MGT 5331 Ch. 2
For a hypothetical company, projects that cost $1,000,000 to implement must have a payback not longer than 4 years. Which of the following annual project cost savings would be acceptable? $100,000 $200,000 $300,000
$300,000 Reason: This annual savings would result in $1,200,000 savings over 4 years. It will achieve the cut off point of a minimum of $250,000 per year.
activities of the strategic management process in the correct order of occurrence
1. review and define the org. mission 2. analyze and formulate strategies 3. set objectives to achieve strategies. 4. implement strategies through projects
Place the following steps in the strategic management process in the correct sequence.
1.Review/review mission statement 2.Set strategy and objectives 3.portgolio of strategic choices 4.Strategy implementation 5.Project selection 6.Projects
In the phase gate model, a gate can lead to three possible outcomes. Which of the following is not one of those outcomes? Go Kill Recycle Accelerate
Accelerate
What are the critical inputs that senior management must provide to an organization utilizing a project priority management system? Development of individual project plans. Amount of resources to commit to various categories of projects. Guidance in what to include in the selection criteria.
Amount of resources to commit to various categories of projects. Guidance in what to include in the selection criteria.
Identify the second step in strategy formulation.
Assess the internal and external environments.
Identify the steps necessary to implement strategies through projects. Establish a corporate organization that complements the strategy Establish a planning and control system Determine and allocate available resources Implement multiple objectives at the same time
Establish a corporate organization that complements the strategy Establish a planning and control system Determine and allocate available resources
True or false: Senior management uses weighted scoring models to build a project portfolio which maximizes short-term profitability.
False Reason:The focus is on maximizing long-term return on investment
Which of the following best relate symptoms of an "implementation gap"? Resources are generally available. Frequent meetings to renegotiate resource allocations. People feel their work is always contributing. Employees have a good understanding of what the priorities are.
Frequent meetings to renegotiate resource allocations. Reason:This is referred to as "priorities" in the text, but one leads to the other.
What are the critical needs of a company utilizing a strategic project portfolio system? Getting input from senior management. Involving a team of people rather than just an individual to make decisions. Utilizing only financial selection criteria. Establishing a common financial goal for all categories of projects (compliance, operation,and strategic.)
Getting input from senior management. Involving a team of people rather than just an individual to make decisions.
strategic project
Goals and objectives from the strategic plan.
The phase gate model is made up of six phases. Place these in the correct sequence.
Idea Proposal Screening and selection Implementation plan progress evaluation closure
When using Net Present Value (NPV) to evaluate a project, which of the following statements concerning the discount (hurdle) rate would be considered correct? It can change depending on the type of project. If two projects are compared and both have a positive NPV, the one with the higher NPV is selected. Strategic projects always have a low hurdle rate. The discount rate is always set at 20% per the text book example.
It can change depending on the type of project. If two projects are compared and both have a positive NPV, the one with the higher NPV is selected.
Identify traditional components included in a mission statement. Major products/services Target customers/markets Geographical domain Profit goals and percentages
Major products/services Target customers/markets Geographical domain.
Which of the following is NOT important in establishing a proper objective? Be as specific as possible while targeting the objective. Ensure that the results are measurable. Make the objective assignable to one person for completion. Establish realistic goals given the resources available. Establish a time frame for the completion of the objective. Make sure there is a project payback.
Make sure there is a project payback. Reason:Compliance projects do not have to have a payback.
What happens when an organization restricts project proposals from specific levels or groups within the organization? Opportunities may be missed. Value is added to the organization.
Opportunities may be missed.
Which of the following is not used to calculate NPV? Payback period Required rate of return Initial investment Net cash inflow for each period
Payback period
A good project priority system will promote a culture where all stakeholders contribute to the goals of the organization but ultimately someone has to choose what direction to go. What are upper management's risks in prioritizing projects?
Picking the wrong one(s).Reason:Seems simple, but top management is all about giving people confidence, and picking the wrong project can hurt badly.
