Sample cba contact center upgrade project

COMPANY NAMECOST BENEFIT ANALYSIS - PROPOSED PROJECT

Page 1

Cost / Benefit Category

SUMMARYRevenue $18,345,649 $0 $1,822,707 $3,322,864 $5,409,254 $7,790,824 Costs ($11,191,906) ($6,224,619) ($1,833,200) ($1,023,105) ($1,036,450) ($1,074,533)Contingency Factor (15%) ($1,641,391) ($781,967) ($348,263) ($167,042) ($168,324) ($175,795)Cost Savings $3,101,190 $0 $742,845 $763,926 $785,829 $808,589

NET PROJECT BENEFIT $8,613,542 ($7,006,586) $384,090 $2,896,643 $4,990,310 $7,349,085 IRR * 29% Additional Shareholder Value = NPV / # of shares outstandingDiscount Rate ** 2.25% Number of Shares Outstanding (from Annual Report): 75,000,000 NPV *** $7,365,233 Value Created per Share $0.10

REVENUEConsumer TeleLending $9,955,257 $0 $343,845 $1,443,947 $3,095,537 $5,071,928 AResidential TeleLending $580,402 $0 $128,978 $128,978 $161,223 $161,223 BBusiness TeleBanking $3,500,640 $0 $350,064 $700,128 $1,050,192 $1,400,256 CTeleSales $4,309,350 $0 $999,820 $1,049,811 $1,102,302 $1,157,417 D

Sub-Total $18,345,649 $0 $1,822,707 $3,322,864 $5,409,254 $7,790,824

* The project IRR is the discount rate at which the NPV of project costs (negative cash flows) equals the NPV of the project benefits (positive cash flows)

** The Discount Rate is the interest rate charged to commercial banks and other depository institutions on loans from their regional Federal Reserve Bank'slending facility - also known as the Discount Window. Federal Reserve Banks offer three Discount Window programs to depository institutions: 1) Primary Credit,2) Secondary Credit, and 3) Seasonal Credit.

*** The Net Present Value (NPV) method of evaluating projects considers the time value of money. NPV indicates the present value (in today's dollars) of the projected net cash flow of a project. The present value is evaluated against the amount needed to implement the project. If the NPV is greater thanimplementation cost, the project will be profitable.

TotalMonths 1-60

TotalMonths 1-12

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60

Reference Schedule

http://en.wikipedia.org/wiki/Internal_rate_of_return

http://www.federalreserve.gov/monetarypolicy/discountrate.htm

http://en.wikipedia.org/wiki/Internal_rate_of_return

http://www.federalreserve.gov/monetarypolicy/discountrate.htm


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COSTSCapital

Consulting ($1,969,000) ($1,969,000) $0 $0 $0 $0 EFurniture and Fixtures ($17,600) ($17,600) $0 $0 $0 $0 FOperating Software ($784,980) ($784,980) $0 $0 $0 $0 GSystems Hardware ($1,001,956) ($1,001,956) $0 $0 $0 $0 HTelecom Hardware ($153,323) ($153,323) $0 $0 $0 $0 IVendor Impl. Assistance ($1,100,000) ($825,000) ($275,000) $0 $0 $0 J

Sub-Total ($5,026,859) ($4,751,859) ($275,000) $0 $0 $0 One-Time Expense

Application Software $0 $0 $0 $0 $0 $0 --Computer Relocation $0 $0 $0 $0 $0 $0 --Employee Relocation $0 $0 $0 $0 $0 $0 --Furniture Relocation $0 $0 $0 $0 $0 $0 --Furniture and Fixtures $0 $0 $0 $0 $0 $0 --Internal Project Staff ($167,500) ($167,500) $0 $0 $0 $0 KRetention Bonus $0 $0 $0 $0 $0 $0 --Severance $0 $0 $0 $0 $0 $0 --Telecom Relocation $0 $0 $0 $0 $0 $0 --Telecommunications $0 $0 $0 $0 $0 $0 --Travel - Internal Staff $0 $0 $0 $0 $0 $0 --

