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24) What are the questions that should be considered when making decisions on the division between PIP and analysis? Explain each question.
: 1. How much effort should be expended on the project initiation and planning process? How much effort should be expended on the PIP process, is often difficult. Practical experience has found, however, that proper and insightful project planning, including determining project scope as well as identifying project activities, can easily reduce time in later project phases. 2. Who is responsible for performing the project initiation and planning process? Most organizations assign an experienced systems analyst, or a team of analysts for large projects, to perform PIP. The analyst will work with the proposed customers of the system and other technical development staff in preparing the final plan. 3. Why is project initiation and planning such a challenging activity? PIP is viewed as a challenging activity because the objective of the PIP study is to transform a vague system request document into a tangible project description. This is an open-ended process. The analyst must clearly understand the motivation for and objectives of the proposed system. Difficulty: Moderate AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification: Synthesis 25) What occurs during the project initiation and planning phase of the development process? Include an example of an activity in each step. Answer: Project initiation focuses on activities designed to assist in organizing a team to conduct project planning. Examples of the types of activities performed are establishing project initiation, developing the project charter, and establishing a relationship with the customer. One key activity of project initiation is the development of the project charter. Project planning, the second activity within PIP, focuses on assessing the information system needs of the entire organization. Project planning is the process of defining clear, discrete activities and the work needed to complete each activity within a single project. Some example activities include describing the project scope, setting a baseline project plan, and identifying and assessing risks. Difficulty: Moderate AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification: Synthesis 26) Define Project Scope Statement (PSS) and Baseline Project Plan (BPP)? Compare and contrast the two. Answer: The Baseline Project Plan and the Project Scope Statement are the major outcomes and deliverables for the project initiation and planning phase. All information collected and analyzed during this phase is contained in the BPP. This plan reflects the best estimate of the project's scope, benefits, costs, risks, and resource requirements. It also specifies detailed project activities for the following phase and more general specifications for the remaining phases. The BPP can be used by the project selection committee to determine the project worth—accept, reject, or modify. The Project Scope Statement is a document prepared for the customer during project initiation and planning that describes what the project will deliver and outlines generally at a high level all work required to complete the project. The PSS consists of a high-level summary of the BPP. While the actual role of the PSS can vary, the PSS can be used by the analyst and the customer to gain an understanding of the project. Difficulty: Difficult AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification: Synthesis 27) Define tangible and intangible benefits and costs. What is the difference between the two? Answer: A tangible benefit refers to a benefit derived from the creation of an information system that can be measured in dollars and with certainty. Examples include reduced personnel expenses, lower transaction costs, and higher profit margins. Intangible benefit refers to a benefit derived from the creation of an information system that cannot be easily measured in dollars or with certainty. Examples include competitive necessity, promotion of organizational learning and understanding, and improved asset utilization. While tangible costs are costs associated with an information system that can be measured in dollars and with certainty, intangible costs are costs associated with an information system that cannot be easily measured in terms of dollars or with certainty. Hardware costs, labor costs, and operational costs are tangible costs. Loss of customer goodwill, employee morale, and operational inefficiency are intangible costs. Difficulty: Difficult AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification: Synthesis 28) Describe the differences between one-time and recurring benefits and costs. Answer: One-time costs are costs associated with project start-up and development or system start-up. This type of cost includes hardware and software purchases, user training, and site preparation. Recurring costs are costs resulting from the ongoing evolution and use of a system. New software and hardware leases, incremental communications, and incremental data storage expense are recurring costs. Difficulty: Easy AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification: Synthesis 29) A Project Scope Statement can be used to ________. A) Detail project estimates B) Outline a schedule C) Prepare the project for the analysis phase D) Serve as a contract Answer: D Difficulty: Moderate AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
