Chapter 4
Net Present Value (NPV) Analysis
A method of calculating the expected net monetary gain or loss from a project by discounting all expected future cash inflows and outflows to the present point in time
Balanced Scorecard
A methodology that converts an organization's value drivers to a series of defined metrics
Discount Factor
A multiplier for each year based on the discount rate and the year
Configuration Management
A process that ensures that descriptions of the project's products are correct and complete
Weighted Scoring Card
A technique that provides a systematic process for project selection on numerous criteria
Mind Mapping
A technique that uses branches radiating out from a core idea to structure thoughts and ideas
SWOT Analysis
Analyze strengths, weaknesses, opportunities, and threats used to aid in strategic planning
Return on Investment (ROI)
Benefits minus costs (divided by costs)
Cash Flow
Benefits minus costs (income minus expenses)
Organizational Process Assets
Formal and informal plans, policies, procedures, guidelines, information systems, financial systems, lessons learned, and historical information that can be used to influence a project's success
Interface Management
Identifying and managing the points of interaction between various elements of a project
Integrated Change Control
Identifying, evaluating, and managing changes throughout a project lifecycle
Directives
New requirements imposed by management, government or some external influence
Project Integration Management
Processes that coordinate all project management knowledge areas throughout a project's life including; developing a project charter, developing preliminary project scope statement, developing project management plan, directing and managing the project, monitoring and controlling the project, providing integrated change control, and closing the project
Payback Period
The amount of time it will take to recoup, in the form of net cash inflows, the total dollars invested in a project
Baseline
The approved project management plan plus approved changes
Internal Rate of Return (IRR)
The discount rate that results in a NPV of zero for a project
Required Rate of Return
The minimum acceptable rate of return on an investment
Discount Rate
The rate used in discounting future cash flow; also called the capitalization rate or the opportunity cost of capital
Capitalization Rate
The rate used in discounting future cash flows also called discount rate or opportunity cost of capital
Opportunity Cost of Capital
The rate used in discounting future cash flows; also called the capitalization rate or discount rate
Cost of Capital
The return available by investing the capital elsewhere
Problems
Undesirable situations that prevent the organization from achieving it's goals
Project Charter
A document that formally recognizes the existence of a project and provides direction on the project's objectives and management
Change Control System
A formal documented process that describes when and how official project documents may be changed
Change Control Board
A formal group of people responsible or approving or rejecting changes on a project
Opportunities
Chances to improve the organization
Strategic Planning
Determining long-term objectives by analyzing the strengths and weaknesses of an organization studying opportunities and threats in the business environment, predicting future trends, and projecting the need for new products and services