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