and perhaps read more books looking at the beautiful lake view. Thus, the new addition was approved by Myra, and Nash was to implement the project. Nash wanted to write down all the requirements necessary to build the new addition. He sat down next to Myra and asked her, Can we get all the requirements written down so that I can get some quotes from three different contractors? I have already asked Craig, and he gave me a figure and schedule. He wanted to fine-tune the amount once I give him our requirements, but he told me that his amount and schedule were very close. If we can get a couple more quotes, we can select the contractor and start the project. They brainstormed for a while and jotted down the following requirements: Clear the area adjacent to the dinette area; Build a 14-by-14 new room; A cathedral ceiling; Fan, HVAC, and lighting; Open entrance from the dinette area; Seven windows equally spaced on the three walls of the room with trim; Relocate existing french door toward the existing deck; and Finish the floors, ceiling, and walls. Myra and Nash went through the list again and were definitely satisfied with the requirements.

2. If the estimated cost of the kitchen project is $10,000, if the remodeled kitchen adds $12K in a good market and $11K in a moderate market to the future selling price, and with the chance of having a good market in the future being 0.4, did the Nathans make the right decision?

4. What is the payback period of the new addition project? What is the ROI?

6. Write a project charter and a scope for this project.