Sub-Total ($167,500) ($167,500) $0 $0 $0 $0


COSTSOn-Going Expense

Equipment $0 $0 $0 $0 $0 $0 --IT - Development ($2,880,000) ($1,252,800) ($835,200) ($264,000) ($264,000) ($264,000) LIT - Production Support $0 $0 $0 $0 $0 $0 --Mainframe - CPU $0 $0 $0 $0 $0 $0 --Maintenance - Hardware $0 $0 $0 $0 $0 $0 --Maintenance - Software ($468,000) $0 ($117,000) ($117,000) ($117,000) ($117,000) MOccupancy $0 $0 $0 $0 $0 $0 --

TotalMonths 1-60

TotalMonths 1-12

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60

Reference Schedule

TotalMonths 1-60

TotalMonths 1-12

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60

Reference Schedule


Page 3

Salaries ($2,573,357) $0 ($606,000) ($630,240) ($655,450) ($681,668) NTelecommunications $0 $0 $0 $0 $0 $0 --Training ($76,190) ($52,460) $0 ($11,865) $0 ($11,865) O

Sub-Total ($5,997,547) ($1,305,260) ($1,558,200) ($1,023,105) ($1,036,450) ($1,074,533)

Total Project Costs ($11,191,906) ($6,224,619) ($1,833,200) ($1,023,105) ($1,036,450) ($1,074,533)

COST SAVINGSCost Savings or Avoidance

$2,344,649 $0 $553,710 $574,791 $596,694 $619,454 PCall Migration $0 $0 $0 $0 $0 $0 --

$330,070 $0 $82,518 $82,518 $82,518 $82,518 QFacility Closure $0 $0 $0 $0 $0 $0 --Training Reduction $426,470 $0 $106,618 $106,618 $106,618 $106,618 R

Sub-Total $3,101,190 $0 $742,845 $763,926 $785,829 $808,589

Call Handling Time Reduction

Employee Retention Improvement

COMPANY NAMECOST BENEFIT ANALYSIS - PROJECT ASSUMPTIONS

Page 4

ASSUMPTIONSNo. Description Explanation / Details

1. Vendor Selection For the purposes of this Cost Benefit Analysis, Vendor X was selected.2. Project Timing

3. Space Restrictions

4. FTE

5. Contingency

FTE ASSUMPTIONSDescription Year 1 Year 2 Year 3 Year 4 Year 5

Current EnvironmentLocation 1 - TeleServicing 0 189 174 174 174Location 2 - TeleServicing 0 82 82 82 82Business TeleBanking 0 18 18 18 18TeleSales 0 9 9 9 9TeleLending 0 10 20 20 20EBC 0 17 17 17 17PFS Support 0 14 14 14 14Executive Hotline 0 11 11 11 11Cash Management 0 12 12 12 12

TOTAL 0 362 357 357 357

This analysis assesses five years of costs and benefits. The costs and benefits have not been allocated to calendar years (January to December) to coincide with the budget process. This analysis assumes that the new platform will be installed in approximately 9 to 12 months, therefore, incremental revenue and cost savings are assumed to begin in Months 13 - 24.

This analysis assumes that the current TeleBanking operation will remain in Irvine and Las Vegas and that the approximately 20 seats in Las Vegas cannot be filled due to the 200% turnover rate, thereby restricting any further growth in the operation. In addition, space reconfiguration plans for both Irvine and Las Vegas were not included in this analysis.

Due to the current space restrictions, there will be no net new additions to staff; however, the new platform will reduce the average call handle time by approximately 30 seconds per call, resulting in an excess capacity of 15 FTE (10 FTE during the day shift - 8:00 a.m. to 5:00 p.m.). This savings was calculated using a staffing model that incorporates Erlang C. The 10 FTE would be converted from TeleBanking Agents to TeleLending representatives in Months 13 through 24.

This analysis assumes a contingency factor of 15% of total costs to account for unanticipated time delays and project overruns.


Schedule A

Page 5

Description

Revenue - Consumer TeleLending $9,955,257 $0 $343,845 $1,443,947 $3,095,537 $5,071,928 Consumer Lending

TOTAL $9,955,257 $0 $343,845 $1,443,947 $3,095,537 $5,071,928 DESCRIPTION EXPLANATION

Consumer TeleLendingRevenue

1. FTE 72 99 99 99Incremental Staff 9 9 9 9Total Staff 81 108 108 108Production / month / rep $283,000 $458,000 $539,000 $631,000Net Volume $22,923,000 $49,464,000 $58,212,000 $68,148,000

2.