30) What makes all projects feasible? A) Unlimited resource and infinite time B) Limited scope C) A great budget D) A highly skilled project team
: A Difficulty: Difficult AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
58) Which of the following is NOT a factor in determining schedule feasibility? A) A 45-hour work week B) Government imposed deadline C) Business cycles D) Vacation
: A Difficulty: Difficult AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
1) Project identification and selection is also known as ________. A) A preproject step B) The Project ID C) The first step D) Project selection
: A Difficulty: Easy AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
5) ________ is the process of defining clear activities necessary to complete activities in a single project. A) Project planning B) Project initiation C) Baseline D) Business case
: A Difficulty: Easy AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
9) All of the following are part of project planning except ________. A) Organizing the team B) Creating a resource plan C) Identifying risk D) Developing the project scope
: A Difficulty: Easy AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
34) All of the following are tangible benefits except ________. A) Decreased flexibility B) Cost reduction C) Increased speed of activity D) Improvement of management planning
: A Difficulty: Easy AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
35) Which of the following is an example of a tangible benefit? A) Error reduction in data entry B) Improvement of employee morale C) Faster decision making D) Positive impacts on society
: A Difficulty: Easy AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
42) ________ is/are the rate at which money can be borrowed. A) Cost of capital B) Present value C) Fixed costs D) Time value of money
: A Difficulty: Easy AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
47) ________ need to be managed in order to be minimized. A) Risks B) ROIs C) Employees D) Estimates
: A Difficulty: Easy AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
48) Which of the following is NOT a potential consequence of not managing risks? A) Unqualified project management B) Inaccurate duration times C) Failure to achieve appropriate system performance levels D) Inaccurate cost estimates.
: A Difficulty: Easy AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
50) Which of the following is NOT a way to manage project risks? A) Changing the budget B) Changing the project plan C) Carefully assigning project team members D) Set up monitoring methods
: A Difficulty: Easy AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
54) Which type of project should companies not have too many of? A) High risk B) High cost C) Huge staff D) Unknown technical environment
: A Difficulty: Easy AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
69) Which part of the baseline project report contains an outline of the recommended course of action? A) Introduction B) Feasibility assessment C) Management issues D) System description
: A Difficulty: Easy AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification:
75) The baseline project plan has all of the primary objectives except ________. A) Helps provide the budget B) Helps provide a clear idea of the scope C) Helps provide an understanding of the benefits D) Defines the duration of the project
: A Difficulty: Easy AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification:
74) Where do you identify the types of people needed for a project? A) Team configuration and management part of the management issues plan B) In the communications part of the management issues plan C) Project standards and procedures of the management issues plan D) In the work breakdown structure of the management issues plan
: A Difficulty: Moderate AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification:
82) Which of the following is a guideline for presentation design in making an effective presentation? A) Keep it simple B) Practice C) Have a backup plan D) Know your audience
: A Difficulty: Moderate AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification:
6) What is an example of a project assumption? A) Size B) Potential problems C) Scope D) Complexity
: B Difficulty: Difficult AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
39) A new hardware purchase is classified as a(n) ________. A) Tangible benefit B) One-time cost C) Fixed cost D) IS fee
: B Difficulty: Difficult AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
2) Which of the following is NOT a question asked to determine if project initiation and planning has ended and analysis has begun? A) What kind of effort should be expended on PIP? B) Who is going to pay for PIP? C) Who is responsible for performing PIP? D) Why is PIP so challenging?