The "implementation gap" refers to the lack of understanding of strategy among top and middle managers. What problems may ensue from this? Potential conflict of interests between managers. Lack of support for strategic projects. A clear mapping of middle management objectives and the strategic plan.
Potential conflict of interests between managers. Lack of support for strategic projects.
Which of the following is not a benefit of a project portfolio management system? Links project selection to strategic metrics. Prioritizes project proposals across a common set of criteria, rather than on politics or emotion. Allocates resources to projects that align with strategic direction. Sacred cow projects are protected. Balances risk across all projects. Builds discipline into project selection process. Improves communication and supports agreement on project goals. Justifies killing projects that do not support organization strategy.
Sacred cow projects are protected.
Many organizations find they have three basic kinds of projects in their portfolio. Which of the following is not one of those three? Operational Compliance Strategic Sacred cows
Sacred cows
Implementation of projects without a strong priority system linked to strategy creates problems. Which of the following are some of those problems? Lower ROI on the individual projects Resource conflicts and multitasking The implementation gap Organization politics Projects that take longer than expected
The implementation gap Reason: The implementation gap is the lack of understanding and consensus of organization strategy among top and middle-level managers. Organization politics Reason: Politics exist in every organization and can have a significant influence on which projects receive funding and high priority. Resource conflicts and multitasking Reason: Most projects operate in a multiproject environment. This environment creates the problems of project interdependency and the need to share resources.
What are the main reasons project managers need to understand an organization's mission and strategy? To modify the design of a product To allow appropriate decision making To authorize appropriate scope changes To be an effective project advocate
To allow appropriate decision making Reason: Implicit in the job of a manager is to make decisions and not continually ask which way to go. To be an effective project advocate Reason: Managing technical aspects is important, but one cannot overlook politics in a company.
Why might organizations include multiple non-financial criteria in a screening model for projects?
To avoid focusing only on profitable projects, which can lead to overextension. Reason: Yes. There are several reasons for supporting projects which do not necessarily have high profit margins, but which support the core mission.
Why is alignment between the strategic plan and projects critical for an organization?
To avoid poor utilization of the organization's resources. Reason:Without alignment between strategy and projects, resources such as people, money, and equipment are likely to be allocated to projects which do not advance organizational goals.
must-do projects
To comply with a regulation or an emergency situation.
operation project
To support the current business products or service. Strategic Strategic Drop zone Goals and objectives from the strategic plan. correct Toggle Button Unavailable.
What is required to implement a "strategy"
actions and tasks reason: Ultimately, implementation needs action, and most strategic plans are implemented through projects.
Identify the assumptions made in the integration of projects with strategic plans? a. An open and transparent selection process for all participants to review. b. A process for prioritizing projects by their contribution to the plan. c. Existence of a strategic plan. d. A strategic plan needs to be created and documented.
b. A process for prioritizing projects by their contribution to the plan. c. Existence of a strategic plan.
The __________ approach basically uses a list of questions to review potential projects and to determine their acceptance or rejection
checklist
The most frequently used method in selecting projects has been the _________
checklist
True or false: Strategic management positions the organization to meet the needs and requirements of its customers for the short term
false reason: Strategic management has a long-term focus. It can decide the long-term survival of the organization.
the context of the phase gate process, the ___________ gate is invisible.
first
All managers realize that without ______________ , success is impossible.
implementation
If the preliminary proposal is approved, then a project manager and staff are assigned to develop a more comprehensive _______________ plan.
implementation
Multitasking in an organization with many projects creates:
inefficiencies. Reason:Multitasking in PM implies starting and stopping frequently to switch between projects. This has a highly negative impact on conceptual work.
Doran (1981) created the SMART memory device to help write objectives. The M stands for
measurable
Most projects operate in a ____________ environment.
multiproject
In the context of ranking strategic project proposals, if a project does not meet designated "______________" objectives, it is not considered and is removed from consideration.
must
Organizational ___________ drive projects
objectives
These projects are high-risk, high-value projects
oysters
According to David and Jim Matheson, Blank______ projects have high commercial potential and high technical feasibility.
pearls Reason: Pearls are low-risk development projects with high commercial payoffs.
Managing the _____________ takes the selection system one step higher in that the merits of a particular project are assessed within the context of existing projects.
portfolio
A ______ driven project portfolio system can reduce or eliminate the impact of problems in project implementation.
priority
A multiproject organizational environment faces major problems without a ____________ system that is clearly linked to the strategic plan.
priority
Enforcing the project _____________ system is critical.
priority
The main purpose of ___________ _____________is to assess performance and determine what, if any, adjustments should be made.
progress review
Typically an organization will issue a _____________ for ____________ to contractors/vendors with adequate experience to implement a project.
request; proposal
Task completion requires
resources
____________ management should be responsible for prioritizing projects.
senior
Project _____________ are typically high-ranking managers who endorse and lend political support for the completion of a specific project.
sponsors
Financial return, while important, does not always reflect _______________ importance.
strategic
_____________ management is the process of assessing "what we are" and deciding and implementing "what we intend to be and how we are going to get there."
strategic
One of the four activities of the strategic management process is to analyze and formulate _____________
strategies
_____________ describes how an organization intends to compete with the resources available in the existing and perceived future environment.
strategy
The main goal of a "governance team" managing a project portfolio system is to ensure that
the priority process is free of power politics.
The most important criterion for project selection is: the project's fit to the corporate culture. the project's fit to the organization's strategy. financial return of the project.
the project's fit to the organization's strategy.
Doran (1981) created the SMART memory device to help write objectives. The T stands for
time related
A preliminary decision of balance between compliance, strategic, and operational projects must be made by _________________ management.
top
True or false: How a project manager responds to project delays should be based on the impact on strategic concerns.
true reason: A project manager has to make decisions based on how the project affects the organization's strategy, including whether project delays may reduce an organization's ability to compete.
Project proposals should be classified by __________ so the appropriate criteria can be used to evaluate them
type
_________ scoring models result in bringing projects into closer alignment with strategic goals.
weighted
___________ scoring models generally include qualitative and/or quantitative criteria.
weighted
Formulating strategy answers the question of ____ to reach the organization's objectives.
what needs to be done Reason: Formulating strategy includes determining and evaluating alternatives to select the best ones (i.e., the "what") to enable an organization to achieve its objectives.
Payback period is typically measured in _____________
years
What positive role can corporate politics play in managing strategic projects?
Project sponsors may use politics to support a project behind the scenes. Reason: A project sponsor is someone higher up the ladder than the project manager who can help with things like resources and priority changes when needed.
Mission statements should be written and communicated to organizational managers and other employees in order to:
Provide a focal point for decision making. Reason: That's the entire point and the reason to write it down - to literally get everyone on the same page.
Which of the following are the considerations for a proper mix of projects? Type Risk Resource demand Hurdle rate
Resource demand Type Risk
The question "what are we now?" is part of which of the following phases of the strategic management process?
Review mission
Which of the following best explains the role of the sponsor in ranking and selecting strategic projects?
The sponsor decides whether to pursue a project based on its value to the organization. Reason:Yes, the sponsor evaluates data and information collected about the value of the project and determines whether to forward it to the priority team/project office.
Identify significant benefits of using a multi-weighted scoring model to select projects. Selection criteria may be mapped to critical success factors in the strategic plan. The model is a good predictor regardless of the criteria selected. The weighting provides an objective measurement to allow ranking from best to worst.
The weighting provides an objective measurement to allow ranking from best to worst. Selection criteria may be mapped to critical success factors in the strategic plan.
Which of the following statements is true of selection criteria for projects? They are typically identified as nonfinancial and not financial. They are typically identified as financial and not nonfinancial. They are typically only identified as financial. They are typically identified as financial and nonfinancial.
They are typically identified as financial and nonfinancial.
What are two types of risks associated with a strategic project portfolio?
Total risk of all the projects. Specific project risks.