3.

4.

5.

6.

7.

TotalMonths 1-60

TotalMonths 1-12

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60

TeleLending will remain in the TeleBanking Center. The new Contact Center platform will reduce average call handle time by approximately 30 seconds per call, resulting in a total excess capacity of 15 FTE (see Schedule AN), with an excess capacity of 10 FTE during regular working hours between 8:00 a.m. and 5:00 p.m. PST.

The 10 TeleBanking Agents will be replaced with 9 TeleLenders and 1 TeleLending manager. This analysis also assumes no additional increase in staff beyond the initial 10 FTE due to space restrictions within the current facility. Revenue and expense data is based on the CBA prepared for the TeleLending Expansion Project.

No additional increase in staff beyond the initial 10 FTE due to space restrictions within the current facility. Revenue and expense data is based on the CBA prepared for the TeleLending Expansion Project.

This analysis only incorporates the revenue generated by the new staff and does not include any revenue generated by the current TeleLending staff.Increasing the net lines funded per month per staff from $283,000 to $631,000 and increasing the margin from 3% to 3.08% during the next 4 years. The Net Volume in Months 13-24 is based on 9 months of production to account for new staff training and new platform implementation. See Schedules H and AB for TeleLending FF&E and salary costs.

Since new TeleLenders replace existing TeleBanking Agents, there are no incremental telecommunication or occupancy costs.

Costs for other projects or additional VRU/ACD equipment are excluded from this analysis.


Schedule A

Page 6

8. Fee income that may be derived from additional lines of credit are excluded from this analysis.


Schedule B

Page 7

Description

Revenue - Residential TeleLendingResidential Lending $580,402 $0 $128,978 $128,978 $161,223 $161,223

TOTAL $580,402 $0 $128,978 $128,978 $161,223 $161,223

DESCRIPTION EXPLANATION

Residential TeleLendingFTE 3 3 3 3

1. TeleBanking Agents have not received cross-selling training. Incremental Fundings/FTE 20 20 25 252. Minimal marketing effort for TeleLending

3. No. of Fundings 60 60 75 754. Avg. Loan Size $143,309 $143,309 $143,309 $143,3095.

Total Fundings (No.xAvg. Loan) $8,598,553 $8,598,553 $10,748,191 $10,748,1916.

Margin 1.50% 1.50% 1.50% 1.50%7.

Revenue (Mgrn.xTtl Fund) $128,978 $128,978 $161,223 $161,223

TotalMonths 1-60

TotalMonths 1-12

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60

There is an increase in the incremental fundings per FTE of 20 in Months 13-36 and of 25 in Months 37-60 due to increased efficiency and cross-selling capabilities resulting from the new platform.

There is no net new staffing increase due to current facility space constraints.

Margin percentages provided by the Finance Department, Profitability Group.


Schedule C

Page 8

Description

Revenue - Business BankingBusiness TeleBanking Revenue $3,500,640 $0 $350,064 $700,128 $1,050,192 $1,400,256

TOTAL $3,500,640 $0 $350,064 $700,128 $1,050,192 $1,400,256


Business TeleBanking Revenue

1. Business TeleBanking FTE remains constant Limited space available. Role of current staff changes from support to revenue production resulting 2. There will be an incremental increase in Business TeleBanking from increased operating efficiency from the new platform system, which creates additional capacity.

FTE of 2 per year starting in Months 13-24 In addition, the Financial Service Centers (bank branches) will follow a learning curve relative to3. Support staff will be decreased by 2 FTE per year starting in business banking products and the FSC will be less reliant on the TeleBanking Support group.