: B Difficulty: Easy AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
31) All of the following are categories of feasibility except ________. A) Technical B) Scope C) Scheduling D) Political
: B Difficulty: Easy AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
43) Which option identifies the point at which benefits equal costs? A) Net present value B) Break-even analysis C) Time value of money D) Present value
: B Difficulty: Easy AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
44) Which of the following is NOT an example of an economic cost-benefit analysis technique? A) Net present value B) Time value of money C) Return on investment D) Break-even analysis
: B Difficulty: Easy AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
56) Which feasibility is concerned with the project attaining its desired objectives? A) Technical feasibility B) Operational feasibility C) Schedule feasibility D) Legal feasibility
: B Difficulty: Easy AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
70) The ________ outlines possible alternative solutions. A) Design strategies B) System description C) Project scope D) Introduction
: B Difficulty: Easy AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification:
71) Which of the following is NOT an example of a system description? A) Web-based online system B) Management issues C) LAN with decentralized databases D) Mainframe with central databases
: B Difficulty: Easy AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification:
77) ________ are peer group reviews of products created via the systems development process. A) Staff meetings B) Walk-throughs C) Steering committee meetings D) Project approval bodies
: B Difficulty: Easy AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification:
10) What of the following is NOT a purpose for a baseline project plan? A) Resources are more quantifiable B) Eliminate risks C) Decide if a project should be rejected D) A depository for information collected during initiation
: B Difficulty: Moderate AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
51) Which of the following is NOT an example of a project risk assessment factor? A) Project duration time B) Customer's commitment to system C) Familiarity with other systems D) Organizational personnel changes resulting from system
: B Difficulty: Moderate AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
78) Which of the following is NOT a role in a walk-through meeting? A) Secretary B) Treasurer C) User D) Presenter
: B Difficulty: Moderate AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification:
40) Which of the following is NOT an example of a recurring cost? A) Software maintenance B) Data storage expenses C) System conversion D) Hardware leases
: C Difficulty: Difficult AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
45) Which of the options below means the organization has the ability to build the requested system? A) Economic feasibility B) Return on investment C) Technical Feasibility D) Break-even point
: C Difficulty: Easy AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
52) Which of the following is a less risky approach to the technical parts of a project? A) User involvement B) Using a matrix C) Using standard technology D) Having a well-equipped IT staff
: C Difficulty: Easy AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
67) A common legal and contractual development in new application development is ________. A) Understanding how stakeholders feel about the system B) Determining which IS to develop C) Expanding software licenses D) The political ramifications of a new system
: C Difficulty: Easy AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification:
79) Which role in the walkthrough normally has done all or some of the work presented? A) Coordinator B) User C) Presenter D) Standards bearer
: C Difficulty: Easy AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification:
11) Which document outlines all work required to complete the project? A) Baseline project plan B) Business plan C) Project scope document D) Feasibility document
: C Difficulty: Moderate AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
3) Who is typically responsible for performing the PIP process? A) Managers B) Users C) Systems analyst D) The business unit
: C Difficulty: Moderate AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
7) Which of the following is NOT a part of project initiation? A) Create the project initiation team B) Establish management procedures C) Create a project budget D) Develop the project charter
: C Difficulty: Moderate AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
32) Which feasibility category deals with identifying financial benefits associated with the project? A) Political B) Legal C) Economic D) Technical
: C Difficulty: Moderate AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
36) Which of the following is an example of an intangible cost? A) Hardware costs B) Labor costs C) Customer goodwill D) Employee training
: C Difficulty: Moderate AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
38) Which of the following is NOT a guideline for better cost estimation? A) Have clear guidelines for creating estimates B) Use experienced developers C) Update estimates at the end of the project D) Use historical data
: C Difficulty: Moderate AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
72) At what point in the project should you identify the alternative solutions? A) The introduction B) During the project initiation phase C) In the system description document D) During baseline planning
: C Difficulty: Moderate AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification:
49) Failure to integrate the new system with the old system is an example of ________. A) A poor break even analysis B) Failure to create an adequate project scope statement C) Failure to recognize tangible benefits D) Failure to assess and manage risks
: D Difficulty: Difficult AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
80) Which of the following is NOT an outcome after a presenter has participated in a walk-through of the product? A) Approval of the work product B) Approval of the work product pending changes C) Approval of the work product pending major revisions D) Disapproval and removal of the work product
: D Difficulty: Difficult AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification:
4) Why is PIP challenging? A) Because it is expensive B) Because only systems analysts participate in the process C) Because it is a closed-ended process D) Because it turns a vague system request into a project description
: D Difficulty: Easy AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
8) What is the term that describes the best estimate of a project's scope, benefits, cost, and resources? A) Management procedure B) Project charter C) Resource plan D) Baseline project plan
: D Difficulty: Easy AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
33) A(n) ________ comes from an information system that can be measured monetarily. A) Project benefit B) Economic feasibility C) Project plan D) Tangible benefit
: D Difficulty: Easy AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
41) Which term below means that money available today is worth more than the same amount tomorrow? A) Cost benefit B) Discount rate C) Variable costs D) Time value of money
: D Difficulty: Easy AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
55) The following is NOT an example of a type of feasibility study. A) Operational feasibility B) Technical feasibility C) Economic feasibility D) Resource feasibility
: D Difficulty: Easy AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
57) Which type of feasibility deals with project duration? A) Political feasibility B) Contract feasibility C) Time feasibility D) Schedule feasibility
: D Difficulty: Easy AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
68) All of the following are included in the baseline project report except ________. A) Introduction B) System description C) Feasibility assessment D) Conclusion
: D Difficulty: Easy AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification:
73) Which of the following is NOT included in the feasibility assessment? A) Project costs B) Technical difficulties C) Project benefits D) System alternatives
: D Difficulty: Easy AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification:
76) Who must review the baseline project plan before it moves to the next phase in the SDLC? A) The Customers B) The CEO C) The IS Manager D) The uses, managers, and development group
: D Difficulty: Easy AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification:
37) Which of the following is an example of a procurement IS cost? A) System maintenance B) User training C) Personal recruiting D) Organizational disruptions
: D Difficulty: Moderate AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
46) Which of the following is NOT a consideration during the assessing technical feasibility stage? A) System size B) System complexity C) System target hardware D) System cost
: D Difficulty: Moderate AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
53) Each organization has to decide its acceptable project mix of ________. A) Costs B) Personnel C) Requirements D) Risks
: D Difficulty: Moderate AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification:
81) Which of the following types of documents do NOT make use of a walk-through? A) System specifications B) Code segments C) Test procedures D) Project budget
: D Difficulty: Moderate AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification:
85) The baseline business plan is a type of project and contains steps for overall systems development.
: FALSE Difficulty: Difficult AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification:
12) The more complex organizational settings are for projects, the less time it takes for analysis because the company has more resources.
: FALSE Difficulty: Easy AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
14) Every project uses all of the project initiation activities.
: FALSE Difficulty: Easy AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
16) A project must have a positive ROI to be approved for continuation.
: FALSE Difficulty: Easy AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
18) Small projects do not have any risk.
: FALSE Difficulty: Easy AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
21) A project with high risk may not be conducted.
: FALSE Difficulty: Easy AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
22) Operational feasibility deals with project duration.
: FALSE Difficulty: Easy AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
83) The introduction portion of the baseline project report is often the first section to be written.
: FALSE Difficulty: Moderate AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification:
84) Detailed task and activities estimates are completed during the project initiation and planning phase.
: FALSE Difficulty: Moderate AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification:
94) Creative design and development is a part of the marketing Web-based system costs.
: FALSE Difficulty: Moderate AACSB: Information Technology LO: 5.4 Describe the activities and participant roles within a structured walk-through Classification:
87) Define legal and contractual feasibility. Describe activities that may be involved in this feasibility study.