Months 13-24

TotalMonths 1-60

TotalMonths 1-12

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60


Schedule D1

Page 9

Description

Revenue - TeleSalesChecking $89,497 $0 $20,764 $21,803 $22,893 $24,037 Savings $90,124 $0 $20,910 $21,955 $23,053 $24,206 Term Accounts $4,129,730 $0 $958,146 $1,006,053 $1,056,356 $1,109,174

TOTAL $4,309,350 $0 $999,820 $1,049,811 $1,102,302 $1,157,417

TotalMonths 1-60

TotalMonths 1-12

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60


Schedule D1

Page 10

Description


Revenue - TeleSales Incremental Checking Accts (+5%/yr) 404 425 446 468Average Balance as of (date) $3,515 $3,515 $3,515 $3,515

1. TBAs are not currently trained to cross-sell customers Contribution Rate 1.46% 1.46% 1.46% 1.46%2. Revenue - Checking $20,764 $21,803 $22,893 $24,037

Incremental Savings Accts (+5%/yr) 145 152 160 168Average Balance as of (date) $9,850 $9,850 $9,850 $9,850

3. Contribution Rate 1.46% 1.46% 1.46% 1.46%Revenue - Savings $20,910 $21,955 $23,053 $24,206

4. Incremental Term Accts (+5%/yr) 7,234 7,595 7,975 8,374Average Balance as of (date) $26,493 $26,493 $26,493 $26,493

5. Contribution Rate 0.50% 0.50% 0.50% 0.50%Revenue - Term Accounts $958,146 $1,006,053 $1,056,356 $1,109,174

6. Contribution Rate data is from the Finance Department Supporting Calculations

Current % Change IncrementalTBA Weekday Calls 2,824,552Referrals - 30% incr. from TBAs to TeleSales

Checking 4,348 30% 1304Savings 3,080 30% 924Term Accts 49,720 30% 14,916

Total 57,148 17,144Referral Rate 2.02%

Conversion Rate - (40%) decrease since customer does not initiate sales converationNo. Converted % Converted % Change Incremental % Total

Checking 3,080 71% -40% 31% 404Savings 1,716 56% -40% 16% 145Term Accts 44,000 88% -40% 48% 7,234

Total 48,796 85% -40% 45% 7,783Incremental Incremental % Total

Checking 1,304 31% 404Savings 924 16% 145Term Accts 14,916 48% 7,234

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60

Customers are transferred to TeleSales only if they request to be transferred. This accounts for the high penetration rate for TeleSales Representatives

There is a 30% increase in referrals from TeleBanking Agents to TeleSales

There is a 40% decrease in the conversion rate since the customer no longer initiates the sales conversation

There is a 5% annual increase in account production volume (all types), beginning in Months 25-36


Schedule D1

Page 11

Total 17,144 45% 7,783


Schedule E

Page 12

Description

Capital ExpendituresConsulting - 1 Engagement Manager; Months 1 to 12 ($90,000) ($90,000) $0 $0 $0 $0 Consulting - 1 Project Manager; Months 1 to 12 ($500,000) ($500,000) $0 $0 $0 $0 Consulting - 3 Implementation Consultants; Months 1 to 12 ($1,200,000) ($1,200,000) $0 $0 $0 $0 Engagement Manager Travel ($9,000) ($9,000) $0 $0 $0 $0 Project Manager Travel ($50,000) ($50,000) $0 $0 $0 $0 Implementation Consultants Travel ($120,000) ($120,000) $0 $0 $0 $0

TOTAL ($1,969,000) ($1,969,000) $0 $0 $0 $0


Consulting1. Engagement Manager - project oversight; Months 1 to 12 Consulting Quantity No. of Hours Hourly Rate Total2. Project Manager - project oversight; Months 1 to 12 Engagement Manager (15%) 1 300 ($300) ($90,000)3. Implementation Consultants - proj. impl.; Months 1 to 12 Project Manager (100%) 1 2,000 ($250) ($500,000)4. Consultant Travel = 10% of consulting fees Implementation Consultants (100% 3 2,000 ($200) ($1,200,000)

Sub-Total ($1,790,000)Travel Total

Consultant Travel (10% of Consulting Fees)Engagement Manager ($9,000)Project Manager ($50,000)Implementation Consultants ($120,000)

Sub-Total ($179,000)Total ($1,969,000)

TotalMonths 1-60

TotalMonths 1-12

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60


Schedule F

Page 13

Description

Capital ExpendituresFurniture and Fixtures ($17,600) ($17,600) $0 $0 $0 $0

TOTAL ($17,600) ($17,600) $0 $0 $0 $0


Furniture and Fixtures1. Furniture and Fixtures are needed for 10 people Furniture for 9 TeleLending Reps and 1 Supervisor to replace TeleBanking Agents.

Quantity Cost Each Total

Desks 10 ($800) ($8,000)Chairs 10 ($600) ($6,000)File Cabinets 3 ($1,200) ($3,600)

Total ($2,600) ($17,600)

TotalMonths 1-60

TotalMonths 1-12

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60


Schedule G

Page 14

Description

Capital ExpendituresOperating Software ($784,980) ($784,980) $0 $0 $0 $0

TOTAL ($784,980) ($784,980) $0 $0 $0 $0


Operating Software1. Operating Software $3,115 per concurrent user. There are 252 concurrent users between both locations.

Quantity Cost Each Cost

Concurrent Users 252 ($3,115) ($784,980)Total ($784,980)

TotalMonths 1-60

TotalMonths 1-12

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60


Schedule H

Page 15

Description

Capital ExpendituresSystems Hardware ($1,001,956) ($1,001,956) $0 $0 $0 $0

TOTAL ($1,001,956) ($1,001,956) $0 $0 $0 $0


Systems HardwareQuantity Cost Each Total

1. Computing Hardware - Workstations All workstations will be replaced due to age 256 ($3,104) ($794,624)2. Computing Hardware - Application Server New server needed to support the application 1 ($207,332) ($207,332)

Total ($1,001,956)Supporting Calculations

Location 1

Consumer TeleLending 61Residential TeleLending 40Business Banking 26TeleSales 10Training 17

Sub-Total Location 1 154Location 2

Consumer TeleLending 21Residential TeleLending 26Business Banking 30TeleSales 16Training 9

Sub-Total Location 2 102Grand Total 256

TotalMonths 1-60

TotalMonths 1-12

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60


Schedule I

Page 16

Description

Capital ExpendituresTelecommunication Hardware ($153,323) ($153,323) $0 $0 $0 $0

TOTAL ($153,323) ($153,323) $0 $0 $0 $0


Telecommunication Hardware1. Communication Hardware Communication hardware required for communication with host and telephony equipment

Three connections are required:Quantity Cost

Switch 1 ($54,563)Host 1 ($53,404)VRU 1 ($45,356)

Total ($153,323)

TotalMonths 1-60

TotalMonths 1-12

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60


Schedule J

Page 17

Description

Capital ExpendituresVendor Implementation AssistanceConsulting - 2 Implementation Consultants; Months 1 to 12 ($500,000) ($500,000) $0 $0 $0 $0 Consulting - 1 Implementation Consultant; Months 1 to 24 ($500,000) ($250,000) ($250,000) $0 $0 $0

Sub-Total Vendor Implementation Assistance - Consulting ($1,000,000) ($750,000) ($250,000) $0 $0 $0 Vendor Implementation Travel ($100,000) ($75,000) ($25,000) $0 $0 $0

TOTAL ($1,100,000) ($825,000) ($275,000) $0 $0 $0


Vendor Implementation Assistance1. 2 Vendor Implementation Consultants - impl.; Months 1 to 12 Consulting Quantity No. of Hours Hourly Rate Total2. 1 Vendor Implementation Consultant - impl.; Months 1 to 24 Implementation Consultants (100% 2 2,000 ($125) ($500,000)3. Vendor Implementation Consultant Travel = 10% of fees Implementation Consultants (100% 1 4,000 ($125) ($500,000)

Sub-Total ($1,000,000)Travel Total

Consultant Travel (10% of Consulting Fees)Vendor Implementation Consultant Travel ($100,000)

Sub-Total ($100,000)Total ($1,100,000)

TotalMonths 1-60

TotalMonths 1-12

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60


Schedule K

Page 18

Description

One-Time Expense - Internal Project StaffVP - Operations and Technology (75,000) (75,000) 0 0 0 0 AVP - Operations (65,000) (65,000) 0 0 0 0 Team Manager (27,500) (27,500) 0 0 0 0

TOTAL (167,500) (167,500) 0 0 0 0

DESCRIPTION EXPLANATION1. VP - Operations and Technology Assumes 50% utilization with estimated annual compensation incl. benefits of $150,0002. AVP - Operations Assumes 50% utilization with estimated annual compensation incl. benefits of $130,0003. Team Manager Assumes 25% utilization with estimated annual compensation incl. benefits of $110,000