: Legal and contractual feasibility is the process of assessing potential legal and contractual ramifications due to the construction of a system. Possible considerations might include copyright or nondisclosure infringements, labor laws, antitrust legislation, foreign trade regulations, and financial reporting standards, as well as current or pending contractual obligations. Contractual obligations may involve ownership of software used in joint ventures, license agreements for use of hardware or software, nondisclosure agreements with partners, or elements of a labor agreement. A common situation is that development of a new application system for use on new computers may require new or expanded, and more costly, system software licenses. Difficulty: Easy AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification: Synthesis 88) What is political feasibility and why is it important? Answer: Political feasibility in which you attempt to gain an understanding of how key stakeholders within the organization view the proposed system. Because an information system may affect the distribution of information within the organization, and thus the distribution of power, the construction of an information system can have political ramifications. Those stakeholders not supporting the project may take steps to block, disrupt, or change the intended focus of the project. Difficulty: Moderate AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification: Synthesis 89) Describe the sections of a baseline project plan. Answer: The major sections of a baseline project plan are: 1. Introduction—a brief overview of the entire document and outline of recommended course of action for the project. 2. System Description—an outline of possible alternative solutions in addition to the one deemed most appropriate for the given situation. 3. Feasibility Assessment—issues related to project costs and benefits, technical difficulties, and other such concerns are outlined. 4. Management—a short section outlines a number of managerial concerns related to the project. Difficulty: Difficult AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification: Synthesis 90) List and describe the parts of the feasibility assessment portion of a baseline project report. Answer: Economic Analysis—Provides an economic justification for the system using cost-benefit analysis. Technical Analysis—Provides a discussion of relevant technical risk factors and an overall risk rating of the project. Operational Analysis—Provides an analysis of how the proposed system solves business problems or takes advantage of business opportunities in addition to an assessment of how current day-to-day activities will be changed by the system. Legal and Contractual Analysis—Provides a description of any legal or contractual risks related to the project. Political Analysis—Provides a description of how key stakeholders within the organization view the proposed system. Schedules, Time Line, and Resource Analysis—Provides a description of potential time frame and completion date scenarios using various resource allocation schemes. Difficulty: Difficult AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification: Synthesis 91) List and describe the sections of the management issues portion of a baseline project report. Answer: Team configuration and management—Provides a description of the team member roles and reporting relationships. Communication plan—Provides a description of the communication procedures to be followed by management, team members, and the customer. Project standards and procedures—Provides a description of how deliverables will be evaluated and accepted by the customer. Other project-specific topics—Provides a description of any other relevant issues related to the project uncovered during planning. Difficulty: Difficult AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification: Synthesis 92) Briefly define the introduction and system description portions of a baseline project report. Answer: The introduction includes the following: Project overview—Provides an executive summary that specifies the project's scope, feasibility, justification, resource requirements, and schedules. Additionally, a brief statement of the problem, the environment in which the system is to be implemented, and constraints that affect the project are provided. Recommendation—Provides a summary of important findings from the planning process and recommendations for subsequent activities. System description includes: alternatives-Provides a brief presentation of alternative system configurations. System description—Provides a description of the selected configuration and a narrative of input information, tasks performed, and resultant information. Difficulty: Difficult AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification: Synthesis 93) Users, management, and customers verify the BPP. Answer: FALSE Difficulty: Moderate AACSB: Information Technology LO: 5.4 Describe the activities and participant roles within a structured walk-through Classification:
59) Explain the time value of money. Incorporate terms such as discount rate and present value.
: Most techniques used to determine economic feasibility encompass the concept of the time value of money (TVM), which reflects the notion that money available today is worth more than the same amount tomorrow. Benefits from systems development will likely occur sometime in the future. Because many projects may be competing for the same investment dollars and may have different useful life expectancies, all costs and benefits must be viewed in relation to their present value when comparing investment options. The rate at which money can be borrowed or invested is referred to as the cost of capital, and is called the discount rate for TVM calculations. Present value is the current value of a future cash flow. Difficulty: Moderate AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification: Synthesis 60) Define the most commonly used economic cost-benefit analysis techniques. Answer: Net Present Value (NPV) uses a discount rate determined from the company's cost of capital to establish the present value of a project. The discount rate is used to determine the present value of both cash receipts and outlays. Return on Investment (ROI) is the ratio of the net cash receipts of the project divided by the cash outlays of the