TotalMonths 1-60

TotalMonths 1-12

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60


Schedule L

Page 19

Description

On-Going Expense - IT DevelopmentMonths 1-12, Interface Development (1,252,800) (1,252,800) 0 0 0 0 Months 13-24, Application Enhancement (835,200) 0 (835,200) 0 0 0 Months 25-60, Application Support (792,000) 0 0 (264,000) (264,000) (264,000)

TOTAL (2,880,000) (1,252,800) (835,200) (264,000) (264,000) (264,000)

DESCRIPTION EXPLANATION1. Months 1-12, Interface Development 1. IT Project Manager and 8 IT Staff at $11,600 per month. Incl dev and implementation costs2. Months 13-24, Application Enhancement 2. IT Project Manager and 5 IT Staff at $11,600 per mo. Incl app enhancements/startup support3. Months 25-60, Application Support 3. Two IT Staff at $11,600 per month

TotalMonths 1-60

TotalMonths 1-12

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60


Schedule M

Page 20

Description

On-Going Expense - Software MaintenanceAnnual Software Maintenance (468,000) 0 (117,000) (117,000) (117,000) (117,000)

TOTAL (468,000) 0 (117,000) (117,000) (117,000) (117,000)

DESCRIPTION EXPLANATION1. Annual Software Maintenance 1. Annual software maintenance (licensing) is 15% of the software acquisition cost.

Expenditure begins in Months 13-24

TotalMonths 1-60

TotalMonths 1-12

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60


Schedule A

Page 21

Description

On-Going Expense - Salaries ($2,573,357) $0 ($606,000) ($630,240) ($655,450) ($681,668)TeleLending Salaries

TOTAL ($2,573,357) $0 ($606,000) ($630,240) ($655,450) ($681,668)


Consumer TeleLending

1. TeleLending 9 9 9 9Comp. per Rep. (4% ann. incr.) -$50,400 -$52,416 -$54,513 -$56,693Manager 1 1 1 1Comp. per Mgr. (4% ann. incr.) -$68,400 -$71,136 -$73,981 -$76,941CLPC Staff 2 2 2 2

2. Comp./CLPC (4% ann. incr.) -$31,200 -$32,448 -$33,746 -$35,096CLPC Manager 0.5 0.5 0.5 0.5Comp./CLPC Manager -$43,200 -$44,928 -$46,725 -$48,594

Total -$606,000 -$630,240 -$655,450 -$681,6683.

4.

5.

TotalMonths 1-60

TotalMonths 1-12

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60

TeleLending will remain in the TeleBanking Center. The new Contact Center platform will reduce average call handle time by approximately 30 seconds per call, resulting in a total excess capacity of 15 FTE, with an excess capacity of 10 FTE during regular working hours between 8:00 a.m. and 5:00 p.m. PST.

The 10 TeleBanking Agents will be replaced with 9 TeleLenders and 1 TeleLending manager. This analysis also assumes no additional increase in staff beyond the initial 10 FTE due to space restrictions within the existing facility.

No additional increase in staff beyond the initial 10 FTE due to space restrictions within the current facility. Revenue and expense data is based on the CBA prepared for the TeleLending Expansion Project.

Salary data and management ratio based on TeleLending Expansion CBA. An increase in CLPC Support Staff is included to support additional TeleLending staff, but they will not be located in the TeleBanking area. Therefore, the total available seats are not impacted.Since new TeleLenders replace existing TeleBanking Agents, there are no incremental telecommunication or occupancy costs.


Schedule O

Page 22

Description

On-Going Expense - Staff TrainingTrain the Trainer (5,000) (5,000) 0 0 0 0 Staff Training (47,460) (47,460) 0 0 0 0 New Release Training (23,730) 0 0 (11,865) 0 (11,865)

TOTAL (76,190) (52,460) 0 (11,865) 0 (11,865)

DESCRIPTION EXPLANATION1. Train the Trainer 1. One company trainer is trained by the vendor for 5 days at $1,000 daily2. Staff Training 2. 210 TBAs to be trained for 2 days. Avg TBA daily wages are $1133. New Release Training 3. 210 TBAs to be trained for 4 hours each in Years 3 and 5. Avg hourly rate $14.125

TotalMonths 1-60

TotalMonths 1-12

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60


Schedule P

Page 23

Description

Cost Savings - Reduced Call Handle TimeReduced average handle time (30 secs per call) $1,855,945 $0 $440,325 $455,736 $471,687 $488,196 Reduced telecommunications costs (800 number) $488,704 $0 $113,385 $119,054 $125,007 $131,257

TOTAL $2,344,649 $0 $553,710 $574,791 $596,694 $619,454

DESCRIPTION EXPLANATION1. Reduce Average Handle Time by 30 Seconds

2. Reduce Telecommunications Costs

Supporting Calculations

1. Average Salary $29,355 $30,382 $31,446 $32,546 FTE 15 15 15 15

Salary Savings $440,325 $455,736 $471,687 $488,196

2. Annual TBA assisted calls 3,435,914 3,607,710 3,788,095 3,977,500 Savings per Call (30 seconds at 6.6 cents per min.) $113,385 $119,054 $125,007 $131,257

TotalMonths 1-60

TotalMonths 1-12

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60

Reduction in avg. handle time of 30 seconds per call (200 vs. 170 secs.). Identified avg. number of calls received during 30-minute increments. Determined staff needs using Erlang C model. Average savings 15 FTE.

Salary data below assumes a 3.5% merit increase through Months 49-60. 10 of 15 TBA FTE will be converted into TeleLending representatives

Reduction in avg. handle time of 30 seconds per call reduces toll-free (800) charges. There are 3,435,914 representative-assisted calls annually. Call volume is expected to increase by 5% annually in Months 25-60. 800 number charge is 6.6 cents per minute.

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60


Schedule Q

Page 24

Description

Cost Savings - Improved Staff RetentionIncrease staff retention by 10% $330,070 $0 $82,518 $82,518 $82,518 $82,518

TOTAL $330,070 $0 $82,518 $82,518 $82,518 $82,518

DESCRIPTION EXPLANATION1. Increase staff retention by 10%


Total TBAs - Location 1 135 135 135 135

Turnover 26% 26% 26% 26%

New Hires - Location 1 35 35 35 35


Turnover 200% 200% 200% 200%


Total New Hires (Location 1 and 2) 185 185 185 185

10% reduction in turnover 19 19 19 19

Training Cost per Student (3 weeks x $8.00/hour + $386 training cost) $1,346 $1,346 $1,346 $1,346

Savings - Sub-Total $24,914 $24,914 $24,914 $24,914

Recruiting Costs $1,000 $1,000 $1,000 $1,000

Savings - Sub-Total $18,510 $18,510 $18,510 $18,510

New Hire Productivity (50% less for 3 months) $2,112 $2,112 $2,112 $2,112 Savings - Sub-Total $39,093 $39,093 $39,093 $39,093

Total $82,518 $82,518 $82,518 $82,518

TotalMonths 1-60

TotalMonths 1-12

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60

Reduction in turnover is based on Contact Center management estimation. Savings due to reduced new hire training costs, lower recruiting costs, and increased productivity. Training cost information provided by the Training Department.

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60


Schedule R

Page 25

Description

Cost Savings - Reduction in New Hire TrainingTrain on one system, rather than six $426,470 $0 $106,618 $106,618 $106,618 $106,618

TOTAL $426,470 $0 $106,618 $106,618 $106,618 $106,618

DESCRIPTION EXPLANATION1. Reduce New Hire Training



Turnover 26% 26% 26% 26%



Turnover 200% 200% 200% 200%


Total New Hires (Location 1 and 2) 185 185 185 185

10% reduction in turnover 19 19 19 19

Total New Hires (after new platform implementation) 167 167 167 167

Reduction in Training Cost per student (2 weeks x 8 hours x $8.00 per hour) $640 $640 $640 $640

Savings $106,618 $106,618 $106,618 $106,618

TotalMonths 1-60

TotalMonths 1-12

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60

New hires will need to be trained on one system (new platform), rather than on six systems. Training time decreases from three weeks to one week. Training cost savings based on new hire hourly rate of $8.00.

TotalMonths 13-24

TotalMonths 25-36

TotalMonths 37-48

TotalMonths 49-60