project. Trade-off analysis can be made among projects competing for investment by comparing their representative ROI ratios. Break-Even Analysis (BEA) finds the amount of time required for the cumulative cash flow from a project to equal its initial and ongoing investment. Difficulty: Moderate AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification: Synthesis 61) Assume a proposed system has a useful life of 5 years, one-time costs of $250,000, recurring costs of $80,000 per year, and tangible benefits of $175,000 per year. If the cost of capital is 12%, what is the overall NPV? Overall ROI? Break-even point? Answer: The overall NPV is $92,454; the overall ROI is .17, and break-even occurs in year 4. Difficulty: Difficult AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification: Synthesis 62) Define technical feasibility. What are the assessments associated with this feasibility study? Answer: The purpose of assessing technical feasibility is to gain an understanding of the organization's ability to construct the proposed system. This analysis should include an assessment of the development group's understanding of the possible target hardware, software, and operating environments to be used, as well as system size, complexity, and the group's experience with similar systems. In this section, we will discuss a framework you can use for assessing the technical feasibility of a project in which a level of project risk can be determined after answering a few fundamental questions. Difficulty: Easy AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification: Synthesis 63) List the factors associated with technical risks. Describe the rules involved in assessing a technical risk assessment. Answer: The amount of technical risk associated with a given project is contingent on four primary factors: project size, project structure, the development group's experience with the application and technology area, and the user group's experience with systems development projects and the application area. The rules are: 1. large projects are riskier than small projects. Project size, of course, relates to the relative project size with which the development group typically works. 2. A system in which the requirements are easily obtained and highly structured will be less risky than one in which requirements are messy, ill-structured, ill-defined, or subject to the judgment of an individual. 3. The development of a system employing commonly used or standard technology will be less risky than one employing novel or nonstandard technology. 4. A project is less risky when the user group is familiar with the systems development process and application area than if the user group is unfamiliar with them. Difficulty: Moderate AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification: Synthesis 64) Describe how one can manage project risk. Answer: You can manage risk on a project by changing the project plan to avoid risky factors, assigning project team members to carefully manage the risky aspects, and setting up monitoring methods to determine whether or not potential risk is, in fact, materializing. The amount of technical risk associated with a given project is contingent on four primary factors: project size, project structure, the development group's experience with the application and technology area, and the user group's experience with systems development projects and the application area. Difficulty: Easy AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification: Synthesis 65) Briefly describe schedule feasibility. Provide an example. Answer: The purpose of assessing schedule feasibility is for you, as a systems analyst, to gain an understanding of the likelihood that all potential time frames and completion date schedules can be met and that meeting these dates will be sufficient for dealing with the needs of the organization. Detailed activities may only be feasible if resources are available when called for in the schedule. The schedule of activities produced during project initiation and planning will be very precise and detailed for the analysis phase. Example: a system may have to be operational by a government imposed deadline. Difficulty: Easy AACSB: Information Technology LO: 5.2 List and describe various methods for assessing project feasibility Classification: Synthesis 66) Which of the following is NOT a factor in determining legal and contractual feasibility? A) Labor laws B) Financial budgets C) Copyright infringements D) Foreign trade regulations Answer: B Difficulty: Easy AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification:
15) The useful life of many IS may not exceed five years.
: TRUE Difficulty: Difficult AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
13) When projects are across departments with different objectives, it may be difficult to get parties to agree on the direction of the project.
: TRUE Difficulty: Easy AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
17) Building an economic case for a project is an open ended activity.
: TRUE Difficulty: Easy AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
23) During schedule feasibility it is a good practice to not have system testing during holiday periods.
: TRUE Difficulty: Easy AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
96) Personal appearance matters during a presentation.
: TRUE Difficulty: Easy AACSB: Information Technology LO: 5.4 Describe the activities and participant roles within a structured walk-through Classification:
19) For risker projects, the return is typically greater.
: TRUE Difficulty: Moderate AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
20) Development of an executive support system is an example of risky project.
: TRUE Difficulty: Moderate AACSB: Information Technology LO: 5.1 Describe the steps involved in the project initiation and planning process Classification:
86) Ensuring the customer and development group have a common understanding of the project is a primary objective of the BPP.
: TRUE Difficulty: Moderate AACSB: Information Technology LO: 5.3 Describe the activities needed to build and review the baseline project plan Classification:
95) An example of a recurring tangible cost is software.
: TRUE Difficulty: Moderate AACSB: Information Technology LO: 5.4 Describe the activities and participant roles within a structured walk-through Classification:
