Consulting Terms
QFD Technical Requirements
(Quality Function Deployment) Evaluate how well customer requirements have been met compared to the competition
When to use Management Procurement
-Contractor hired to manage entire project -Fees are paid by contractor -Benefits a client who cares about quality, time and key objectives
intercept term in macroeconomic model
= stock's expected return
Present Value
=(Future Value)/(1 + i)^t
Charts used in quality control
Histograms, Pareto charts, and scatter diagrams, used in quality control
View from 30,000 feet
Seeing a situation from a wider perspective after considering all relevant factors and thinking strategically.
brownfield investment
foreign direct investment in an existing industrial setting (repurposing)
Design and Manage
Similar strategy to management contracting Contractor paid fee to manage and assume responsibility, not only for the works and contractors but also for the design and design team
In selecting the method(s) of inquiry there are 6 potential methods described. Which method is good for large numbers of people?
Survey
restricted stock
units of stock with restrictions on when they can be sold, usually issued as partial compensation for employees and directors and usually lifts in 3 to 5 years when the stock vests
Simple
not Complicated
On the Beach
not currently staffed on a client project
focused
not global
brief
not lengthy
Workstream
one section of an overall client project
Growth and increasing sales - increase volume
- Expand # of dist channels - Increase product line through diversification (particularly with products that won't cannibalize) - Analyze the segments of the business that have the highest future potential Invest in a marketing campaign - Acquire competitor (esp if question is about increasing market share) - Adjust prices (lower --> increase volume, raise --> decrease demand, increase profits) - Create seasonal balance (increase sales in every quarter [nursery: sell flowers in spring, herbs in summer, pumpkins in fall, garlands/trees in winter]) - Find niches in developing industries with high barriers to entry (less competition, more notice if someone is trying to enter)
Why's it important to manage scope
- Failure to manage scope is a leading cause of project failure - ensures team is working within their resource parameters
Kick-off meeting
- Gain support for the project - Engage stakeholders so they can resolve any questions or issues before project planning
Prices are stable only when three conditions are met:
- Growth rate for all competitors is approximately the same - Prices are paralleling costs - Prices of all competitors are of ~equal value
We should never collude with the client to?
- Help them avoid responsibility - Play down the impact that difficult relationships have on the problem
Pick 2 of the guidelines for selecting what to highlight to the client after collecting all the data.
- Items that are clearly important to the organization - Items that the client has control over changing
Describing the concerns that began the process, where the change effort is at, and what the organization needs is an example of doing what?
- Opening with transparent purpose and leveling the playing field
If case includes decline-in-sales problem, analyze:
- Overall declining market demand - Possibility that current marketplace is mature/product is obsolete - Loss of market share due to substitutions
Keys for a successful project meeting
- Project sponsor should introduce the project: introduce stakeholders -Review roles and responsibilities of stakeholders -Review elements from project charter: project objectives, business case, projected timeline, funding status, deliverables - Discuss project organizational structure - Dedicate a staff person to support the meeting
Growth and increasing sales - company questions
- Size - Resources - Products
The book recommends giving the data and recommendations in the first 20% of the meeting why?
- So that you get to the point and to the recommendations quickly - So that you have enough time to deal with their resistance
Project Success Factors
- Strong Executive Support - Plenty of User Involvement - An Experienced Project Manager - Clear Business Objectives
Case steps
- Summarize question - What constitutes success, including any other objectives I should know about? - Ask clarifying questions - Label case, lay out structure - State hypothesis
Pricing strategies - steps
- Take notes - Repeat/verify question - Objective: profits, market share or brand positioning? - What constitutes success to the client, including any other objectives I should know about? - Hypothesis - Investigate company - Investigate product - Determine pricing strategy
Growth and increasing sales - steps
- Take notes - Repeat/verify question - What constitutes success to the client, including any other objectives I should know about? - Hypothesis - Company - Industry - Strategy to grow/increase sales --- Increasing sales =/= necessarily increasing profits
Entering a new market - steps
- Take notes - Repeat/verify question - Why does the company want to enter this market? - What constitutes success to the client, including any other objectives I should know about? - Hypothesis - Questions about the company - Current and future market - Investigate market to see if entry makes sense - Recommendation - Ways to enter - Recommendation
M&A - steps
- Take notes - Repeat/verify question - Why does the company want to merge/acquire? - What constitutes success to the client, including any other objectives I should know about? - Lay out objectives - General questions - Hypothesis - Price questions - Due diligence questions - Exit strategies questions - Recommendation + risks and next steps + "We can help you with that"
Risk transfer
- accomplished through an insurance policy - a deductible in an insurance policy means the insured is bearing some of the risk of loss and thereby (partially) self-insuring
Non-financial risks
- arise from actions within an entity or from external origins, such as the environment, the community, regulators, politicians, suppliers, and customers - consist of a variety of risks - settlement risk, operational risk, legal risk, regulatory risk, accounting risk, tax risk, model risk, tail risk, and sovereign or political risk
Market risk
- arises from movements in stock prices, interest rates, exchange rates, and commodity prices
Hedge Funds
- available only to accredited investors and are exempt from most reporting requirements - different hedge fund strategies exist - typical annual fee structure is 20% of excess performance plus 2% assets under management
Jensen's alpha
- based on systematic risk (beta) rather than total risk - measure of percentage returns in excess of those from a portfolio that has the same beta but lies on the SML
Asset classes
- building blocks of an asset allocation - an asset class is a category of assets that have similar characteristics, attributes, and risk-return relationships - investors have distinguished cash, equities, bonds, and real estate as the major asset classes
Load funds
- charge either up-front fees, redemption fees, or both
Mutual Funds
- combine funds from many investors into a single portfolio that is invested in a specified class of securities or to match a specific index - many varieties exist, including money market funds, both funds, stock funds, and balanced (hybrid) funds - open-ended shares can be bought or sold at the net asset value - closed-ended funds have a fixed number of shares that trade at a price determined by the market
Risk infrastructure
- comprises the resources and systems required to track and assess the organization's risk profile
risk of a two-asset portfolio
- dependent on the proportions of each asset, their standard deviations and the correlation (or covariance) between the asset's returns - as the number of assets in a portfolio increases, the correlation among asset risks becomes a more important determinate of portfolio risk
tips to control scope creep
- ensure team knows project scope - Understands the importance of detecting activities, events, or statements that violate project scope, and informing the project manager for immediate attention
Sharpe Ratio
- excess returns per unit of portfolio risk and higher Sharpe ratios indicate better risk-adjusted portfolio performance - the Sharpe ratios of all portfolios along the CML are the same - Because the Sharpe ratio uses total risk, rather than systematic risk, it accounts for unsystematic risk that the portfolio manager has taken - Sharpe ratio is the slope of the CAL for the portfolio and can be compared to the slope of the CML, which is the Sharpe ratio for any portfolio along the CML
Conditional Var (CVaR)
- expected value of a loss, given that the loss exceeds a minimum amount - relating it to VaR, the CVaR would be the expected loss, given that the loss was at least 200 million euros. It is calculated as the probability-weighted average loss for all losses expected to be at least 200 million euros - CVaR is similar to the measure of loss given default that is used in estimating risk for debt securities
Risk drivers
- fundamental global and domestic macroeconomic and industry factors that create risk
Common measures of risk
- include standard deviation or volatility; asset-specific measures, such as beta or duration - derivative measures, such as delta, gamma, vega, and rho - tail measures such as value at risk, CVaR and expected loss given default
Open-end fund
- investors can buy newly issued shares at the NAV - newly invested cash is invested by the mutual fund managers in additional portfolio securities - investors can redeem their shares (sell them back to the fund) at NAV as well - all mutual funds charge a fee for the ongoing management of the portfolio assets, which is expressed as a percentage of the net asset value of the fund
Constraints when constructing a portfolio
- liquidity requirements - time horizon - regulatory requirements - tax status - unique needs
Risk-averse investors
- make investment decisions based on the risk-return trade-off, maximizing return for the same risk, and minimizing risk for the same return - concerned by deviations from a normal return distribution and from assumptions of financial markets' operational efficiency
Duration
- measure of the price sensitivity of debt securities to changes in interest rates
Standard Deviation
- measure of the volatility of asset prices and interest rates - standard deviation may not be the appropriate measure of risk for non-normal probability distributions, especially those with negative skew or positive excess kurtosis (fat tails)
Beta
- measures the market risk of equity securities and portfolios of equity securities - measure considers the risk reduction benefits of diversification and is appropriate for securities held in a well-diversified portfolio, whereas standard deviation is a measure of risk on a stand-alone basis
Global minimum-variance portfolio
- portfolio on the efficient frontier that has the least risk
Separately Managed Accounts
- portfolios managed for individual investors who have substantial assets - in return for an annual fee based on assets, the investor receive personalized investment advice
Efficient Frontier
- portfolios that have the greatest expected return for each level of risk (standard deviation) make up the efficient frontier - the efficient frontier coincides with the top portion of the minimum-variance frontier - a risk-averse investor would only choose portfolios that are on the efficient frontier because all available portfolio with that are not on the efficient frontier have lower expected returns than an efficient portfolio with the same risk.
Minimum-variance portfolio
- portfolios that have the lowest standard deviation of all portfolios with a given expected return - together they make up the minimum-variance frontier
Risk can be modified
- prevention and avoidance - risk transfer (insurance) - risk shifting (derivatives)
M-square (M^2)
- produces the same portfolio rankings as the Sharpe ratio but is stated in percentage terms
Closed-end funds
- professionally managed pools of investor money that do not take new investments into the fund or redeem investor shares - the shares of a closed-end fund trade like equity shares (on exchanges or over-the-counter) - the portfolio management firm charges ongoing management fees
Strategic asset allocation
- results from combining the constraints and objectives articulated in the IPS and capital market expectations regarding the asset classes - as time goes on, a client's asset allocation will drift from the target allocation and the amount of allowable drift as well as a rebalancing policy should be formalized
Leveraged return
- return to an investor that is a multiple of the return on the underlying asset
Assumptions of CAPM
- risk aversion : to accept a greater degree of risk, investors require a higher expected return - utility maximizing investors : investors choose the portfolio, based on their individual preferences, with the risk and return combination that maximizes their (expected) utility - frictionless markets : there are no taxes, transaction costs, or other impediments to trading - One-period horizon: all investors have the same one-period time horizon - homogeneous expectations: all investors have the same expectations for assets' expected returns, standard deviation of returns, and returns correlations between assets - divisible assets: all investments are infinitely divisible - competitive markets: investors take the market price as given and no investor can influence prices with their trades
Liquidity Risk
- risk that as a result of degradation in market conditions or the lack of market participants, one will be unable to sell an asset without lowering the prices to less than the fundamental value - a.k.a transaction cost risk -arises from the uncertainty of the spread
Risk mitigation internally
- self-insurance (ie. setting up reserve fund to cover losses) - diversification
Capital Market Line (CML)
- special case of the capital allocation line, where the efficient portfolio is the market portfolio - obtaining a unique optimal risky portfolio is not possible if investors are permitted to have heterogeneous beliefs because such beliefs will results in heterogeneous asset prices - investors can leverage their portfolios by borrowing money and investing in the market - under the assumption of homogeneous expectations, this optimal CAL for all investors is termed the capital market line (CML)
Two-fund separation theorem
- states that all investors' optimum portfolios will be made up of some combination of an optimal portfolio of risky assets and the risk-free asset - the line representing these possible combinations of risk-free assets and the optimal risky asset portfolio is referred to as the capital allocation line - allows us to separate decision making into two steps - 1) the optimal risky portfolio and the capital allocation line are identified, which are the same for all investors 2) investor risk preferences enable us to find a unique optimal investor portfolio for each investor
CML vs. SML
- the CML uses total risk=standard deviation of portfolio on the x-axis - only efficient portfolios will plot on the CML - the SML uses beta (systematic risk) on the x-axis, so in a CAPM world, all properly priced securities and portfolios of securities will plot on SML - portfolios that are not well diversified (efficient) plot inside the efficient frontier and are represented by risk-return combinations
Value at Risk (VaR)
- the minimum loss over a period that will occur with a specific probability - consider a bank that has a one-week VaR of 200 million euros with a probability of 3%, that means that a one-week loss of at least 200 million euros is expected to occur 3% of the time. Note that this is not the maximum one-week loss the bank will experience; it is the minimum loss that will occur 3% of the time. VaR does not provide a maximum loss for a period. VaR has become accepted as a risk measure for banks and is used in establishing minimum capital requirements
Tax risk
- the risk that the tax code could change, along with regulatory and accounting risks together form compliance risk
Risk governance
- the top-level foundation for risk management , including risk oversight and setting risk tolerance for the organization
Financial risks
- those that arise from activity in the financial markets - consist of market risk, credit risk, and liquidity risk
ADVANTAGES OF USING FORMAL PROJECT MANAGEMENT
-Better control of financial, physical, and human resources -Improved customer relations -Shorter development times -Lower costs - Be careful! -Improved productivity -Higher worker morale -Better understanding of overall project goals -More organized and streamlined way to manage a project -More accurate and reliable project status information -More efficient use of project resources -Better communication -Faster response to conflicting project goals -Greater awareness of project progress -Fewer project failures
When to use Design Build
-Building functional rather than aesthetic -Building is simple -Brief for scope is likely to change -Single organization takes responsibility for risk of design and construction -Simpler projects with inexperienced clients. Common in repeated work and prefabricated
Disadvantages of Design and Build
-Changes in project after design stage costly -Difficult to compare between bids -Design required by limited standard contracts available -Client should understand conditions of project at an early stage -Client has no experience in preparation of work or understanding the market
Advantages of Design and manage
-Client dealing with one organization firm. Creates opportunity to improve cooperation between teams, design team, and construction team -Overlapping design and construction phase. Saves time. -Improve constructability by constructor in design -Roles, responsibilities, and risks for all parties are clear -Design is flexible to changes
Advantages of Construction Management
-Client will work directly with contractor -High degree of cost control -Client participation in contract from beginning to end -Owner involvement with all parties
Advantages of management procurement
-Early involvement of contractor -Overlapping between design and construction saves time -Design flexibility throughout project's duration
Advantages of traditional procurement
-Many options -All tendering contractors bid at the same time >>justice -Client has direct influence -Certainty of price as soon as you get contract -Changes in contract easily applied -this method is familiar in the market
Disadvantages of Design and Manage
-No clarity in cost -Client loses direct control over quality of design that's under constructor -Client has to supervise ongoing work--needs experience
Advantages of Design and Build
-Reduces the need to provide resources and time by providing designers and contractors together -Final price in beginning -Stimulates innovations and reduces time and cost
By use
-Residential building construction -Commercial and institutional construction -Infrastructure and heavy construction -Industrial construction -Environmental construction
Disadvantages of management procurement
-Risks passed to client -Quality on site difficult to manage -Reduction in cost certainty -More expensive
Procurement systems
-Traditional procurement system (design-bid-build) [owner, architect/consultant, contractor] -Design and build the procurement system [owner, + 1 person to design and build] -Management contracting procurement system [owner, contract team for management] -Cost reimbursement procurement system [owner, contractor, you'll be reimbursed for your services w/ a percentage of the product itself] -Partnering Procurement System [do a partnership with someone who has the know-how or resources]
Pre-tax Nominal Return
-return prior to paying taxes - Dividend income, interest income, short-term capital gains, and long-term capital gains may all be taxed at different rates
Venture capital funds
-similar to buyout funds except that the companies purchased are in the start-up phase -venture capital funds, like buyout funds, also provide advise and expertise to the start-up
If a product is in its emerging growth stage...
...Concentrate on R&D, competition, pricing
If profits are declining bc of a drop in revenues...
...Concentrate on marketing and distribution issues
If profits are declining bc of rising expenses...
...Concentrate on operational financial issues (e.g. COGS, labor, rent, marketing costs)
If you lower prices --> volume rises --> pushed beyond full capacity...
...Costs will shoot up as employees work overtime, and profits will suffer
If a product is in its declining stage...
...Define niche market, analyze competition's play, or think of exit strategy
If a product is in its growth stage...
...Emphasize marketing and competition
If sales are flat and profits are taking a beating...
...Examine both revenues and costs. Start with revenue, ID and understand revenue streams.
If a product is in its mature stage...
...Focus on manufacturing, costs and competition
If the sales are flat but market share remains relatively constant....
...Industry sales could be flat and competitors could be facing similar problems
If sales and market share are decreasing but profits are declining...
...Investigate whether prices are dropping or costs are climbing If costs aren't the issue, investigate product mix to see if the margins have changed
an Activity On Node (AON) diagram
1) activities are sequenced (predecessors and successors are determined) 2) activity paths are determined 3) duration of each path is calculated 4) critical path is identified (longest path & determines the soonest the project will complete)
Entering new market case strategy
1. Ask questions about the company 2. Determine state of current and future market (trends) 3. Investigate market to determine whether entry makes good business sense 4. Determine best way to enter market
5 Impacts of Project Management
1. Business advantage 2. competitive advantage 3. accurate and timely information to keep competitive edge 4. clear roles and responsibilities helps minimize conflicts and confusion 5. Effective communication
Management Process
1. Clear goals 2. Problem solving: investigations to come to solutions. constant communication 3. Develop a detailed plan: lays out tasks, establishes resources, budget and schedule parameters 4. Control the project: mobilize contractors, suppliers and vendors and evaluate their progress
Types of pricing strategies
1. Competitive analysis (How does price compare to competition, how will they respond?) 2. Cost-based pricing (add up all costs, then add profit margin to it -> not good bc if you need to cut prices it will squeeze margins) 3. Price-based costing (What are people willing to pay? May be much higher than you'd expect compared to just adding profit margin)
Project Life Cycle
1. Conceptualization - development of the initial goal and technical specifications of the project. Key stakeholders are identified and signed on at this phase. 2. Planning - all detailed specifications, schedules, schematics, and plans are developed. 3. Execution - the actual "work" of the project is performed. 4. Termination - project is transferred to the customer, resources reassigned, project is closed out.
QFD maps
1. Customer requirements 2. Technical Requirements 3. Interrelationships
TMAP Procedure
1. Define Project Goals 2. List the knowns, unknowns and constraints 3. Sequence and link all team comments, responses and questions
Time management planning process
1. Define activities 2. sequence activities 3. estimate activity resources 4. estimate activity durations 5. develop a schedule
Construction Project Characteristics
1. Defined goal 2. Specific tasks not routinely performed 3. A defined beginning and end 4. Defined deliverables 5. Resources being consumed
Outputs for project execution
1. Deliverables 2. Data and information about tasks performed: 3. Change requests 4. Updates to organizational assets
Organizational Structures
1. Designates formal reporting relationships 2. Grouping by individuals or departments 3. Design of systems for communication, coordination
Biggest factors in M&A cases?
1. Does it increase shareholder value? 2. Do the cultures of the two companies mesh well?
Ways to cut costs (finance)
1. Have customers pay sooner 2. Refinance your debt 3. Sell nonessential assets 4. Hedge currency rates 5. Redesign health insurance plans
Considerations when developing new product (thinking about market strategy)
1. How does this strategy affect existing product line? 2. Are we cannibalizing our sales from an existing product? 3. Are we replacing an existing product? 4. How will it expand our customer base and increase sales? 5. What will competitive response be? 6. Barriers to entry? 7. Major players and their market shares?
Considerations when developing new product (thinking about funding)
1. How is the product being funded? Does our company have the cash or are they taking on debt? Can we support the debt under various economic conditions? 2. What is the best allocation of funds?
Six Basic Step for MOV
1. Identify the desired area of impact *Strategic *Customer *Financial *Operational *Social 2, Identify the desired value of the IT Project Better? Faster? Cheaper? Do more? 3. Develop an Appropriate Metric (numeric) ▪provides the project team with a performance target or directive ▪sets expectations among all stakeholders, and ▪affords a means for evaluating whether the project is a success later on. Marchewka, Jack T.. Information Technology Project Management, 5th Edition (Page 64). Wiley. Kindle Edition. 4. Time Frame for achieving MOV 5. Verify and Get Agreement from Stakeholders 6. Summarize the MOV in a clear concise statement The project will be successful if ______ Or use a time table (in year ___ we will ____, and so on)
Methods of communication
1. Interactive communication: meetings, phone calls, etc. 2. Push communication: memos, reports, faxes, etc. 3. Pull communication: intranet sites, knowledge repositories, etc.
Ways to cut costs (production)
1. Invest in technology 2. Consolidate production space to gain scale and create accountability 3. Create flexible production lines 4. Reduce inventories (JIT) 5. Outsource 6. Renegotiate with suppliers 7. Consolidate suppliers 8. Import parts
Strategy for "Pricing Strategy" case
1. Investigate company - what is its objective? (profits, market share, or brand positioning) 2. Investigate the product - how does it work compared to competition? - Are there substitutions or alternatives? 3. Determine a pricing strategy
"Growth and increasing sales" case strategy
1. Learn about company and its size, resources, and products 2. Investigate the industry (how is client doing compared to it? Are client's prices in line with competitors?) 3. Increase volume
Possible actions in "turnaround" case
1. Learn as much as possible as company and operations 2. Analyze services, products, and finances 3. Secure sufficient financing, so your plan has a chance 4. Review the talent and temperament of all employees, and get rid of "dead weight" 5. Determine short-term and long-term goals 6. Devise a business plan 7. Visit clients, suppliers and distributors, and reassure them
Product Life Cycles
1. Linear- Define the work and ensure that the project includes only the required work 2. Iterative- Develop or deliver in increments 3. Adaptive- Build in flexibility to adapt during the project 4. Agile- Collaborate closely with customers in highly flexible, change-driven style
PM Characteristics
1. Management is goal oriented process 2. Multidimensional (work, people and operations) 3. A continuous process 4. Group activity 5. Dynamic function 6. Intangible force
Reasons for initiating and approving a project
1. Opportunity a. Market demands b. technological advances 2. Challenges - customer requests and social needs 3. Business Requirements
Elements for PM
1. PM elements- process groups, processes 2. Life cycles- linear, iterative, adaptive, and agile 3. Phases- life cycle phases for reviews, milestone, and deliverables 4. Organizations-
Project risk planning processes
1. Plan Risk Management 2. Identify Risks 3. Perform Qualitative Risk Analysis 4. Perform Quantitative Risk Analysis 5. Plan Risk Responses
Three major steps in Portfolio Management
1. Planning Step - creating an investment policy statement (IPS) that details the investor's investment objectives and constraints; should also specify an objective benchmark (such as an index return) against the success of the portfolio management process to be measured 2. Execution Step - analysis of the risk and return characteristics of various asset classes to determine how funds will be allocated to the various asset types; top-down analysis, a portfolio manager will examine current economic conditions and forecasts of such macroeconomic variables as GDP growth, inflation, and interest rates. Bottom-up security analysis is when you use model valuations for securities to identify those that appear undervalued 3. Feedback Step - portfolio manager monitor these changes and rebalance portfolio in response, adjusting the allocations to the various asset classes back to their desired percentages
Questions to ask about company?
1. Profits and revenues for last three years 2. Customer segmentation/demographics 3. Product mix, costs/margins 4. Production capabilities and capacity 5. Brand strength 6. Distribution channels 7. What constitutes success? WCS
Barriers to learning from post-project reviews
1. Psychological Barriers 2. Team-based shortcomings 3. Epistemological constraints
Business Case Financial Measurements
1. Return on Investment (ROI) 2. Future value (FV) 3. Net present value (NPV) 4. Payback period 5. Internal rate of return (IRR) 6. Cost-benefit analysis 7. Alternatives 8. Risk analysis
PMBOK knowledge areas included in audit:
1. Risk management 2. Procurement management 3. Quality Management
Key Baselines
1. Scope: Tasks and work packages in Work Breakdown Structure 2. Time: Planned start and end times for all work packages 3. Cost: Estimated cost for each work package
Ways to enter a new market
1. Start from scratch and grow organically 2. Acquire existing player from within the industry 3. Form a joint venture/strategic alliance with another player with a similar interest. What can both sides bring to the venture? 4. Outsourcing 5. Do cost-benefit analysis for each
For projects to be successful
1. Strategy 2. Leadership 3. Management
First five steps of a case
1. Summarize the question 2. Verify the objective(s) 3. Ask clarifying questions 4. Label the case and lay out structure 5. State your hypothesis
Techniques for Handling Change Requests
1. Use a Project Steering Team or Change Control Board (CCB) with members approved by stakeholders 2. Use configuration management procedures and tools to control the design and characteristics of products and their documentation 3. Document all change requests - even oral, informal, and minor ones
Questions to ask in competitive response cases
1. What is competitor's new product and how does it differ from what we offer? 2. What has the competitor done differently? What changed? 3. Have any other competitors picked up market share? 4. Have the customer's needs changed? 5. Did they increase or expand into new channels?
Examples of due diligence in M&A case
1. What kind of shape is the company you're looking at in? 2. How secure are its markets, customers, and suppliers? 3. How is the industry doing overall? How is the company doing compared to the industry? Is it a leader in the field? 4. What are the margins like? Are they high volume-low margin, or low volume-high margin? 5. How will competitors respond? 6. Are there any legal reasons why we can't or shouldn't acquire the target company? 7. Are there technology risks?
Ways to investigate market for new market entry case
1. Who are competitors, and what size market share do they have? 2. How do their products differ from ours? 3. How will we price our products and services? 4. Are substitutions available? 5. Any barriers to entry? 6. Barriers to exit? 7. What are the risks?
Considerations when developing new product (thinking about customers)
1. Who are customers and what is important to them? 2. How are they segmented? 3. How can we best reach them? 4. How can we ensure that we retain them?
How to analyze company in "turnaround" case
1. Why is it failing? Bad products or services? Bad management? Bad economy? 2. Are our competitors facing the same problem? 3. Do we have access to capital? 4. Is the company publicly-traded or privately-held?
Assumptions of mean-variance analysis
1. all investors are risk averse 2. expected returns, variances, and covariances are known for all assets and investors know the future value of these parameters 3. investors create optimal portfolios by relying solely on expected returns, variances, and covariances 4. investors face no taxes or transactions costs
types of multifactor models
1. macroeconomic factor models - driven by SURPRISES in macroeconomic risk factors 2. fundamental factor models - driven by multiple firm-specific factors 3. statistical factor models - factor analysis and principal component models
assumptions of the fundamental law of active management
1. manager has accurate knowledge of her skills and exploits this optimally 2. sources of information used by the manager are independent so that each bet is based on new information 3. IC is the same for each bet
Examples of barriers to exit
1. massive investment and non-transferrable fixed assets 2. Contract requirements with suppliers, gov. regulations 3. If costs of leaving market are higher than those incurred by staying in market
Key economic factors to memorize
1. unemployment rate 2. disposable income 3. consumer confidence 4. interest rates 5. the dollar's strength in current market 6. oil prices
methods to derive inputs of the mean-variance model
1. using historical means, variances, and correlations 2. estimating betas using the market model 3. calculating adjusted betas
There are two aspects of implementation for consultants and they are?
1.) Building support 2.) The technical work
How is commitment to change influenced?
1.) Confidence in the competence of the leaders promoting the change 2.) Confidence in their own ability to put the change into practice 3.) Attitude toward the change
What are the steps to change process?
1.) Establish a baseline 2.) Monitor changes to the baseline 3.) Address Changes to the baseline - internally and externally
What is a project according to Charles?
1.) Projects are hard, risky, expensive business initiatives 2.) They always have a measured return 3.) Normally business critical - clients jobs are on the line 4.) Consultants are never, ever hired when the job is easy.
Describe the steps in the general change process:
1.) Recognize need 2.) Unfreeze 3.) Change 4.) Refreeze
Consultants have traditionally given too much attention to _______ and ________ and too little attention to the complexity of translating those answers into action.
1.) Recommendations 2.) Analysis
The steps in Getting the picture is descirbed using 14 steps. We have completed at least the first 5 of these steps prior to, or during our first meeting. Pick only those that fit into the first 5 steps:
1.) Select the dimensions to examine 2.) Select the discovery strategy 3.) Re-decide to proceed
What are some of the required activities in project management?
1.) Status reporting 2.) Issue Management 3.) Quality assurance 4.) Human resources 5.) Organizational communications 6.) Being a taskmaster
What are the two questions that leaders must know as it concerns change?
1.) When to change 2.) How to change
Project Management Institute
1969 -Launched to promote project management as its own profession -Advocacy for the profession, setting professional standards, conducting research, providing access to info and resources 260,000 members 171 countries
Steps for Developing a Business Case
1: Define Measurable Organizational Value (MOV) 2: Form a Cross-Functional Business Case Team ▪Credibility—Access to people from various organizational areas or departments can provide critical expertise and information that may not be readily accessible to others outside that particular area. involved who will ask the right questions ▪Alignment with organizational goals—Higher level managers can help connect the business case with the organization's long-term strategic plan and mission. ▪Access to the real costs—The members of the business case team with certain expertise or access to important information can help build more realistic estimates with respect to salaries, overhead, accounting and reporting practices, training requirements, union rules and regulations, and laws. 3: Identify Alternatives 4: Define Feasibility and Assess Risk 5: Define Total Cost of Ownership—The 6: Define Total Benefits of Ownership—Similarly, 7: Analyze Alternatives 8: Propose and Support the Recommendation
According to a study cited in the textbook, inadequate management practices are associated with what percent of project failure?
65%
Price Elasticity of Demand
= (% Change in Quantity)/(% Change in Price)
variance of an n-asset portfolio
= (1/n * (sigma^2)) + ((n-1)/n * Cov)
Breakeven Market Share
= (Breakeven Volume)/(Total Market Size)
Quick Ratio
= (Current Assets - Inventory)/(Current Liabilities)
Return On Investment (ROI)
= (Gain from Investment - Cost of Investment)/(Cost of Investment)
unconstrained optimal active risk
= (IR / SR of benchmark) * risk of benchmark
Return on Equity (ROE)
= (Net Income)/(Shareholders' Equity)
Profit Margin or Net Margin
= (Profits)/(Revenues)
total risk of portfolio^2
= (risk of benchmark^2) + (risk of asset^2)
Contribution per unit
= (sales revenue - variable costs) / units sold
variance of an n-asset portfolio as pairs of two stocks
= (sigma^2) * ((1-p)/n + p)
active risk squared
= Active factor risk + active specific risknorth
margin of safety
= Actual quantity sold - breakeven quantity
Payback Period
= Cost of Project/Annual Cash Inflows
correlation of two assets
= Cov (a,b) / (sigma a*sigma b)
Current Ratio
= Current Assets/Current Liabilities
Free Cash Flow (FCF)
= EBIT(1-Tax Rate) + Depreciation & Amortization - Change in Net Working Capital - Capital Expenditure
Total Cost
= Fixed Costs + Variable Costs
Information Ratio using managers' skill
= IC * sq root BR
IC(combined)
= IC * sq.root (2/(1+r)) where r is correlation useful when original investment strategy is augmented with another strategy and the two investments are correlated
alpha
= IR * residual risk (w)
optimal level of residual risk (w*)
= IR / 2 gamma = (IC * sq root BR) / 2 gamma
value added for an optimal level of residual risk (VA*)
= IR^2 / 4 gamma = (IC^2 x BR) / 4 gamma
Net Present Value (NPV)
= Initial Investment + (Cash Flow Year 1)/(1+discount rate) + (Cash Flow Year 2)/(1 + discount rate)^2 + ... +(Ultimate Cash Flow Year X)/(1 + discount rate)^x
Return on Equity
= Net profit / total equity
Contribution Margin
= Price/Unit - Variable Cost/Unit
Net Cash Flow
= Receipts - payments
Profit
= Revenue - Total costs
Contribution
= Revenue - Variable costs
Profitability Formula
= Revenues - Costs Revenues = (Price * Volume) Costs = (Fixed Costs) + (Variable Costs * Volume)
Debt Ratio
= Total Debt/Total Assets
Debt-to-Equity Ratio
= Total Debt/Total Equity
Labor Productivity
= Total Output / # of workers
Total Variable Costs
= Variable cost * units sold
standardized sensitivities in fundamental factor model
= [(P/Ei) - (average P/E)] / sigma P/E
value added
= active portfolio return - benchmark return
adjusted (forecasted) beta
= alpha 0 + alpha 1 * beta, t-1 common value for: alpha 0 - 1/3, alpha 1 - 2/3
information ratio of a portfolio
= annualized residual return (alpha) / annualized residual risk (w) For different time horizons, the denominator increases by square root of the time horizon. E.g. quarterly will be 1/sq root (2) or half o the annual residual risk
More authority shared between functional and project managers
= better chances for project success
breakeven inflation
= expected inflation and risk premium for uncertainty in inflation = yield on non-inflation indexed bonds - yield on inflation indexed bonds
Breakeven Quantity
= fixed costs / contribution
Wages
= hours worked * hourly rate
liquidity requirement
= liquidity requirement - savings
Closing cash balance
= opening balance + net cash flow
Customers
= prospects * conversions
discount rate for commercial real estate
= real RF rate + expected inflation + uncertainty in inflation + credit spread + uncertainty about terminal value + illiquidity
component of discount rate
= real risk-free discount rate + expected inflation + risk premium reflecting the uncertainty about the cash flow (RP)
Accounts receivable turnover
= sales / accounts receivable
Cross Elasticity of Demand
=(% of change in Quantity for Good X)/(% of change in Price for Good Y)
Perpetuity Formula
=(Cash Flow)/(discount rate - growth rate)
Future Value
=(Present Value)*(1 + i)^t
Stand up call
A 'quick' round table team call to update status from each team member/lead. Usually no longer than 15-20 mins.
Takeaway
A British term referring to carry-out food; also transmogrified to indicate the salient point that should be retained upon the conclusion of the discussion, often prefaced with key.
Experienced Hire
A candidate with previous consulting experience who is hired to fill a high ranking position. Compare to campus hire.
Elevator Test
A challenge of one's capability to explain a concept within 60 seconds or less. It originated from the hypothetical situation explained in elevator pitch.
Paradign Shift
A change of intellectual viewpoints or perceptions that create a huge impact on a business. An example would be a shift from manual to digital documentation within an organization.
Take the lead on
A clever phrase often used by more experienced consultants to delegate a menial task, as in: "Why don't you take the lead on putting together this document," which may translate to, "I'm lazy and probably not smart or energetic enough to work on this, so go do it"; often appears in irrelevant settings, as in, "Why don't you take the lead on making dinner reservations for the team," a manifestly silly request for something which doesn't require leadership and on which they will certainly be working solo
Core Client
A client who has established a time-honored relationship with a consulting firm.
Core Client
A client with a long-standing and monetarily valuable relationship with the firm
Core client
A client with a long-standing firm relationship, and one in which there is continual dialogue between senior executives even if there are no ongoing projects; aka big spenders.
Portfolio
A collection of strategically aligned, value-generating change initiatives that help achieve organizational goals.
Straw man
A construct presented purely for the sake of argument, with the implication that it is not designed to withstand repeated attacks. Can be developed into a longer, defensible
Experienced hire
A consultant hired from another company (consulting or otherwise), typically with a higher starting position and salary than 1st year consultants. See also "parallel hire."
Parallel hire
A consultant hired from another company, typically with a more senior position position and higher starting salary than 1st year consultants. See also "experienced hire."
Boutique Firm
A consulting firm that offers a limited number of specialized consulting services to specific types of businesses. Examples of boutique firms include LEK and Marakon.
Granular
A detailed level of abstraction; often used in the context of increasing the fineness of the analysis, as in: "We need to get more granular here."
Provide color
A directive that translates roughly to "This is perhaps the most boring thing I have ever read, with the possible exception of certain lengthy legal disclaimers, and even then it's pretty close"; this bit of jargon is nevertheless somewhat of an advance, since, back in the early days of consulting, people were encouraged to provide black and white.
Program
A dossier of Projects & transformation activities to achieve outcomes and realise benefits of strategic importance to the business
Leverage
A fancy way of saying "use," as in "Let's leverage this set of data."
Hope you're doing well
A generally well-intended but insincere interpolation used at the beginning of most voicemails to replace the standard pleasantries that would be present in verbal communications; use of this phrase does not indicate actual interest in the well-being of the recipient; also found with alarming frequency in electronic mail.
project team
A group of individuals assembled to perform activities that contribute toward achieving a common task related goal. Many business operators will put together a project team consisting of skilled workers from the same or different function areas to work on an important project.
Workstream
A group of tasks that make up a project. Usage - "The team was developing various workstreams to complete the client deliverables"
Core Competency
A key strength that adds value to a company. It can consist of knowledge, technical capabilities, commitment, skill sets, or production techniques that enable an organization to introduce unique products and services to the market that will give their business a competitive advantage.
Space
A market, arena, field of endeavor, or general area, not to be confused with the area beyond Earth's atmosphere; use of this term usually adds nothing in the way of descriptive value, as in "I don't think there will be many opportunities in the technology space."
Benefit
A measurable improvement resulting from an outcome that is perceived as an advantage by the users and the sponsoring organisation and which contributes towards one or more organizational objective(s)
value added
A metric that attempts to capture the tradeoff between active return and active risk. Risk adjusted excess return = a - (residual risk aversion parameter * residual risk^2) = a - (gamma x w^2) = (residual risk * IR)/2
At the end of the day
A phrase used to attempt summarization, introduce an air of finality and perhaps close off certain avenues of discussion; since most consultants' days do not end with the setting of the sun, at the end of the day most of them are still working.
5,000 mile view
A phrase used to describe a high-level, summary view of the situation. 5,000 can be replaced by any large number to indicate the same thing.
Up or Out
A policy in which an employee is either promoted (usually within a period of time) or discharged.
Portfolio triple constraints
A portfolio's effectiveness to deliver value is controlled by three important elements, namely, organizational goals, projects and resources.
Bottom-Up
A problem solving approach that begins with an analysis of the details (or with low-level employees) and ends with an examination of the highest conceptual value (or top management).
Top-Down
A problem solving method that begins with an analysis of the highest conceptual level (or with the top management) and ends with an examination of the details (or low-level employees).
Successful elements of PM
A process is a set of related actions directed at accomplishing a specific result, e.g., to estimate project costs, create a plan, collect requirements. Knowledge is required in multiple areas, e.g., managing people, time, cost, risk, and communications
commodity
A reasonably interchangeable good or material, bought and sold freely as an article of commerce. Commodities include agricultural products, fuels, and metals and are traded in bulk on a commodity exchange or spot market.
business process
A series of logically related activities or tasks (such as planning, production, or sales) performed together to produce a defined set of results.
Change Management
A service provided by consulting firms to help with a period of major company change, such as an acquisition or a major shift in strategic priorities.
Fact Pack
A set of information that includes the necessary details of an assignment.
Workstream
A set of tasks that comprise a project.
Pareto Chart
A simple bar graph where the y axis represents frequency of occurence
Deck
A slide presentation, typically in Microsoft Powerpoint.
Boilerplate
A standard text or graphic that can be easily modified for future use. For instance, an employment contract may serve as a boilerplate if it is used every time a new consultant is hired. The recruiter can simply edit the personal information of the new hire and retain the terms of the contract.
Portfolio Managent Office (PMO)
A structural unit which is established centrally to manage the investment process, strategic alignment, prioritisation and selection, progress tracking and monitoring, optimisation and benefits achieved by an organisation's change initiatives on behalf of its senior management.
Sandwich method
A structure for providing feedback that resembles a sandwich - one positive comment, then a developmental critique, ending with a positive comment. Also known as a "hero sandwich" - "you're a hero - you suck - you're a hero."
contingency planning
A systematic approach to identify what can go wrong in a project and be prepared with plans, strategies, and approaches to mitigate and manage risks
Requirement Traceability Matrix
A table captured to map all the requirements of all stakeholders in order to track them until the project is complete
Check Sheet
A table or form used to allow a team to systematically record and compile data from historical source or observations as they happen
Value-add
A takeoff on "value added," which is based on the notion of increasing shareholder wealth by contributing to the profitability and therefore value of a firm. Now used to describe anything that "adds value," i.e., is positive, productive, and helpful. For example: "Consultants are clearly value-add professionals."
Deliverable
A task, usually part of a larger project, that has been promised to a client. It can be tangible, such as progress reports or a market study summary, or intangible such as a presentation.
Project
A temporary endeavour to create a unique product, service, or result according to an agreed Business Case
Elevator test
A test of one's ability to explain concepts in a short-period of time (typically 60 seconds or less). The elevator test represents a hypothetical situation where you are sharing the elevator with a VIP and need to give them a quick summary/presentation during the ride.
Sandwich Method
A three-step feedback method that starts by reviewing sound points of the project or idea presented, followed by corrective comments, and ends with praise. This approach serves to soften the impact of the criticism.
Fishbone Diagram
A tool that allows teams to identify and graphically detail all possible causes related to a problem and discover root causes of the problem
Kano model
A tool to distinguish types of product requirements that influence customer satisfaction
Charge code
A unique code provided with each project/assignment to which you can charge work-related expenses; a delight for new consultants and Friday hassle for experienced consultants.
Baselined
AKA approved
EBITDA
Abbreviation for Earnings Before Interest, Taxes, Depreciation, and Amortization, an indicator of a company's operational profitability.
B2B
Abbreviation for business-to-business, an online transaction between two organizations or businesses.
B2C
Abbreviation for business-to-consumer, an online transaction between a company and consumers or end users.
In line
About the same
Summer
Abridged noun form of summer intern.
CAGR
Acronym for Compound Annual Growth Rate, the number used to calculate the average return per year. For example, if a market grows from $100 billion to $230 billion over the course of 9 years, the CAGR is 9.70%. This is analogous to Internal Rate of Return in Finance.
QC
Acronym for Quality Control, a method that ensures the accuracy of documents and calculations.
Initiatives
Actions. Ex: "ABC could pursue performance improvement initiatives to further strengthen hydro power generation's contribution to the holding."
Buy-In
Agreement and/or consent. For example: "Do you have the CEO's buy-in?"
Buy-in
Agreement, support; it is unclear why 'buy-in' has come to supplant these terms, as no actual purchasing occurs.
Stakeholders
All individuals or groups who have an active stake in the project and can potentially impact, either positively or negatively, its development.
How big does a project have to be to justify a full-time PM?
All projects require leadership and experience of the leader is what will change.
Work Breakdown Structure
Allows an at-a-glance look at the organizational resources structured in a hierarchical manner Key project deliverable that organizes the team's work into manageable sections. Used to define the project during early stages of its cycle Visually defines the scope into manageable chunks that a project team can understand Need to make a plan based on the tasks involved
Engagement
Also known as a project or a case; something a consulting firm is paid to do (unless it's pro-bono, that is).
Slack
Amount of time that a task can be delayed without causing a delay to subsequent tasks
Actual Cost
Amount spent so far
MECE
An abbreviation for Mutually Exclusive, Collectively Exhaustive, a McKinsey principle that refers to creating subcategories to ensure that all relevant facts and details are considered. These subcategories must be mutually exclusive (they cannot occur at the same time) and collectively exhaustive (at least one of the events must occur). MECE is often used when performing market researches.
POOMA
An acronym for Pulled Out Of My Ass.
SWAG
An acronym for Some Wild-Ass Guess, an idea, answer, or opinion without supporting facts or valid basis. It's synonymous with POOMA.
MBB
An acronym that stands for McKinsey, Bain, and BCG, the three most renowned international consulting firms. The MBB firms are also referred to as the "Big 3."
Crisp
An adjective indicating that the referenced work or analysis is thorough and complete, perhaps by gastronomical allusion to food that is appropriately but not over-prepared; it is duly noted that crisp objects, while ostensibly finished, are also far more brittle and prone to shattering.
Contracts
An agreement between two or more parties representing a promise which one person agrees to perform a specific task or provide goods or a service to another in exchange for something in return.
Guesstimate
An educated guess. Can also be called a WAG ("wild-ass guess") or a SWAG ("scientifically wild-ass guess").
Deep Dive
An in-depth analysis or discussion of a particular topic.
To be transparent
An indication that what follows will be particularly revelatory, although it often is not especially so; the troubling implication of this usage is that the speaker has heretofore been opaque.
project
An individual or collaborative enterprise that is carefully planned to achieve a particular aim.
Rock star
An individual whose performance in a given area or success at specific endeavors is highly impressive, unique and/or admirable; this appellation is generally used sparingly; although the term is sometimes used frivolously to express purportedly extreme gratitude, as in: "Thanks for picking up my mail for me, you're a rock star."
White Space
An opportunity for company to generate revenue where it is not currently. For example, generating revenue from an existing product in a new market.
Portfolio Sponsoring Organisation (PSO)
An organisational unit with the budget, projects, resources, and the decision-making authority on how it wants to allocate its resources.
Best Practice
An organizational technique, method, or procedure that consistently produces the most effective or superior results. It is used as a benchmark by companies that want to improve their systems and processes.
Risk
An uncertainty (threat or opportunity) that will affect costs, time, benefit, quality and/or scope objectives of a project.
The structure of a presentation to present the picture should include:
Analysis of the problem Recommendations Analysis of how the situation is managed NOT a picture of the organization
Competitive response - responses
Analyze current product/design, repackage, move upmarket Intro new product Increase profile with marketing/PR campaign Build customer loyalty Cut prices Lock up raw materials and talent Acquire competitor/another player in same market Merge with competitor --> strategic adv Copy competitor
AOB
Any Other Business - another term meaning "miscellaneous" generally used in developing a meeting agenda (denotes time scheduled to discuss miscellaneous topics in a meeting)
Private Owners
Any individual, partnership, corporation or institution that builds a project for its own use or for resale Have much more freedom Invite designers to compete for their project Homes, shopping malls, hospitals, universities Includes: -homeowner -multinational companies -developers (owns project only for duration of project. goal is to make money thru quick sale or long term rental)
AOB
Any other business - a term generally used in developing a meeting agenda. Denotes time scheduled to discuss miscellaneous topics in a meeting.
Organizational Change is defined as?
Any substantive modification to an aspect of an organization - Workforce, Technology, Structure, Work processes, Culture, Values, Strategic mission.
Project Initiators
Anybody who submits projects to be considered for investment by the portfolio.
Deliverable
Anything that is owed by you to your manager/team, or owed by team to client. The cause of many (really, only and all) late nights on the job.
Design professionals
Architects: architecture, drafters, specification writers, interior designers, landscape arch Engineers: structural engineers, mechanical engineers, electrical engineers, civil engineers, surveyors
Pricing strategies - competitive analysis questions
Are there similar products out there? How does our product compare to the competition? Do we know the competitors' costs? How are they priced? Are there substitutions available? Is there a supply-and-demand issue? What will the competitive response be?
Portfolio management addresses questions like:
Are we working on the right projects? Are we investing in the right areas? Do we have the right resources to be competitive?
Sniff test
As in evaluating food for rancidity, this term is used when gauging the viability or reasonableness of a particular analysis; var. smell test.
Boil the ocean
As the name states, clearly an impossible task. Generally, a project manager or partner will say "Let's not boil the ocean" as a pretext for suggesting a ton of analyses that in effect, often ends up boiling a very large lake, if not exactly the ocean.
Cutting costs - steps
Assessment Internal cost analysis External cost analysis
Accounting Equation
Assets = Liability + Owner's Equity
Human Resources Management Plan
Assigned team member roles & responsibilities Approach for managing team members and staffing policies Describes how project resources will be acquired and released Describes how team members will be managed. After the project team has identified all activities that must be performed they determine resource requirements which are used to develop a human resource plan
PM Certifications
Associate in Project Management (AMP) Project Management Professional (PMP)
Benefit to cost ration (BCR)
Attempts to identify the relationship between the cost and benefits of a proposed project.
Features
Availability, "bells and whistles"
Meeting stakeholders' objectives
Balancing competing demands -Scope, time cost quality -Stakeholders with different needs and expectations -Identified requirements (needs) and unidentified requirements (expectations) -Stakeholder management is a proactive task -Project Manager must identify all stakeholders and incorporate their needs into the project
Starting a new business - market and strategic plans questions
Barriers to entering market? Major players, market shares? Competitive response?
Opportunity cost
Basic economic principle that describes the "cost" of the next best alternative foregone when making a decision. Not utilized widely in consulting; rather, profitability scenarios weigh the cost-benefit of Scenario A vs. Scenario B.
Consumer adoption rates
Bell curve Innovators: 2.5% Early adopters: 13.5% Early majority: 34$ Late majority: 34% Laggards: 16%
Project Scope
Best defines a baseline for performance measurement
Breakeven
Breakeven Point = Initial Investment∕Net Profit Margin = $100,000∕$5 = 20,000 units
Functional Requirement
Brief summary and a rationale that help project stakeholders and outsourced contractors understand why the requirement is needed and track the requirement through the progress of the project
Turnaround
Bringing something from slums to the surface
Turnaround
Bringing something from the slums to the surface. Ex: "ABC cement is facing serious financial challenges and the chance for a turnaround is small".
CPI
Budgeted Cost Work Performed / Actual Cost Work Performed
Local roles
Building development Fire and police
B2B
Business to Business - referring to a company's primary sales and marketing audience
B2C
Business to Consumer - referring to a company's primary sales and marketing audience
B2B
Business to business, referring to a company's primary audience for sales and marketing.
B2C
Business to consumer, referring to a company's primary audience for sales and marketing.
Categories of construction projects
By size: by ownership, by scope
Bandwidth
Capacity, free time, ability to do (additional) work; generally used to indicate that speaker cannot or would not prefer to do additional work, as in: "I don't think I'll have any bandwidth this Friday."
CAPEX
Capital Expenditure Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment.
CAPEX
Capital expenditure; or cost on the investment side
Cash Ratio
Cash Ratio = Cash / Current Liabilities
If profits are declining but revenues have gone up, review...
Changes in costs Changes in prices Additional expenses Product mix Changes in customer needs
Project management
Checking planning, organizing, motivating and controlling resources to achieve specific goals Application of: knowledge, skills, tools and techniques to protect activities to meet or exceed stakeholders' expectations while using resources efficiently and effectively
Leader's and consultants goal during the change phase is what?
Commitment
Writing a Deck
Compiling a slide presentation, typically in Microsoft Powerpoint.
CAGR
Compound annual growth rate (usually references multiple years to remove variance). If you don't know it, you won't get very far.
Rigorous
Comprehensive
Due Diligence
Comprehensive study of a business model with an aim to set clear expectations, risks, dependencies, etc. as part of a business proposal or M&A evaluation
Due diligence
Comprehensive study/survey of a business model with an aim to set clear expectations, risks, dependencies, etc. as part of a business proposal or M&A evaluation.
End-to-end
Comprehensive, complete. 'The supervisors should manage and construct projects in an end-to-end manner.'
Citizen roles
Conservation law foundation Historic review commission
state-of-the-art
Consisting of, or incorporating the latest technology in its field.
Portfolio Executive Board (PEB)
Consists of Senior Management with decision making authority: Builds and maintains the Strategic Framework. Governance body taking decisions on inclusion of initiatives in portfolio.
Paradigm
Consulting-ese for "pattern" or "model" or "framework." Also used to convey an oversimplified view of the problem that should be easier to solve. Parallel hire
Profit and loss - economy (not manufacturer)
Consumer confidence Unemployment rate Disposable income Gas prices
Design and Build
Contractor responsible for both design and construction Contract made with client detailing design, cost, and the time needed for completion of the project Contractor accepts full responsibility for design Certainty of final cost Overlap of design and construction saves time Improved communication
Cutting costs - assessment questions
Cost breakdown? (Irregularities?) Benchmark competitors Consider labor-saving technologies
Profit and loss - cost questions
Cost breakdown? FC/VC? (Any seem out of line/unusual?) Any major shifts in costs? Our costs vs. competitors'? Can we reduce costs without damaging revenue streams?
Cost of Goods Sold
Cost of Goods Sold = Cost of Materials/Inventory - Cost of Outputs
critical chain of events = critical events
Critical events or critical chains of events are those with the potential to impinge on a project the most. By identifying such events at the very beginning, it is possible to lessen the negative effect they have on projects
Key
Critical, essential, required, important, central; the key analysis is generally the linchpin; often used as a noun, and with such frequency that its significance has been diluted, because everything is now 'key.'
Portfolio review team (PRT)
Cross functional team consisting of Subject Matter Experts in finance, marketing, engineering, R&D, IT, operations, etc.. Governance body responsible for monitoring portfolio progress and resolving issues.
Ways to cut costs: labor
Cross-train workers Cut overtime Reduce employer 401(k) or 403(b) match Raise employee contribution to healthcare premium 4 10-hour days instead of 5 8-hour days Convert workers into owners (if have stake, will work harder) Layoffs Across-the-board pay decreases
M&A - reasons to merge/acquire
Cultures mesh well (merger) Increases shareholder value Increase market access, boost brand, increase market share Diversify holdings Pre-empt competition from acquiring Inherit management talent Obtain patents or licenses Gain from synergies, cost savings, cultural integration, expansion of distribution channels Gain tax advantages
On Board
Currently working on a case or project.
Scope
Define the work and ensure that the project includes only the required work
Effective management of stakeholders
Defines the approach to managing project stakeholders during the project life cycle Maximize support from stakeholders and minimize disruptive effects on project
Project Life Cycle
Defines the phases that connects the beginning of a project to its end A project is unique Details: Raw material extraction and processing, project manufacturing, distribution, use, end of life Recycle, Remanufacture, reuse/super-use
Portfolio Design Specifications
Defines which change initiatives can be considered as serious contenders for a given portfolio.
Benefits of work breakdown structure
Defining and organizing project work Project budget can be allocated to the top levels of the WBS Department budgets quickly calculated Project schedule and budget can be quickly developed Identify project cost performance and identify issues and problem areas in the project organization It's about detailing. No longer about estimation it's actual calculations
Big 4
Deloitte, Ernst & Young, KPMG, PricewaterhouseCoopers
Derivatives Risks
Delta - this is the sensitivity of derivatives values to the price of the underlying asset Gamma - this is the sensitivity of delta to changes in the price of the underlying asset Vega - this is the sensitivity of derivatives values to the volatility of the price of the underlying asset Rho - this is the sensitivity of derivatives values to changes in the risk-free rate
Boil the ocean
Describes what might occur if a Consultant is not being focused enough. For example: "We don't need to boil the ocean to get the exact number on this. Just make an estimate based on historical data for one product line."
On the bench
Description for a consultant who is not working on a billable project. Similar to Off the clock.
On the clock
Description for a consultant who is working on a billable project.
Business Model
Description of how a business creates and delivers value to its target market. It includes strategies, organizational structure, processes, and policies.
Granular
Detailed or exhaustive; often used when referring to project studies and analyses.
Civil Engineers
Determine project location on a site by studying the subsurface soil conditions and the topography of the land Design roads, bridges, tunnels, parking lots, storm water drainage, and sewage treatment plants
Smell Test
Determining whether a result makes sense based on intuition and experience. For example: "This analysis doesn't pass the smell test. If it is accurate, then it means that this division accounts for over 200% of our client's market capitalization!" Derived from the idea of smelling food or drink before consuming it, to make sure it isn't rotten.
Top-down
Developing an estimate by starting with the highest-level assumptions and using estimates to drill down to a smaller-level estimate. For example, estimating market size by starting with the number of potential customers and estimating how many purchase the product, how frequently, and at what price points. Contrast with "Bottoms-up."
Planning Process Group and Time Management knowledge area
Development of schedules, milestones, and critical paths
In selecting the method(s) of inquiry there are 6 potential methods described. Which method is the best source of data if you can trust your own perceptions?
Direct Observation
In selecting the method(s) of inquiry there are 6 potential methods described. Which method gives the aura of objectivity?
Document analysis
Risk Management plan
Document describes how project risk management will be structured & performed on the project. -Approach to managing project risks -Roles & responsibilities in managing risks -Budgeting for managing risks -Risk categories (RBS) -Definition of risk probability & impact -Risk probability & impact matrix -Stakeholders' risk tolerances -Tracking risks
Fast Tracking
Does not result in an increase of costs, but leads to an increase in the risk, because increase of reworking or rearrangement that may result
risk management knowledge areas audit question?
Does the project plan consist of a contingency plan?
Profit and loss - economy (manufacturer)
Dollar against other currencies Interest rates Gas prices Commodities
Earned Value Management (EVM
EVM is a technique for monitoring and controlling your scope, time, and cost baselines. With EVM, you can calculate variances that show you if your project is on track. -Planned values for cost and start/end times - Actual costs - Estimate of how much work was completed
PLANNING
Entering project information Identifying project subdivisions and milestones Documenting resources Entering restrictions Assigning Resources to tasks
Technical complexity
Ex. M&E, degree of finishes, Product availability, Materials, technologies, equipment. The level of technology employed and to some degree the project's risk level. Projects with known technologies, readily available materials and average finishes carry less risks than those that involve unknown technology and unusual materials
The process
Ex. Project funding, Timetable currency, Preconstruction information, project unknowns can also carry with it a certain level of risk. Any project that carries strict funding requirements and/or a rushed timetable will have a high level of risk. This is because commitments may have to be made with incomplete information or some of the early planning
Owner organization
Ex. Sophistication, organizational structure, decision making Sophisticated organizations with a past project experience, a committed project team and an empowered decision maker will be able to handle project risks better than unsophisticated owners,
The Work Environment
Ex. country, location, neighbors, regulatory environment, job site conditions, economic market conditions The more congested and environmentally sensitive the site and the more difficult the subsurface conditions, the higher the risk. Inner-city locations, soil with hazardous materials from prior use and sites that have unstable subsurface conditions would all be characterized by having a high level of risk,
Performance
Execution or accomplishment of a project to fulfill customer requirements in accordance with project scope
Public owner
Exists for the benefit of the general public Ex. Municipalities, libraries, interstate highways Under umbrella of government Financing from local state Can be done thru public agencies like Dept of Transportation or State Public Works Specific method for managing projects: -get public approval in specific schedule and budget -projects publicly advertised -wage rates advertised
Industry analysis - questions about future
Expanding or shrinking> Mergers and acquisitions? Barriers to entry or exit?
Risk factors
External: market situation, architects' plans arrive too late, complicated client, weak construction management, bad building contracts, economic, physical, political, Internal: subsoil, project duration too short, architecturally sophisticated/complicated, labor, site, materials, subcontractor Global: construction, design, location, environmental, timeframe, management, financial
4.) True or False: There is power among peers that bosses and management can easily overcome.
False
Upward Feedback
Feedback given by lower level employees to higher ranking employees.
Production phase
Finally, the contractor executes the job. Overviews the different models existing example for duties as per contractor's responsibilities throughout project timeline
Financial Model
Financial models focus on either profitability and/or cash flows. Cash flow models focus on the net cash, may be positive or negative, and are calculated by subtracting the cash outflows from the cash inflows. In general, one could view the benefits associated with a particular alternative as a source of cash inflow and the costs as the source of outflows. The most commonly used cash flow models include payback, breakeven, return on investment, and net present value..
Secondary objectives
Flexibility, sustainability, cost, risk, responsibility, certainty, complexity
Analyze phase of Six Sigma DMAIC
Focuses on how and why defects and errors occur
Risk
Focuses on what can go wrong or what must go right. ▪Identification—What can go wrong? What must go right? ▪Assessment—What is the impact of each risk? ▪Response—How can the organization avoid or minimize the risk?
Project Charter
Gain approval and formally authorize the existence and start of the project. Issued by project initiator or sponsor
GMC
Global Management Consultancy, sometimes referring to just the Big 3, sometimes referring to the Big 3 plus the Big 4 accounting firms.
Project Audits
Help organization determine whether the project controls are functioning as expected. Answers questions posed by the customer, sponsor, executives, or other stakeholders
Productivity
How efficient and effective things are run
Starting a new business - management questions
How experienced is the management team and what are its core competencies? Have they worked together before? Is there an advisory board?
Developing a new product - financing questions
How funded? Best allocation of funds? If taking on debt, can we support debt under various economic conditions?
Starting a new business - finance questions
How is it being funded? Best allocation of funds? If taking on debt, can we support debt through various economic conditions?
Time
How long should it take to complete the project? What is the project's schedule?
M&A - exit strategies questions
How long to keep it? Divest parts of the organization?
Industry analysis - supplier questions
How many? Product availability? What's going on in their market?
Best Practice
How things should "best" be done
Change management
How to make changes happen in big organizations
Production
In noun form, a department (either internal or outsourced) of the consulting firm that assists in producing the materials needed for presentations, meetings, etc.
Streamline
In organized system and with specializations
Infrastructure and heavy construction
Include highways, mass transit systems, tunnels, bridges, pipelines, drainage systems and sewage treatment plants Publicly owned and therefore are sensitive to governmental policy Characterized by a high degree of mechanization which has gradually replaced some labor intensive operations Designed principally by civil engineers and built by heavy construction contractors having engineering backgrounds or support
business analysis
Investigation into the operations of a business to expose the causes behind the results achieved, and the effects of those results on the business.
Industrial Projects
Involve large scale projects with a high degree of technological complexity such as oil refineries, steel mills, chemical processing plants and coal-fired or nuclear power plants Owners are deeply involved in development Prefer to work with designers-builders such that the total time for the completion of the project can be shortened
Project Management Plan
Is used as a roadmap to guide the team through execution of project, a communication doc for stakeholders, and a comprehensive doc that integrates strategic and other planning: Scope management plan Requirements management plan Schedule management plan Cost management plan Quality management plan Process improvement plan HR management plan Communication management plan Risk management plan Procurement management plan Change management plan Schedule, cost performance, and scope baselines
Collaborative Procurement (Partnering)
Long term commitment between two or more organizations Enhance the efficiency and effectiveness of work in terms of cost and opportunities for innovation and continuous improvement of product quality and service Requires development of relations between different parties. Commitment, trust, cooperation
Big 3 (MBB)
Mckinsey, Bain, and BGC
Value Benefit Analysis
Measures the effectiveness of a solution.
Return on investment (ROI)
Measures the performance of an investment by measuring the gain from an investment and the cost of the investment.
Facetime
Meeting in person or being in the office to promote the impression of being productive. For example: "I have no work to do but I need to go into the office on Saturday to put in a little facetime."
Portfolio Director (PD)
Member of the Management Board responsible for the Portfolio Strategy. Provides leadership and direction to portfolio management. Heads both the PEB and the PRT.
Traditional Procurement
Method developed to satisfy client Client appoints consultant to design and control the cost After design stage, client appoints main contractor to start project Client has full control over design quality Best bid is obvious Used in complex projects, technically advanced and highly serviced buildings
MECE
Mutually Exclusive and Collectively Exhaustive which means that your solutions and data should have no gaps or overlaps
MECE
Mutually exclusive, collectively exhaustive. A term originating at McKinsey and common across consulting firms, it's a grouping principle that allows coverage of every idea without any overlap. Nearly impossible to achieve comprehensive in short consulting engagements, so focus is really on being mutually exclusive.
Is delivery a PMBOK process?
NO
Should the customers be involved in the entire process?
No they do not need to be. They should know and understand the process but they don't ALWAYS need to be involved.
Ad-Hoc
Non-structured. For example: let's turn this ad-hoc process into a structured and efficient one.
Impression management
Offers praise, ingratiation, and self promotion
Multi-Project Management
Often focuses on the management of the project portfolio from a controlling perspective and manages critical resources (usually financial only) across several independent and for resources competing projects only.
Hands
Often prefaced with 'client,' indicates the interpersonal skills of an individual in relation to a particular group of people, as in, "That manager sure has great client hands."
OPEX
Operating expenditure; or the cost on the operation side
Risk Responses
Options and Actions that mitigate risks and reduce project threats best defines
OBS (Contract)
Owner initiates contract w/ prime contractor Prime contractor signs w/ first tier subcontractors 1st tier contractors sign w/ second tier subcontractors Owner -Prime contractor >Concrete >Electrical >Steel erection >Mechanical *Sprinklers *Plumbing
PMP
PMI provides certification as a Project Management Professional
Planned Value
PV = Planned completion % x Budget at completion
Payback
Payback Period = Initial Investment∕Net Cash Flow = $100,000∕$20,000 = 5 years
Idea Champions
People who actively and enthusiastically support new ideas.
Impeccable
Perfect
Operations
Performed by people Constrained by limited resources Planned, executed and controlled Ongoing Repetitive
Projects
Performed by people Constrained by limited resources Planned, executed and controlled Temporary Unique
Blanks
PowerPoint slides that are drawn on a notepad. More senior Consultants often describe a presentation yet to be drafted by "blanking" a series of slides and giving them to a junior Consultant to perform the work required to complete them.
Major goal of project management
Prevent defects
Classification of contractors
Prime "general"- responsible for construction of entire project Subcontractor "specialty"- responsible for construction of a limited aspect such as plumbing, heating, electrical, etc
Configuration Management
Process of managing change in hardware, software, documentation
program management
Process of managing multiple related projects working toward the same goal or result.at once.
EXECUTING
Producing work results Requesting changes Recommending improvements Creating project records, reports, and presentations
Core company questions
Profits and revenues for last 3 years Customer segmentations Product mix (costs/margins) Prod capabilities and capacity Brand Dist channels
PERT
Program Evaluation Review Technique
Project Phases
Programme phase Design Phase Procurement phase Production phase
PMO
Project Management Office
ROI
Project ROI = Total Expected Benefits−Total Expected Costs Total Expected Costs = $115,000−$100,000 $100,000 = 15%
OBS Sample
Project Team -Project development -Procurement -Production -Engineering Design >Process >Automation >Electrical >Mechanical *CAD *Piped Services *Engineering ~Senior Engineer 1 ~Senior Engineer 2
PROJECT MANAGEMENT TOOLS AND TECHNIQUES
Project charters, scope statements, and WBS (scope) Gantt charts, network diagrams, critical path analyses (time) Net present value, cost estimates, and earned value management (cost)
Requirements traceability matrix
Project documents associate with the scope management knowledge area
project management (PM)
Project management is the discipline of using established principles, procedures and policies to manage a project from conception through completion, i.e. in planning, control, monitoring, and review of projects.
Stakeholder
Project manager Customer Performing organization Sponsor Team Internal/External End user Society, citizens
Project planning
Project planning can begin at the completion of two key project initiation processes: (1) the project charter is created and approved by the project sponsor, and (2) the project stakeholders are identified The standard student response is that a project is successful if it is completed on time (schedule), within budget (cost), and producing deliverables which meet customers expectations (scope, quality, requirements). But they can go as far as Proper project documentation Clearly defined and assigned roles & responsibilities Senior management or executive support Stakeholder buy-in Periodic team meetings held (kickoff, progress, etc.) Periodic meetings with the customer Competent project manager & team
Progression
Projects build up slowly as workers and equipment are brought to the project and mobilized. Early on only a few activities may occur, but once mobilization is complete work proceeds at a rapid pace until the end, when production slows down and the last remaining items are wrapped up. S-curve reflects this. Line represents cash flow and project completion Three curves: actual, expected, and initial
Project Sponsors
Provide the investments funds for the projects in the portfolio and work closely with the respective project managers in ensuring that the projects are completed successfully.
Cost-plus percentage fee contracts
Provides no incentive for the contractor to control costs (not used often)
PIOUTA
Pulled it out of thin air, also see "WAG" or "SWAG."
QC
Quality control, typically referring to need to check for typos, grammar mistakes, calculation errors, etc.
Value-add
Quite simply, that value is added, mashed into a hyphenated noun form. See "adding value."
Adding value
Quite simply, that value is being added. See also "value-add."
C-Suite
Refers to any number of executives with a capital C at the beginning of their title (the C stands for "Chief." For example: COO, CFO, CEO, CIO, CMO, etc.
Takeaway
Refers to key points, conclusions, insights, or lessons learned from a presentation or during a meeting. If a consultant effectively delivers his or her message, the recommendations are usually implemented.
Pipe or Pipeline
Refers to upcoming projects the Consulting firm may have available (e.g. Supervisor, what is in the pipe?)
Design Phase
Requirements: -Details -Conceptual arch drawing -Equipment -Materials -Technical issues (mechanical, structure) -Drawings, materials, specs People Involved: -Consultant -Owner
Bidding Phase
Requirements: -Formal contract documents -Contractor appointing -Municipality approval People involved: -Owner -Consultant -PM
Execution Phase
Requirements: -Monitoring and control for activities and processes -Procurement -Progress completion/payment People involved: -Owner -Supervision -Consultant -Contractor -PM
Planning Phase
Requirements: -Scheduling -Plan People Involved -Eng -Arch -Civil Engineer - Mechanical and Electrical -PM
Closing Phase
Requirements: -Warranty Period -Maintenance -Lessons learned -Asbuilt drawings -Checklist People involved: -Owner -Supervision -Consultant -Contractor -PM
Initiation
Requirements: -Scope -Duration/Start -Location -Budget People Involved: -Client -Owner -Consultant -PM
Crashing
Resources are added to the project for the least cost possible.
When conducting interviews in an organization, the mere act of asking questions can stimulate people to do what?
Rethink what they are doing
Net Profit
Revenue * margin
Net Income
Revenues - Expenses = Net Income
Risk Register
Risk register is a document which is developed early in project planning and progressively elaborated in the risk management planning process. At a minimum, the risk register contains identified risks, description of risks, results of the qualitative and quantitative risk analysis, risk triggers, risk owners, and planned risk response strategies: 1. Pr of event 2. Impact of event
Let me play this back
Said when the listener wants to refract and color the conversation through his or her own perspective, under the pretense of reviewing the transcript of what's been said; in this manner the listener can pretend he or she is a tape recorder.
Commercial Buildings
Schools, universities, medical clinics, hospitals, sports stadiums, shopping centers, warehouses, offices, hotels Privately funded, though some projects like schools, courthouses and city offices are publicly funded Owner may or may not be familiar with construction industry practices but they're usually able to select competent professional consultants and arrange the financing of the constructed facilities themselves Specialty architects and engineers engaged for designing a specific building, Builders/contractors my also be specialized only in that building
Charles Cochran addressed this type of change what is it?
Scope Change or growth within a contract or project
Knowledge Areas
Scope Management Time management Cost management Stakeholder management Human resource management Communication management Procurement management Risk management Quality management Integration management
Triple Constraint for scope
Scope is constrained by 1. Cost 2. Schedule 3. Quality
Scoring Models
Scoring models provide a method for comparing alternatives or projects based on a weighted score. Total Score = ∑n i=1 wi ci Where: wi = criterion weight ci = criterion score 0≤wi ≤1
Cost Reimbursement
Separating responsibility and management in design and production Start working immediately without needs for details of the contract Final cost is nonspecific. No price till work is completed. Contract documents on basis of information in schematic design, specs, and price charts Used in emergency work, renovations and general maintenance
project lifecycle
Seven stage process through which practically every major project goes through: (1) Identification: stage where one project-idea out of several alternatives is chosen and defined. (2) Preparation: defined idea is carefully developed to the appraisal stage. (3) Appraisal: every aspect of the project idea is subjected to systematic and comprehensive evaluation, and a project plan is prepared. (4) Presentation: detailed plan is submitted for approval and financing to the appropriate entities. (5) Implementation: with necessary approvals and financing in place, the project plan is implemented. (6) Monitoring: at every stage the progress of the project is assessed against the plan.(7) Evaluation: upon completion the project is reassessed in terms of its efficiency and performance.
Footprint
Significant or powerful presence in something. Ex: 'the firm has expanded its footprint in the real estate and social infrastructure construction in synergy with the urban development business.'
Restructuring
Significantly and massively changing something
Transformation
Significantly and massively changing something
Restructuring
Significantly and massively changing something. Ex: "The board guided three-year human capital transformation plan including restructuring divisions and alignment to business strategy."
Double click
Similar to "deep dive", this means a thorough in-depth exploration of a particular topic.
Deep dive
Similar to "double click", this means a thorough in-depth exploration of a particular topic.
Construction Method
Similar to management contracting Contract made directly between client and commercial contractor Difference: having a supervisor for the client at the site as well as supervision of the various departments Appropriate method for client experienced in construction Client gets separate contract with consultants and contractors. Construction manager provides management services as a consultant
Entering a new market - market questions
Size, growth rate and trends of old and new markets? Where is the industry in its life cycle? Who are the new market customers and how are they segmented? What role does technology play in the old and new industries and how quickly will it change?
Rock-star
Star performer, i.e., someone who shows impressive capabilities and is often in high demand for new projects. For example: "John worked 100 hours last week and completed the best merger analysis I've seen in years. He is the rock star of his class."
Commencement date
Start day onsite
Entering a new market - ways to enter
Start from scratch and grow organically Acquire existing player JV/strategic alliance with player with similar interest. What can both sides bring? Outsource Cost/benefit analysis of each
Roles for
State: department of environmental protection department of transportation State inspector general Local: Building development Fire and police Citizens: Conservation law foundation Historic review commission Business: business roundtable related to investments Designers: civil engineers transportation engineers architects graphic designers Construction: project managers construction contractors material suppliers equipment suppliers labor Consultants: testing laboratories surveyors public relations
Mission Statement
Statement that clarifies what the organization does, who they do it for, and how or why they do it.
Competitiveness
Strength; ability to compete
Stewardship
Successful project management requires both project leaders and project management
Scope of a project
Sum of all individual jobs comprising a project. Its documentation explains the boundaries of the project, establishes responsibilities for each team member and sets up procedures for how completed work will be verified and approved.
SDLC
System Development life cycle. A term used in InfoSys to describe planning, creating, testing and deploying an Information System (not super flexible)
reengineering
Systematic starting over and reinventing the way a firm, or a business process, gets its work done
Benchmarking
Systematically manage process improvements by a single organization **Types of models: o Center for Business Practices o Kerzner's project management maturity model o ESI International's project framework o SEI's capability maturity model integration
Competitive response
Take into account when planning product launch/making price change What will you do if a competitor comes out with a new product/service and starts to steal your market share? Or, what will your competitor do if you come out with a new product aimed at stealing their market share?
Start of any question
Take notes Repeat/verify question What constitutes success to the client, including any other objectives I should know about?
Incremental Change
Takes relatively smaller steps toward its goal, perhaps by restructuring to be more efficient or expanding it line of products or services to promote more growth.
80/20 Rule
The Pareto principle that states that 80% of the results come from 20% of the causes. In business, it implies that managers need to determine the critical factors that require more attention. In terms of time management, it implies that fundamental issues should be addressed before less vital tasks and concerns.
Quick question
The answer will be anything but; bizarre because the adjective 'quick' is intended, by implication, to be transferred to the answer to said question and does not necessarily have any bearing on the length of the question
Core
The chief concerns of a company or business unit. For example: "We need to exit these three business lines and focus on our core product."
Beach
The consulting equivalent of sports' being on the bench, it is viewed with worrisome anxiety by junior consultants and relieved gratitude by senior consultants.
Opportunity Cost
The cost of an alternative product or service a company chooses to forgo in order to pursue another. For instance, if a retailer decides to sell bags, the opportunity cost refers to alternative products (e.g., school supplies, clothes, etc.) that could have been sold.
Project Quality
The degree to which a set of inherent characteristics of a project fulfill project scope
operations management
The design, execution, and control of operations that convert resources into desired goods and services, and implement a company's business strategy
Discount Rate (aka Hurdle Rate,
The discount rate is the minimum return a company would expect from a project if the company were to make an equivalent investment in an opportunity of similar risk. Calculated using the formula: NPV = −I O + ∑( Net Cash Flow (1 + r) t ) Where: I = total cost (or investment) in the project r = discount rate t = time period
Transparency
The dissemination of company information such as market studies and financial reports. It can also mean being open to team members when it comes to work-related activities.
risk management
The identification, analysis, assessment, control, and avoidance, minimization, or elimination of unacceptable risks. An organization may use risk assumption, risk avoidance, risk retention, risk transfer, or any other strategy (or combination of strategies) in proper management of future events.
Low-hanging fruit
The initial opportunities, areas of exploration, etc. that are easiest to cover; intended to evoke visual imagery of fruit-laden trees, suggesting that much remains beyond the lowest boughs; syn. quick win.
Weeds
The intricate details of an analysis. Compare with "Drill-down."
Critical Path
The key tasks needed in order for a process to achieve a desired result.
Payback period
The length of time required to recover the cost of an investment.
Low-Hanging Fruit
The low-hanging fruit is the easiest to pick from a tree. When this phrase is applied to business, it refers to the goal that can be achieved without difficulty, the task that can be finished readily, or the opportunity that can be grabbed quickly.
value engineering
The modification of designs and systems according to value analysis.Manufacturing: Systematic analysis that identifies and selects the best value alternatives for designs, materials, processes, and systems. It proceeds by repeatedly asking "can the cost of this item or step be reduced or eliminated, without diminishing the effectiveness, required quality, or customer satisfaction?" . Its objectives are (1) to distinguish between the incurred costs (actual use of resources) and the costs inherent (locked in) in a particular design (and which determine the incurring costs), and (2) to minimize the locked-in costs.
Project Risk and Liability
The nature of any project is very risky but each project carries its own set of additional risks that may be based on an aggressive schedule or a particular location or politically charged environment
Utilization Targets
The number of yearly target billable hours a firm sets for each of its clients, usually expressed in percentages.
goal
The object of a person's ambition or effort; an aim or desired result.
scalability
The potential for a business or an aspect of a business to continue to function effectively as its size increases.
Construction
The process by which many parties came together to form a permanent facility using material, equipment and machinery to assemble it Involves many businesses and agencies Work together for a few years and then move onto different projects Service industry more than a manufacturing or project based industry Built based on human needs Designer and constructor operations become more complicated bc of technology
Upward feedback
The process of providing feedback "upward" to more senior employees, from managers to partners
Measurable Organizational Value
The projects overall goal and measure of success. It must align with the organization's objective, mission, and goals. The MOV MUST: *Be Measurable. *Provide Value to the Organization. *Be Agreed Upon *Be Verifiable
Entrepreneurship
The pursuit of starting and managing one's own business. It is one of the most popular exit options of management consultants as their consulting experience and exposure have prepared them for the challenges of running a business.
Bandwidth
The resources required to finish a task or project including the amount of energy and level of skill needed to do things efficiently.
active risk
The standard deviation of the active return. It has two components - active factor risk and active specific risk
On board
The status of being assigned to a case, engagement, or project
What is a project life span / project life cycle?
The total of the phases through which a project passes from the time it is initially conceived until the time it is either in use as a success or abandoned as a failure
Sustainable Approach
The type of approach recognizes needs that help in the long-term, that value opportunities to develop people and enhance capabilities what will contribute to sustainable performance. Looking to improve members' on-the-job experience, positive relationships with the community, and reduce harmful impacts on the natural environment.
Added Value
The value added to the production cost of a product in terms of either price or worth. For example, a one-year warranty on an electronic device is a value-added feature that conveys the quality of the product.
Conventional Approach
This type of approach recognizes needs that help to maximize profits, efficiency, productivity, and competitiveness Identifies what needs are urgent and what can be overlooked ( at least for the moment)
Buttoned-Up
Thoroughly planned, accurate, and supervised. Also called Buttoned-down.
Relation between primary and secondary objectives
Time: flexibility, sustainability Cost: risk, responsibility Quality: certainty, complexity
Ping
To contact someone about a particular issue or matter. The word is generally used in reference to emails, but it can also be applied to mobile phones, instant messengers, and other electronic forms of communication.
Circle back
To follow up with indicated individuals at a later point in time, usually to review progress on the current topic of discussion; this phrase is somewhat redundant, as it is impossible to trace a circle that does not connect back with itself.
Drill-Down
To get beyond the higher-level summary in to the details. Compare with "Weeds."
Buttoned-down
To indicate that a particular piece of work or analysis is comprehensive, accurate and capable of withstanding close scrutiny; see buttoned-up.
Buttoned-up
To indicate that a particular piece of work or analysis is comprehensive, accurate and capable of withstanding close scrutiny; with buttoned-down, this is an example of opposite terms with identical meanings.
Pushback
To indicate to a superior Consultant that something is difficult or challenging and may not be realistic. Being able to push back effectively when a manager may be overpromising or unrealistic is an important, delicate skill. Pushing back can also be done if the Consultant is being overworked and feels "stretched too thin."
Run the Numbers
To make calculations in order to determine if the quantitative data supports a given business endeavor, investment, or transaction.
Wordsmith
To make trivial or generally unnecessary edits to text that may only subtly change the meaning, if at all; incorrectly implies that one is a craftsman on the order of a blacksmith or goldsmith; sadly, wordsmithing rarely involves the deletion of jargon
Re-frame
To re-discuss the purpose and scope of a project with the client.
Hit the Ground Running
To start something enthusiastically and at a fast pace.
Think out of the Box
To think creatively, freely, or unconventionally in order to come up with innovative ideas that are not confined by structures, practices, or rules.
Leverage
To use any resource to improve or enhance a product or service.
Stakeholder Analysis
Tool for demonstrating some of the seemingly un-resolvable conflicts that occur through the planned creation and introduction of new projects.
Rock Star
Top Performers
enterprise model
Top level representation of an organization's mission, functions, processes and the information flows. It is used as reference for constructing all other models.
Total Cost of Ownership
Total cost of ownership (TCO) is a concept that has gained widespread attention and generally refers to the total cost of acquiring, developing, maintaining, and supporting the product or application system over its useful life. TCO includes such costs as: ▪Direct or up-front costs—Initial purchase price of all hardware, software, and telecommunications equipment, all development or installation costs, outside consultant fees, etc. ▪Ongoing costs—Support, salaries, training, upgrades, supplies, maintenance, etc. ▪Indirect costs—Initial loss of productivity, time lost by users when the system is down, the cost of auditing equipment (i.e., finding out who has what and where), quality assurance, and postimplementation reviews.
Asking the client if they are getting what they want half way through the meeting gives you time to recover if they express concerns.
True
True or False: Implementation is, in theory, the point of the consultation, the fruit of the labor:
True
True or False: When giving the final report to the client it is ok to provide support for what they have been doing right, and to point out or confront them with what they have been doing wrong
True
True or false: Peers see each other more clearly than management sees them, and therefore peers are harder to manipulate than management.
True
Gantt chart
Type of bar chart that illustrates a project schedule with start and finish dates, deliverables, etc.
Value chain
Type of breaking down business activities based on chronicle steps
What must organizational leaders help members do?
Understand the need for change and provide members with information that reduces uncertainty
Cutting costs - internal cost analysis
Union wages, suppliers, materials, economies of scale, increased support system
Restricted Stock
Units of stock with restrictions on when they can be sold
Features of unsuccessful projects
Unnecessary & / or unapproved scope changes Lack of a change control management procedure Not using or improperly following change procedures Not following the project management plan Poor project monitoring & controlling Continuously gathering requirements Requirements that are poorly defined and are not understood Undefined or poorly defined scope Over-optimistic or unrealistic assumptions Unclear project roles & responsibilities
Leverage
Use of resources materials knowledge or people in order to get what you want
Forward Pass
Used to add early start and finish to network diagram. Start with the critical path.
Hard stop
Used to indicate that after the time indicated, the listeners are on their own, because the person stating that they have a hard stop sure isn't going to be around to help after that.
High-level
Used to indicate that after the time indicated, the listeners are on their own, because the person stating that they have a hard stop sure isn't going to be around to help after that.
High-Level
Viewing a project or situation from a wider perspective or involving the participation of company executives and managers.
Volume, costs and price: which are easiest to change?
Volume (amt produced) and costs Unless all parties change their prices together (e.g. airline tickets or gas prices) Price wars are generally detrimental
2
We hire great people, set clear expectations, we provide regular feedback, and we celebrate great performances.
7
We maximize long-term shareholder value through profitable sales growth.
1
We treat each other with dignity, respect, honesty, and integrity.
Starting a new business - distribution channels questions
What and how many [that we can rely on]?
Pricing strategies - price-based costing questions
What are people willing to pay for this product? If they're not willing to pay more than what it costs you to make, it might not be worth making. But consumers might be willing to pay much more than you could get just by adding a profit margin Profit margins vary by industry What is the product worth to the buyer? Compare to other products/services in their lives. What did they pay for those?
Entering a new market - company questions
What are the company's profits and revenues for the last 3 years? What is the company's product mix? - Will this new product cannibalize an existing product? - Are the customer segmentations the same? - Can we use the same distribution channels and sales force? - How and where will this new product be produced? Will we have to hire new workers or can we retrain existing ones? How strong is the brand?
Entering a new market - entry questions
What are the risks to entering the market? Who are our competitors, what market share will they have, and how will they respond to our entry? Are there any barriers to entry or exit? How do our competitors' products differ from ours? Are substitutions available? How will we price our new products? Any other risks to entering the market?
Starting a new business - products and services questions
What is the prod, service or tech? Competitive edge? Adv and disadv? Proprietary?
M&A - general questions
What kind of shape is the company you're looking at in? How secure are its markets, customers and suppliers? How is the industry doing overall? And how is the company doing compared to the industry? Is it a leader? What are the margins like? High volume, low margin, or low volume high margins? How will the competitors respond? Legal reasons we can't or shouldn't acquire the target company? Technology risks?
M&A - due diligence questions
What shape is the company in? Industry? How secure are the markets and customers? What are the margins? What is the best competitive response to acquisition? Legal issues?
Cost
What should it cost to complete the project? What is the project's budget? What resources are needed?
Scope
What work will be done as part of the project? What unique product, service, or result does the customer or sponsor expect from the project?
Planning components
What: Scope (Plans and specifications) How much $: Budget (via CBS - and estimate) Who: OBS How: WBS When: Schedule
Profit and loss - company questions
Who are they? What do they do? What are their products? Public or private? Are they the market leader? Size, in terms of revenues? Trends, in growth? (3 years) Customer segmentation?
Developing a new product - customer questions
Who? How to reach them? How to hold them (retention)?
M&A - PE firm
Why does the PE firm want to buy the company? What else does it own? What does it plan to do with it (hold, flip, break apart)?
Turnaround - company and industry questions
Why is it failing? Bad prod/services? Bad management? Bad economy? Are our competitors facing the same problem? Do we have access to capital? Public or private?
M&A - acquisition
Why? What other products do they sell?
WBS
Work Breakdown Schedule Deliverable Oriented "Scope"
Estimators
Work with design drawings and prepare a list of completed job costs Need to understand construction process Detail oriented and well organized Knowledge about costs for labor, materials, and equipment Estimating is a computerized activity
Work-Life Balance
Working without sacrificing one's relationships, interests, spirituality, growth, and other personal needs. Achieving this balance is a common problem for most if not all consultants due to the long work hours required in the industry.
worstcase scenario
Worst possible environment or outcome out of the several possibilities in planning or simulation. Imagining a worst case scenario helps in planning expenditure cuts, in formulating contingency plans, and in setting aside enough reserves to cushion the impact if the event or situation actually occurs.
Capacity
Your available time and energy for additional tasks.
project plan
a formal, approved document used to guide both project execution and project control. The primary uses of the project plan are to document planning assumptions and decisions, facilitate communication among project stakeholders, and document approved scope, cost, and schedule baselines.
Gantt Chart
a graphical depiction of a project schedule, a type of bar chart that shows the start and finish dates of several elements of a project that include resources, milestones, tasks and dependencies.
program
a group of related projects managed in a coordinated way to obtain benefits and control not available from managing them individually
project schedule
a listing of a project milestone activities, and deliverables, usually including intended start and finish dates.
return on investment
a measure of the company's ability to use its assets to generate additional value for shareholders. calculated as net profit divided by net worth
return on assets
a measure of the company's profitability, calculated as earnigns divided by total average assets
residual frontier
a plot of residual return versus risk for a given information ratio - the slope of the residual frontier is the IR
efficient frontier
a plot of the expected return and risk combinations of all efficient
earned value management (EVM) = Earned Value Project/Performance Management (EVPM)
a project management technique for measuring project performance and progress in an objective manner. It links resource planning to cost and schedule requirements. All work is budgeted and scheduled in time-phased increments incorporating a baseline for cost and schedule measurement.
Post Project Review = post mortem = project retrospective = Post-Implementation Review (PIR)
a project review generally conducted at the end of the entire project , and analysing how the project performed against the Business Case and Project Management Plan (PMP) and helping to identify lessons learnt that will enable continuous improvements.
event chain methodology
a project scheduling technique that focuses on identifying and managing the events and event chains that affect projects. It maps out uncertainty and risk in a project, and statistically estimates the impact that events will have—even external ones. It is based on existing analysis methodologies including: Monte Carlo simulation, Bayesian approach, and others.
metrics
a set of measurements that quantify results. performance metrics quantify the units performance. project metrics tell you whether the project is meeting its goals
balanced scorecard
a strategic management and measurement system that links strategic objectives to a comprehensive range of key performance indicators, to provide a balanced view
nonlinear management (NLM)
a superset of management techniques and strategies that allows order to emerge by giving organizations the space to self-organize, evolve and adapt, encompassing Agile, "evolutionary" and "lean" approaches, flextime, time banking, as well as many others. Key aspects of NLM, including holism, evolutionary design or delivery, and self-organization are diametrically opposite to linear management thinking.
Project
a temporary undertaking that has a definite beginning and an end and something that has a distinct and definitive purpose. It is undertaken to create a unique product, service or result.
fiscal year
a twelve-month accounting period, not necessarily starting at January 1
efficient portfolios
a) minimum risk of all portfolios with the same expected return b) maximum expected return for all portfolios with the same risk
demand-based pricing
aka price-based costing. a pricing method in which the price of a product is finalized according to its demand. if the demand of a product is more, an organization prefers to set high prices to gain profit. the success of demand-based pricing depends on the ability of marketers to analyze the demand. this type of pricing can be seen in hospitality and trael industries
intellectual property
all of a company's patents, trademarks, service marks, trade names, trade secrets, and copyrights. it is distinguished from capital property.
Project portfolio management
an emerging business strategy in which organizations group and manage projects and programs as a portfolio of investments that contribute to the entire enterprise's success.
intergrated master plan (IMP)
an event-based, top level plan consisting of a hierarchy of program events, with each event being supported by specific accomplishments, and each accomplishment associated with specific criteria which must be satisfied for its completion. So, the three elements of the IMP are: (1) event - a program assessment point that occurs at the culmination of significant program activities; (2) accomplishment - is the desired result(s) prior to or at completion of an event that indicates a level of the program's progress; (3) criteria - provides a definitive evidence that a specific accomplishment has been completed.
communications log
an on-going documentation of events between any identified project stakeholders, managed and collected by the project manager
Report-Out
an update to the client on the project status
Frederick Taylor
analyzed work patterns and behavior and found out that better methods can increase the productivity
Exchange-traded Funds
are similar to mutual funds, but investors can buy and sell ETF shares in the same way as shares of stock. Management fees are generally low, though trading ETFs results in brokerage costs.
80/20 Rule
belief that 80% of the effects come from 20% of the causes; in consulting, this term is used to imply that 80% of the assignment can be finished in 20% of the time
transfer coefficient
can be thought of as the correlation between actual active weights and optimal active weights
Hard Stop
can't run past the time allocated for a given activity (must be in by 2:00 PM)
private equity
capital that is not noted on a public exchange. composed of funds and investors that directly invest in private companies, or that engage in buyouts of public companies, resulting in the delisting of public equity
effect of adding a risk free asset on the shape of the efficient frontier
changes from a curve to a line
COTS
commercial off the shelf = Item that is commercially available, leased, licensed, or sold to the general public and which requires no special modification or maintenance over its life cycle.
Case (Engagement)
consulting project
a communications management plan
contains a description of the identified project stakeholder information needs and defines approach for communicating during the project.
Hoskin Kanri
corporate-wide management approach that combines strategic management and operational management by linking the achievement of top management goals with daily management goals at the operational level
Activity-based costing (ABC)
costing that aims to provide a dynamic and realistic means of calculating the true cost of doing business. It precisely allocates direct and indirect costs to particular products or customer segments
Program Evaluation and Review Technique (PERT)
created in 1958 as part of the Polaris missile submarine program. Later extended to create WBS
current ratio
current assets / current liabilities. shows liquidity of a company (working capital)
Environmental construction
dealing with projects that improve the environment includes sanitary sewers, waste management and clean water
Event Chain Diagram
depicts the relationships between external events and tasks and how the two affect each other. These chains are represented by arrows that are associated with a particular activity or time interval on a Gantt chart.
Financial institutions
determine where the money will come from and terms and conditions of funding
market segmentation
differentiates products based on price, quality, and characteristics and this allows for branding
extreme project management (XPM)
differs from traditional project management mainly in its open, elastic and undeterministic approach. Its main focus is on the human side of project management (e.g. managing project stakeholders), rather than on intricate scheduling techniques and heavy formalism.
Schedule management plan
document within the project management plan containing information on how the schedule will be developed and controlled, how schedule processes will be measured, and what scheduling tool will be used.
Activity-Based Costing
dynamic and realistic means of calculating the true cost of business through allocating direct and indirect costs to particular products or customer segments (assigns overhead costs to customers and products based on the amount of activity and resources spent on these customers and products - leads to enhanced understanding of customer and product profitability)
Balanced Scorecard
enhances performance measurement by creating a scorecard based on a balance of four perspectives - customer, internal, financial and future (allows companies to measure both daily performance and long-term strategy)
active return
equals the differences in returns between a managed portfolio and its benchmark = Rp - Rb
Boil the Ocean
euphemism for an impossible task that is time consuming and adds little value, meaning that one should close book and move on
Organization Development
evolving field of consulting practice dedicated to understand and impacting the processes of human systems in order to increase their effectiveness and success
Role of the PM
executing a vision through: Planning, Execution, Monitoring, Control, Closure. in Project planning: Identify & document project requirements Build the project team Establish clear project objectives Understand stakeholders' expectations Prevent unnecessary scope changes Ensure team understands project objectives Develop project plans
fixed costs
expenses that don't change based on production or sales volumes. they include salaries, rent, insurance, etc.
fixed costs
expenses that don't change based on production sales/volumes; salaries, rent, insurance
variable costs
expenses that vary based on production volumes. they include material, labor, production utilities, etc.
balance sheet
financial document that shows assets and liabilities
greenfield investment
foreign direct invesmtnet into a new site; easier with emerging markets, harder in more industrialized countries due to regulations
Takeaway
important point of action in a meeting
effort management
in project management: the effective and efficient allocation of time and resources to perform activities in line with a company strategy and/or a project.
quality management plan
in the project management plan. a diagramming technique to illustrate the activity's logical relationships: Finish to Start, Start to Start, Finish to Finish, and Start to Finish
break-even point
income matches expenditures; typically, initial expenditures are high and it takes time for income to reach the same level
inorganic growth
increasing output and business reach by acquiring other companies
Money-weighted rate of return
internal rate of return on a portfolio based on all of its cash inflows and outflows - calculate by considering the beginning value and additional deposits of cash by the investor to be inflows and considers withdrawals of cash, interest, and dividends (which are additional cash available to be withdrawn) and the ending values to be outflows - PVinflows=PVoutflows
inter-temporal rate of substitution
investor's trade off between real consumption now and real consumption in the future = consuming 1 unit in the future/consuming 1 unit today
inter-termporal rate of substitution
investor's trade-off between real consumption now and real consumption in the future
Responsibility Assignment Matrix (RAM)
is a diagram which correlates the project organizational structure to the WBS. The matrix diagram depicts the work which must be performed and the assigned individual or team responsible for performing the work.
expenditure
is a payment or disbursement, and may be for the purchase of an asset, a reduction of a liability, a distribution to the owners, or it could be an expense. For instance, an expenditure to eliminate a liability is not an expense, while expenditures for advertising, salaries, etc. will likely be recorded immediately as expenses. the total amount of money that a government, organization, or person spends during a particular period of time:
The discipline of project management
is about providing tools and techniques to enable a project team to organize its work and meet the project success factors
certified associate in project management (CAPM)
is an entry-level certification for project practitioners offered by the Project Management Institute (PMI). It is intended to demonstrate candidates' understanding of the fundamental knowledge, terminology and processes of effective project management.
enterprise modeling
is the process of understanding an enterprise business and improving its performance through creation of enterprise models.
Risk budgeting
means of allocating investments or assets by their risk characteristics
information coefficient (IC)
measure of a manager's forecasting accuracy and skill = 2 (% of correct bets/all bets) - 1
Economic Value Added
measures the return on total capital invested in a company (to improve accountability for delivering value to shareholders, operating income is compared to the cost of the capital invested)
triple constraint
meeting scope, time, and cost goals (Triangle)
country allocation strategy
mixes elements of active and passive investment approaches
R&D
money a company has re-invested during the period to find and develop new products.
gross revenue
money generated by all the company's operations before deductions and expenses
monitoring and control
monitoring and control is a set of ongoing activities that span the entire project.
Long-Term Assets
non-liquid assets that are required for the company's day-to-day operations (facilities, equipment, and real property)
fixed assets
non-liquid assets that are required for the company's day-to-day operations; facilities, equipment, real property
Descriptive
not judgmental
Project Management
o Complex, one-time process o Limited by budget, schedule and resources o Clear goal o Customer-focused
Process v. Project
o Process-- ongoing, day-to-day activities in which an organization engages while producing goods or services. o Project-- new endeavor, one objective, limited time.
product proliferation
occurs when several different brands are owned by the same company, from budget friendly to high quality (i.e. Unilever). occurs when the marketplace is solidified
merger
occurs when two companies decide to marriage their assets; can create cost synergies overall but sometimes negative for employees (i.e. firing redundant workers)
Functional Area
one of the major functions performed in operating a business
minimum-variance portfolio
one that has the smallest variance among all portfolios with identical expected return
debt-equity ratio
outstanding long and short-term debt divided by the book value of shareholders' equity. helps determine of a prospective investment target is borrowing too much
Procurement Management Plan
plan documents the goods and services which will be procured from outside the project organization and the procurement approach.
Enterprise Environmental Factors
policies for staff hiring and firing, facilities and equipment being used in the project, tools to help you as a project manager
Benchmarking
process of gathering information about other companies in your industry to compare your performance against
Construction roles
project managers construction contractors material suppliers equipment suppliers labor
General work that needs to be completed before delivery of system or service with specified features is
project scope
Matrix organization
project staff have dual loyalties, to the project and their functional unit
Functional organization
projects operate within a single functional unit or across multiple units
key performance indicators
quantifiable measurements, agreed to beforehand, that reflect the critical success factors of the company, department, project, etc.
key performance indicators (KPI)
quantifiable measurements, agreed to beforehand, to reflect the critical success factors (of the company, department, project)
Reengineering
radical redesign of a company's processes, organization, and culture (traditional vertical divisions such as sales, marketing, and production are reorganized around processes such as taking an order, delivering products, and collecting payments)
Net return
refers to the total return after deducting fees for management and administration of the investment account (commissions on trades and other that are necessary to generate investment are included)
Gross return
refers to the total return on a security portfolio before deducting fees for management and administration of the investment account (commissions on trades and other that are necessary to generate investment are included)
EBITDA
reports what the company would have earned during the period if it did not have to pay interest on its debt; didn't have to pay taxes; and had depreciated the full value of all assets at their acquisition. it is roughly equivalent to the operating income line in the Income Statements
Utility function
represents the investor's preferences in terms of risk and return (ie. his degree of risk aversion)
Ways to raise profits
revenue-based and cost-based strategies
Quality Audit
review of the quality plan to determine whether the project activities comply with organization and project policies, processes and procedures
active specific risk
risk from active asset selection attributable to deviations of the portfolio's individual asset weightings versus the benchmark's individual asset weightings
active factor risk
risk from active factor tilts attributable to deviations of the portfolio's factor sensitivities versus the benchmark's sensitivities
Systematic risk a.k.a Beta Risk
risk that affects the entire market or economy and is not diversifiable - priced and earns a return - beta measures the relation between a security's excess returns and the excess returns to the market portfolio
Investors
risk-averse and historical data confirm that financial markets price assets for risk-averse investors
gross profit
sales revenue - costs of goods sold =
PROJECT CONSTRAINTS
scope time cost goals quality risk resources
Deming Cycle (Shewhart Cycle)
set of activities (plan, do, check, act) designed to drive continuous improvement
continuous improvement plan
set of activities designed to bring gradual, but continual improvement to a process through constant review. The Shewhart cycle is among the best known
Selection and Prioritization Process of Organizational Projects
should align with the goals and strategy of the org
Work Breakdown Structure (WBS)
should not be confused with a schedule. The WBS does not show activity relationships, sequence of activities, or activity dependencies. The WBS is developed before the schedule. The work packages are further decomposed into activity lists which is an input into developing the project schedule. - created after the SOW - considered one of the most important project documents which is created in project planning -scope statement is broken down into small manageable components through a technique called decomposition -decomposition continues until all project work is eventually broken down to the lowest level of the WBS called a work package -in theory work packages are typically 80 hours to 8 hours of work. PM should break the work down until a realistic chunk of work (deliverable) is reached that can be scheduled, assigned to be performed, cost estimated, monitored and controlled
S curve
shows the growth of company sales for a new product. rapid, exponential increase in sales for a period time, followed by a tapering or leveling off due to the population of new customers declining
Outside consultants
small organizations without large in-house departments often hire consultants
tracking portfolio
specifically designed to have the same set of factor exposures to match a predetermined benchmark
earnings statement
standard financial document that summarizes a company's revenue and expenses for a period of time
earnings statement
standard financial document that summarizes a company's revenue and expenses for a specific period of time, usually one quarter of a fiscal year and the entire fiscal year
income statement
summarizes a company's revenue and expenses for a specific period of time, usually one quarter of a fiscal year and the entire fiscal year
Total Quality Management
teaches that quality has an intrinsic value and is extremely important to customers (spreads customer orientation throughout the company; empowers employees to fix problems in order to sustain world-class quality of products, services, and processes; sets goal of meeting rigorous quality standards; emphasizes continuous improvement)
Discounted Cash Flow
technique used by financial analysts in the valuation of companies that values current cash flow more than that in the future
discounted cash flow
technique used by financial analysts under the principle that cash today is worth more than cash promised in the future
Consultant roles
testing laboratories surveyors public relations Reporting quality control, project managers, etc Can be all over
Procurement phase
the client appoints the contractor to carry out the project. Depending on the form of contract, it follows either the programme phase or the design phase.
cost of sales
the costs directly related to the purchase or production of whatever the company sells
expenses
the costs of doing business that result from generating revenue. they include parts, salaries, utilities, etc.
expenses
the costs of doing business that result from generating revenue; they include parts, salaries, utilities, etc.
capital
the financial investment needed to start/run a business
capital
the financial investment required to start and/or run a business
increase distribution channels, increase product line, diversify products, and start a new PR or marketing campaign
the four framework strategies for growth
security market line (SML)
the graph of the CAPM
organic growth
the growth rate a company can achieve by increasing output and enhancing sales internally
job enlargement
the horizontal expansion of a job. it involves the addition of tasks at the same level of skill and responsibility. it is done to keep workers from getting bored, not the same as job enrichment
A/R
the monies due to the company for goods sold or services rendered for which payment has not yet bene received
cash flow
the movement of money in and out of a company; when more comes in then goes out, it is a positive cash flow. if more goes out than in, then it's negative.
cash flow
the movement of money into and out of a company. when more comes in than goes out, it is said to be a positive cash flow. a negative cash flow is when more goes out than comes in.
fixed assets
the non-liquid assets that are required for the company's day-to-day operations, i.e. facilities, equipment, and real property
Breadth (BR)
the number of independent forecasts of exceptional return per year that the manager makes, it cannot be highly correlated information sets e.g. 2 forecasts / month * 12 months / year = 24 forecasts / year
Owner
the party that will pay the bills as well as receive the ultimate benefits of the finished project Can be: individuals seeking a home Organization Municipality Developer Responsibilities: Determine scope, schedule and budget Takes advice from consultant Two categories: public, private
Stakeholders
the people involved in or affected by project activities Stakeholders include: The project sponsor The project manager The project team Support staff Customers Suppliers Opponents to the project
market share
the percentage of any of its markets that it holds. companies will often discount their products in order to saturate the marketplace and thereby gain a larger market share
Project manager
the person responsible for leading a project from its inception to execution.
break-even point
the point at which income matches expenditures. typically, initial expenditures are high. it takes time for the income to reach the same level. the break-even point can apply to a product, an investment, or the entire company's operations
global minimum-variance portfolio
the portfolio with the smallest variance among all possible portfolios
project accounting
the practice of creating financial reports specifically designed to track the financial progress of projects, which can then be used by managers to aid project management.
Operational risk
the risk that arises from within the operations of an organization and includes both human and system or process errors
capital allocation line
the risk-return line that lies tangent to the efficient frontier
cost-plus pricing
the simplest method of determining the price of a product. a fixed percentage of the total cost is added to the total cost to set the price.
Arbitrage Pricing Theory (APT)
the theory assumes a. returns are derived from a multifactor model b. unsystematic risk can be completely diversified away c. no arbitrage opportunities exist
Mean-variance analysis
the use of expected returns, variances, and covariances of individual investments to analyze the risk-return tradeoff of combinations
job enrichment
the vertical expansion of a job: adding tasks to a job that increase the amount of employee control or responsibility
increase prices, increase volume, increase amount of each sale, seasonal balance
the ways to increase sales
barriers to entry
things that make it difficult for a new company to compete against companies that are already established in the field; ex: patents, trademarks, copyrighting, a dominating brand
barriers to entry
those things that make it difficult for a new company to compete against companies already established in the field, i.e. patents, trademarks, copyrighted technology, and a dominant brand
Super tools
tools that have high use and high potential for improving project success ex: project management software scope statements work breakdown structures requirement analyses lessons-learned reports status and progress reports well-planned kick-off meetings Gantt charts change requests
Project-based organization
work gets done directly through project managers
Considerations for Alternatives
▪Changing the existing business processes without investing in IT. ▪Adopting or adapting an application developed by a different area or department within the organization. ▪Reengineering the existing system. ▪Purchasing an off-the-shelf application package from a software vendor. ▪Custom building a new application using internal resources or outsourcing the development to another company.
Advantages of Cross Functioning Team for Business Case
▪Ownership—A cross-functional team can spread a sense of ownership for the business case for more buy in and less problems. ▪Agreement—If you develop a business case in isolation, it is very likely that you will have to defend your assumptions and subjective judgments in a competitive or political setting. ▪Bridge building—The business case team may serve as an effective tool for handling critics of the business case.
Benefits of Scoring Models
▪The scoring model can combine both qualitative and quantitative criterion ▪Weights and scores can be subjective ▪Financial models can be biased toward the short run ▪Some criteria can be reverse-scored ▪Past experience may help create a more realistic business case
Let's hit a home run
"I'm desperate to look good. Even though the odds of a home run are slim, I'm banking on one because it's the only thing that'll save me." Something for all you sports fans to remember: if you have a bunch of solid hitters you don't need a bunch of home runs.
Keep this on your radar
"This will come back to bite you. Or me."
Incremental Revenue Gain/Loss
(Revenues from new product/company/etc.) - (Revenues from old product/company/etc.)
Designer roles
civil engineers transportation engineers architects graphic designers
Tighten Up/ Clean Up
cleaning up deliverables --> grammar, formatting, spelling, etc
closet index fund
closer to benchmark than being actively managed; low IR, similar SR, after fee IR ratio could be negative
Grinold rule
expected active return = IC * active risk * standardized score
information ratio
expected active return divided by the tracking risk, so it shows the manager's active return per unit of tracking risk = (Rp - Rb) / s(Rp-R)
beta
= correlation i, m * (st. dev. of stock i / st. dev. of market portfolio) measurement of systematic risk
Revenue
= customers * transactions * average spend = Price * Quantity sold
You and I are not on the same page
"Get on my page. Your page is misguided." No one ever says, "We're not on the same page, so let me work really hard to understand your point of view." If you want to understand someone else, you say, "Can you tell me more about how you're thinking?"
Risk management
- a process that defines risk tolerance and measures, monitors, and modifies risk to be in line with that tolerance
Nonsystematic risk
- local and can be diversified away by combining assets with low correlations - not priced
Managing a project includes
-Identifying the requirements -Establishing clear and achievable objectives -Balancing the competing demands for quality, scope, time, and cost -Adapting specifications, plans, and concerns of the stakeholders
Buyout Funds
-involve taking a company private by buying all available shares, usually funded by issuing debt -the company is then restructured to increase cash flow -investors typically exit the investment within three to five years
Examples of barriers to entry
1. Access to capital, dist. channels, raw materials, human talent 2. Government regulations, customer loyalty, sticky features, market domination by one or two companies
Responses in "competitive response" cases
1. Analyze our current product and redesign, repackage, of move upmarket 2. Introduce new product 3. Increase profile of company with a marketing and PR campaign 4. Build customer loyalty 5. Cut prices 6. Lock up raw material and talent 7. Acquire the competitor or another player in the same market 8. Merge with a competitor to create a strategic advantage and become more powerful 9. Copy the competitor
Risk categories
1. The work environment 2. Technical complexity 3. The process 4. Owner organization (sophistication--what is the process to take the decisions, organizational structure---heirarchy)
Breakeven Formula
1. Units to Breakeven: Total Fixed Costs = (Price * Volume) - (Variable Cost * Volume); solve for volume 2. Price to Breakeven: Total Fixed Costs = (Price * Volume) - (Variable Cost * Volume); solve for price 3. Time to Breakeven: Total Fixed Costs = (Revenues per day/month/year) - (costs per day/month/year); solve for day/month/year
Implementation of any change boils down to whether people at several levels are going to take responsibility for the success of the ______ and the __________.
1.) Institution 2.) Change
Stand Up Call
A brief meeting in which team members provide general updates of their work progress.
Elevator Pitch
A brief yet encompassing speech which is delivered to introduce one's background and qualifications for a consulting job during a networking event or job interview. It refers to an imaginary situation in which one finds him or herself in an elevator with a key person in the consulting industry.
Bird's Eye View
A business phrase for thinking outside the box. It means being open-minded, ingenious, and innovative during meetings, brainstorming sessions, or problem analyses.
reserve analysis
A comparison of the contingency reserves of schedule, resources, and budget at a particular time during the progress of a project
Due Diligence
A comprehensive organizational research and analysis conducted prior to a business transaction or agreement with another party.
Adding Value
A general phrase that can mean a number of things, but all of them revolve around the idea of being productive in a positive way. Evolved from the concept of "value added."
Burndown Chart
A graphical representation of work left to do vs. total time scheduled
Sea Change
A major shift. For example: "There has been a sea change in the past decade in terms of how retail banks interact with their clients, and how they prioritize customers based on profitability."
Going Forward
A phrase synonymous with "in the future."
Internal rate of return (IRR)
A profitability metric used by businesses to determine which projects are likely to yield the greatest return per dollar of capital investment. Though it is closely related to the net present value, it reflects anticipated gains as a percentage of the initial investment rather than as a net dollar amount.
Assignment
A project a consultant undertakes for a professional fee, which usually consists of analyzing a business situation and coming up with recommendations for a solution.
Project Alignment
A solid project plan based on clear goals and identifiable tactics/tasks to reach them. Easier decision-making during the project (e.g. Does this feature/functionality align with our overall strategy?). Money saved with internal or external team efforts by reducing costly change requests or budget overruns caused by "surprise" variables.
Benchmark
A standard or point of reference
resources
A stock or supply of money, materials, staff, and other assets that can be drawn on by a person or organization in order to function effectively.
Use case analysis
A technique used in software projects to document the potential requirements of a new system or software by conveying how the system should interact with the end user or another system to achieve a specific business goal
Project
A temporary endeavor undertaken to create a unique product service or result
TOIL
Acronym for Time Off In Lieu, the hours or days one may take in exchange for working overtime on a certain project.
As variability increases
Accurate estimation decreases and the required sample size increases
AOB
Acronym for Any Other Business, a phrase referring to topics not listed in the meeting agenda but that attendees would like to discuss after the main concerns have been covered.
KPI
Acronym for Key Performance Indicators, a set of measurable goals or objectives that signify satisfactory performance if achieved.
Management
Act ot coordinating the efforts of people to accomplish desired goals and objectives using available resources (eg. Money, workers, equipment, manpower) Includes: -Identifying requirements -Establishing clear and achievable objectives -Balancing the competing demands for quality, scope time and cost -Adapting specifications, plans and concerns for the stakeholders
Initiatives
Actions
Turnaround - steps
Analyze company and industry Possible actions
SWOT Analysis
Analyzing the Strengths, Weaknesses, Opportunities, and Threats for a company or set of companies in an industry.
Project and program management address questions like:
Are we carrying out projects well? Are projects on time and budget? Do project stakeholders know what they should be doing?
PWC
Begins
80/20 rule
Belief that 80% of the effects come from 20% of the causes; in consulting, this term is used to imply that 80% of an assignment can be finished in 20% of the time.
Milestones
Black Diamond - significant point or event Word - 2666 Alt+X U2666
Root cause
Bottleneck that causes the problem
Root cause
Bottleneck that causes the problem. Ex: "The root cause of the problem lies in the poor construction of the bridge"
Break-Even Point
Break-Even Volume = Fixed Costs / Sales Price - Variable Cost Per Unit
Structural engineers
Calculate the deflections foundation sizes, beam thickness and strength of floor slabs Ensure that building can withstand forces of wind and seismic gravity Surveyors, Mechanical engineers, electrical engineers
Actionable
Can be acted upon or can be done. For example: "That recommendation is not actionable because we do not have the managerial talent to implement it."
Risks
Can be positive
Programme Phase
Client has an idea about the project and analyses conditions for its execution.
Utilization rate
Client service hours vs. time on beach. If below 50%, prepared to be "right sized." Most top firms target 70-80%.
Project Scope Management
Collect requirements define scope create a WBS
Management Procurement
Commonly used in fast track projects, large complex projects of long duration. Also used in problematic circumstances Categories: -Management contracting -Construction Management -Design and Manage
Upward Management
Communicating your needs to your supervisor to establish a strong relationship of cooperation and understanding in the workplace.
Benchmarking
Comparing one's business processes and performances metrics to industry bests or practices from another industry
Full-fledged
Completely developed or established
When to use traditional procurement
Complex projects Consultant design is warranted Client wants to appoint owners and designers separately Price certainty wanted before construction Product quality required Balance of risk placed between client and constructor
WBS Sample
Construction of a house: -Internal >Electrical (rough in elec, HVAC) >Plumbing (rough in plumbing, set fixtures, test and clean) -Foundation >Excavate (pour concrete, cure and strip forms) >Steel Erection (steel columns, beams, joist) -External >Masonry work (lay, install tile in toilet room, roofing) >Building finishes (paint walls, ceiling tile)
On the Beach/ On the Bench
Consultant not currently staffed on an engagement
Gannt Chart
Created in 1910
Project Management Benefit
Creates a structure and process that enables a project to be kept under control
Portfolio evaluation criteria
Criteria which need to be assessed in order to enable prioritization of the project.
Debt-to-Equity Ratio
Debt-to-Equity Ratio = Total Liabilities / Total Equity
Leader for the design
Depends on nature of the project On building and residential projects: Architects are lead designer Engineer brought in after basic concept is worked out before details are developed On infrastructure and industrial sector projects: engineer is the lead designer Architect is brought in to work on the aesthetics
Constraint
Difficulty; draw- back; etc.
Proper Planning
Does not guarantee project success
Function
E.g: HR, Finance, Operation, Strategy, etc.
Function
E.g: HR, Finance, Operations, Strategy, etc. Ex: "IT systems are vulnerable while HR and Finance functions also show gaps"
ES = EF pred
Earliest start time is the finish date of a predeccessor
Early Finish
Earliest time an activity can finish
Cutting costs - external cost anlaysis
Economy, interest rates, government regulations, transportation/shipping strikes
Up or out
Employee promotion policy where if you're not promoted "up", you're counseled "out" of the company. Many consulting firms use up or out but not all.
Defined Contribution Plan
Employer contributes a certain sum each period to the employee's retirement account. The employer makes no promise regarding the future value of the plan assets; thus, the employee assumes all of the investment risk
Key point in risk governance framework
Employing a risk governance committee and a chief risk officer (CRO)
EOD
End of Day
Deliverables
End products of consulting projects
Direct Cost
Energy, materials, labor, time, other resources
Material Vendors
Ensure materials needed arrive to project site on time in correct form
CLOSING
Entering final status of finished project Printing final reports Review and analyze performance of the project Lessons Learned
Equipment manufacturers
Equipment may be purchased or rented
Constructors
Estimators, schedulers, purchasing agents Party who brings together all the different elements of the construction process into single concentrated effort Responsible for the interpretation of the contract documents and physical construction of the project
Right-sized
Euphemism for downsized; more delicate way to say "fired a bunch of people".
Bottom-up
Expression meaning to look at the smallest units possible to initiate analysis (eg, bottom-up analysis of a company would start with its lowest-level employees and then work its way to upper management). Also easily confused (or misspoken) as bottoms-up (to drink a glass clean).
Resource Leveling
Extends project time and aims to minimize period by period variations in resource loading by shifting tasks within their slack allowances
M&A - price questions
Fair? Affordable? How to pay? If the economy sours...?
True or False: Change in human systems has much more to do with the ability of those who govern than the consent of the governed.
False
Process areas
First the project initiation state, the project planning or design stage, project execution or production stage, the project monitoring and controlling systems and project completion
Push back (verb form) or Pushback (noun)
Formerly the sole domain of airplanes leaving their gates, this term is now used to indicate resistance and/or disagreement, without actually using those terms; this phrase attempts to avoid any negative connotations of controversy.
Risk Management
Goal is to increase the probability and impact of positive events and decrease the probability and impact of negative events in the project. Project manager needs to understand the risk tolerance levels of the stakeholders (i.e. risk averse, risk seeker, risk neutral).
Soundness
Goodness
UML
Graphical Language for visualizing obj oriented software
Gross Profit Ratio
Gross Profit / Sales
Bird's eye view
High level view
ISO 10006
Guidelines to quality in project management, is an international standard developed by ISO. It is not as popular or widely accepted as the PMBOK.
Critical Path
Has no slack / float time
Ways to cut costs: finance
Have customers pay sooner Refinance debt Sell nonessential assets Hedge currency rates Redesign health insurance
On the same page
Having the same information or thinking in a similar manner.
Engineering
Heavy or horizontal construction Highway, railroad, bridges, utility, dams
Pricing strategies - company questions
How big is it? What products does it have? Is it a market leader? Is it in charge of its own pricing strategies or is it reacting to suppliers, market or competitors?
Organization
How different parts of a company is
When is scope change not considered bad?
If it is managed with change process
Project acceptance
Important part of project implementation and success
Decision Making
Important to get good advice early in the project---initiation phase.
Optimization
Improving toward the best possible outcome
communications protocol
In telecommunications, a communication protocol is a system of rules that allow two or more entities of a communications system to transmit information via any kind of variation of a physical quantity.
Total Benefits of Ownershlp
Include all of the direct, ongoing, and indirect benefits associated with each proposed alternative. life. Benefits can arise from: ▪Increasing high-value work—For example, a salesperson may spend less time on paperwork and more time calling on customers. ▪Improving accuracy and efficiency—For example, reducing errors, duplication, or the number of steps in a process. ▪Improving decision making—For example, providing timely and accurate information. ▪Improving customer service—For example, new products or services, faster or more reliable service, convenience, and so on.
Profit and loss - market questions
Industry size, growth rate and trends Competitors Are competitors facing the same issue? How is the client doing compared to the industry?
project management information system (PMIS)
Information is gathered, integrated, and disseminated to support the project from initiation to closure
Diagnostic assessment
Initial research at the beginning of any consulting project
THE PHASES OF A PROJECT
Initiating Planning Executing Monitoring & Controlling Closing
Real accountability is the willingness to put the well being of the _______ first.
Institution
Ways to cut costs: production
Invest in tech Consolidate production space --> scale, accountability Create flexible production lines Reduce inventories (JIT) Outsource Renegotiate with suppliers Consolidate suppliers Import parts
Portfolio Manager (PfM)
Is in charge of collecting all project and program information to enable the PEB and PRT to take informed decisions, builds and maintains the Portfolio Management Framework, and manages the Portfolio Management Office.
Boil the Ocean
Jargon that describes efforts to resolve a task that is too complicated to complete regardless of the person or group's time and resources.
Close the Loop
Jargon used by consultants during meetings to close a thoroughly discussed topic or issue that has been resolved.
Procurement delivery methods
Key requirements for selection: identifying the client, his needs and objectives. Also, identifying the parties involved. Define it in a way that has no bias.
ISO
Largest developer and publisher of international standards of 162 countries
Traits or Skills for a Project Manager
Leadership Influence Communication Poise and Patience Problem Solver Organized Good at delegation
Governance
Leadership & management system
Turnaround - possible actions
Learn as much as possible about company and ops Analyze services, products, finances Secure sufficient financing, so your plan has a chance Review talent and temperament of all employees, get rid of dead weight Determine ST, LT goals Devise business plan Visit clients, suppliers, distributors, reassure them Prioritize goals, get some small success ASAP to build confidence
Industry analysis - current industry structure questions
Life cycle (growth, transition, maturity) Performance, margins Major players, market share Industry changes (players, tech) Drivers (brand, size, price, tech)
Project schedule
List of all activities of a project with intended start and end dates linked by dependencies and constraints of a project
Success
Maintain interest of customers until the end of the project
Profit and loss - revenue questions
Major revenue streams and % of total? (Anything unusual in balance of %s?) Have the %s changed lately?
Utilization
Make the best use of something
Starting a new business questions
Management Market and strategic plans Distribution channels Products and services Customer Finance
cost management
Management of cost related activities achieved by collecting, analyzing, evaluating, and reporting cost information used for budgeting, estimating, forecasting, and monitoring costs.
Core market questions
Market size, growth rate, trends Where it is in its life cycle (emerging, mature, declining) Industry drivers Customer segmentation(s) Industry changes (M&As, tech) Dist channels Major players, market share Prod differentiation Barriers to entry and exit
Market perspective
Market understanding
Market Perspective
Market understanding. Ex: "The first phase in our project is to get a big-picture of market perspective."
Net present value (NPV)
Measures the profitability in corporate budgeting to assess a given project's potential return on investment. Because of the time value of the currency, it takes into account the compounding of the discount rate over the duration of the project.
Milestones
Mini goals
Milestones
Mini goals - such as "the company passed the $6 million milestone this year."
Management contracting
Most of the risk is on the client because there isnt clarity on cost or program bids -Used in large and complex projects -Flexibility is a key requirement -Projects that require labor, materials, and supply -Projects that need different contractors Advantages: -Completion on time in good quality Disadvantages: -Expensive, not good for inexperienced client
Net Present Value
Net Present Value (NPV)—NPV focuses on the time value of money..
Net profit ratio
Net profit / sales
Greenfield
New opportunity. For example: "Entering the Indonesian insurance market is a true Greenfield opportunity for the Company."
When presenting the picture you should?
Not overload the organization with too many issues
POA
Plan of action
Scheduler
Planner Need to understand construction process Need to define construction activities Need to understand relationship among activities Strong background in construction but learn actual skill on the job Monitor job process, coordinate subcontractors, analyze changes and impacts of delays, solve problems
pure factor portfolio
Portfolio that has been constructed to have sensitivity equal to 1. Only exposed to GDP risk.
Socialization of project
Provide individuals with a heads up on what is going to happen and why
Big Three
Refer to MBB
Big Four
Refers to Deloitte, PwC, Ernst & Young, and KPMG, the four largest international companies offering accounting and professional services.
Value Proposition
Selling point; what customers need
Pricing strategies - partition pricing
Separate prices for separate parts of product/service Look at industry norms
INITIATING
Setting the project goal Identifying start or finish dates Identifying the project manager Identifying project budget and quality considerations
CAPM-based measures
Sharpe Ratio Treynor Ratio M^2 Jensen's Alpha
When managing a meeting for action you presentation should be?
Short and simple
Due Dil
Short for due diligence, this is a reference to the work involved in a thorough research/study of a particular topic. For example: "Have you done the "due dil" on that particular acquisition target?"
Contract Types
Single fixed price Unit price contract Cost plus a fee
Subscale
Small
Work projects
Small project activities with very short durations with definable results
SWAG
Some wild-ass guess. See "WAG."
Change Agent
Someone who acts as a catalyst and takes leadership and/or responsibility for managing part of the change process. - makes shit happen
Developing a new product - product questions
Special or proprietary? Financing? Patented? Substitutions? Adv and disadv? Cannibalizing? Place in product line? Replacing existing product?
Internal Assignment
Specific company projects that are not paid for by the clients.
Ping
Synonym for "contact"; originated as an onomatopoeia for the sound that is emitted when someone receives an instant message, but nowadays can refer to any form of contact including email or even tapping someone on the shoulder.
Infrastructure
System; foundation
Pricing strategies - cost-based pricing
Take all our costs + add a profit to it --> break-even point Not normally a good way bc if misjudge market will have to cut prices --> squeeze margins
Deck
Term for powerpoint presentation
Scope
The agreed-upon list of deliverables and boundaries that underpin any client engagement.
project management
The body of knowledge concerned with principles, techniques, and tools used in planning, control, monitoring, and review of projects.
Best of Breed
The top product in a given industry. It receives the most investment because of its superior quality as evaluated against competitors' offerings.
What is the one product that consultants have to sell?
Their ability to create a positive outcome in a client's business
Synergy
Things when combined create greater value than sum of each part
Primary objectives
Time, Quality, Cost
Frame
To discuss the project and define its scope with a client.
Pricing strategies - strategies
Value add Competitive analysis Cost-based pricing Price-based costing
Indirect cost and overheads
Waste, environmental damage, land use, social issues, other effects.
Levers
Ways to improve things
Levers
Ways to improve things. Ex: "There are three levers to boost sales conversion rate at branches"
5
We act guest first.. We do it right of fix it fast. The guest wins "moments of truth."
4
We are committed to continuous training and development
8
We are good business citizens... We follow the law and positively contribute to our community.
Risk-adjusted discount rate
When analyzing investments or projects for profitability, cash flows are adjusted to the present value to ensure the true value of the undertaking is captured.
Scope Creep
When uncontrolled changes in the project requirements lead to longer project duration. It often occurs when the scope and definition of the project are unclear.
Strategy
Where to play, what to play, how to play. Ex: "The client should develop a holistic urban development strategy to become the developer-of-choice for large-scale urban development projects.
Strategy
Where to play; What to play; How to play
Starting a new business - customer questions
Who? How to best reach? How to retain?
WAG
Wild-ass-guess. See "SWAG"
bond
a form of interest-bearing notes payable issued by corporations, universities, and governmental agencies
market model
a regression model, R = alpha + beta * return of M + regression error
job enlargement
addition of tasks to the same skill and responsibility;
Quality assurance
accomplished by quality audits, process analysis, and tools and techniques used in quality control
Buy-in
agreement or support of stakeholders
liabilities
all of a company's financial obligations that have negative value
assets
all of a company's physical or intellectual property that has financial value
operations management
an area of business that is concerned with the production of good quality goods and services, and involves the responsibility of ensuring that business operations are efficient and effective
Subject Matter Expert (SME)
an expert in a given field that is called upon by to expedite research
Six Sigma
asserts continuous efforts to reduce process variation important to overall performance
Industry (Corporate America)
basically every company that isn't a consulting firm
Kick off
contract signing
COGS
costs directly related to the purchase or production of whatever the company sells
Cycle Time Reduction
decreasing the time it takes to complete a business process
State roles
department of environmental protection department of transportation State inspector general
EBITDA
earnings before taxes, depreciation, and amortization
Industrial
emphasis on production project requires a unique team to plan, design, construct and maintain the project
minimum-variance frontier
graph of the expected return/variance combinations for all minimum-variance portfolios
semi-active, risk-controlled active, enhanced index strategies
hybrids of passive and active strategies
expense
is reported on the income statement. It is a cost that has expired, was used up, or was necessary in order to earn the revenues during the time period indicated in the heading of the income statement.
Non-Disclosure Agreement
legal contract that allows a company to share its intellectual property with others, whose input it needs, without unduly jeopardizing that information
Supply Chain Management
manages supplier relationships in order to gain competitive advantage in cost, service, and quality (streamlines logistics and procurement and integrates business functions with suppliers)
Program Management Office
organization under which projects can be centralized and coordinated
Straw Man
outline of a document without its stuffing or content
current portion of long term debt
portion of debt that comes due in the current year
work breakdown structure (WBS)
project management and systems engineering: a deliverable-oriented decomposition of a project into smaller components that organizes the team's work into manageable sections.
Scope
provides the parameters within which you do the project
gross profit
revenue minus the cost of goods sold
Agenda
should be distributed before a meeting
Strategic Inflection Point
stage when a company's competitive position goes through a transition (point at which the organization must alter the path it is on, adapting itself to the new situation or risk going into decline)
Individuals or organizations who are affected by a project best define
stakeholders
SWOT
strengths, weaknesses, opportunities, and threats. these four factors provide a framework which an organization can use to conduct a structured analysis of its operations
In early stages of a project
tactics is NOT more integral to success than strategy
Deliverables
tangible outputs or results promised to clients including decks, excel models, research papers...
maximum possible risk reduction is equal to
the average correlation
My plate is full
"Help, I'm drowning," or "I would kill myself before I'd work on your project."
Let's touch base next week
"I don't want to talk to you now," or "You are on a short leash and you need to report back to me."
Let's close the loop
"Let me make sure in advance that I'm not going to get into trouble for this one."
Earned Value
% Complete multiplied by the amount spent on the different phases
Treynor Measure
- based on systematic risk (beta) rather than total risk - Treynor measure is based on slope and has the same beta but lies on the SML
Reduce Portfolio Risk
- combining assets w/ low correlations
No-load funds
- do not charge additional fees for purchasing shares (up-front fees) or for redeeming shares (redemption fees)
Security Market Line
- implementation of the CAPM and applies to all securities whether they are efficient or not - can assist in security selection and optimal portfolio construction
Risk tolerance
- key element of good risk governance - delineates which risks are acceptable, which are unacceptable, and how much risk the overall organization can be exposed to
Real return
- nominal return adjusted for inflation - ex. an investor who earns a nominal return of 7% over a year when inflation is 2%. The investor's approximate real return is simply 7-2=5%. The investor's exact real return is slightly lower 1.07/1.02 - 1 =0.049 =4.9%
Indifference curve
- plots combinations of risk (standard deviation) and expected return among which an investor is different - indifference curves slope upward for risk-averse investors because they will only take on more risk (standard deviation of returns) if they are compensated with greater expected returns - an investor who is relatively more risk averse requires a relatively greater increase in expected return to compensate for a given increase in risk - more risk-averse investor will have steeper indifference curves, reflecting a higher risk aversion coefficient
Security Characteristic Line
- regression line - line of best fit of all the securities - the slope of the security characterist line is (Covim/standard dev, m, squared) ie. same as beta
Risk exposure
- the extent to which an entity's value may be affected through sensitivity to underlying risks
Capital allocation line
- the line representing these possible combinations of risk free assets and the optimal risky asset portfolio - represent a set of possible efficient portfolios
After-tax nominal return
- the return after tax liability is deducted
Legal risk
- the risk of being sued or the risk that a court will not uphold an agreement
Model risk
- the risk of using the wrong model for analysis or the risk of using the right model incorrectly
Tail risk
- uncertainty about the probability of extreme (negative) outcomes - commonly used measures of tail risk (sometimes referred to as downside risk) include Value at Risk and Conditional VaR
Investor that is less risk averse
- will optimally choose a portfolio with more invested in the risky asset portfolio and less invested in the risk-free asset
Disadvantages of traditional procurement
-Project cannot start before design phase is finished -Overall project can take longer -Client can't make updates to the design by the contractor in construction phase bc it was not done during the design stage
Ways to cut costs (labor)
1. Cross-train workers 2. Cut overtime 3. Reduce employer 401(k) match 4. Raise employee contribution to healthcare premium 5. Institute four 10hr days instead of five 8hr days 6. Convert workers into owners with stake in company success 7. Contemplate layoffs 8. Institute across the board pay cuts
Ways to increase volume in "growth" case
1. Expand number of distribution channels 2. Increase product line through diversification of products or services (with ones that won't cannibalize existing sales) 3. Analyze the segments of the business that have the highest future potential 4. Invest in a marketing campaign 5. Acquire a competitor (especially if question is about increasing market share) 6. Adjust prices (lower them to increase volume and raise them to decrease demand or increase profits) 7. Create seasonal balance
Nominal Group Technique Steps
1. Gather the core team for a risk workshop 2. Begin by asking each person to identify potential areas of risk 3. Using a flip chart or whiteboard to collect information from the team
Factors signaling project closure
1. Incomplete requirements 2. Lack of user involvement 3. Lack of Resources
Reasons to purchase for M&A case?
1. Increase market access, boost the brand and increase market share 2. Diversify the company's holdings 3. Pre-empt competition from acquiring the company 4. Inherit management talent 5. Obtain patents or licenses 6. Gain from synergies, cost savings, cultural integration, and expansion of dist. channels 7. Gain from tax advantages 8. Increase shareholder value
Processes and Process Groups
1. Initiating- 2. Planning- : develop a project management plan, estimate costs, plan communications 3. Executing- direct execution of the project, procure materials and services 4. Monitoring and Controlling- : report on project performance, control cost and schedule 5. Closing- bring project activities to a close, obtain final approval from customer
Key challenges to success
1. Lack of Planning 2. Lack of Resources- Skills, Time, Money 3. Scope Creep
Questions to ask about market? WICIDMMPB
1. Market size, growth rate, and trends 2. Where in its lifecycle 3. Industry drivers (brand, price, technology, or dist. channels, etc.) 4. Customer segmentation 5. Industry changes (M&A, new tech, major changes) 6. Distribution channels 7. Major players & market share 8. Product differentiation - differences between comp. products 9. Barriers to entry and exit
Factors for using Agile Methods include
1. Prioritization of tasks is done by key stakeholders 2. Works well with true teamwork and collaboration 3. Shorted development cycles
Key roles of project initiation
1. Stakeholder 2. Champion - principal advocate committed to the project and its success 3. Sponsor - provides the funding for the project 4. Customer - determines if the project is successful or not 5. User - uses the products of the project
Stakeholder analysis includes
1. Stakeholder characteristics 2. Level of interest of stakeholders in the specific project 3. Ability to affect the project policies through power and / or leadership
Considerations when developing new product (thinking about product)
1. What's special or proprietary about it? 2. Is the product patented? For how long? 3. Similar/alternative products 4. Advantages and disadvantages of this product 5. How does new product fit in with rest of product line? 6. Can sales force sell it?
A project (3 things)
1. has a beginning and a end 2. expends resources 3. has constraints and requirements that may include scope, budget, schedule, and resources, performance factors, and creation of value to stakeholders
The blueprint for traditional installation-style implementation is to: (pick all that apply)
1.) Articulate a vision 2.) Define measures for the change 3.) Set standards for what to expect
What are the two types of approaches when you are recognizing a need?
1.) Conventional approach 2.) Sustainable approach
Gross Margin
= (Revenues - Cost of Goods Sold)/(Revenues)
IC of a market timer
= 2(%correct) -1
Campus Hire
A candidate who is hired directly out of a university or business school. Compare to experienced hire.
Campus hire
A consultant hired directly from undergraduate or business schools, as opposed to "experienced hire."
Case
A consulting project. (Also called a Study or an Engagement.)
A commitment that is conditional on the response from another is what?
A contract
Nominal Group Technique
A decision making tool used to understand and use the opinion of each and every project member
Project Request Form
A form that is submitted to request funding from the portfolio for a new initiative.
Gantt Chart
A horizontal bar chart that displays the project's work breakdown structure and start and finish dates of each category. It was named after Henry Gantt, the consultant who introduced it in the early 1900s.
Progress Review
A meeting conducted on a regular basis to review the progress, concerns, and accomplishments of the preceding period.
Benchmarking
A method of comparing a company's set of policies, strategies, or systems in relation to the best practices within or outside the industry. This allows the company to develop plans for improving the business.
Progress review
A periodic meeting (either internal or with the client) to review the progress made in the preceding period.
Mission-Critical
A product, concept, analysis, or service that is irreplaceable. For example: "Do we really need this expensive item? Is it mission-critical?"
Charge Code
A project code to which consultants charge work-related costs.
prototype
A sample or a model built to test a concept or product best defines
Workplan
A schedule for completing a project or set of tasks for a project. The workplan is a dominant issue in all Consulting projects.
business process model
A sequential representation of all functions associated with a specific business activity.
On the beach
A term that describes consultants who do not get billable projects from clients and therefore have sufficient time for recreation.
Sniff Test
A term that refers to evaluating the feasibility or rationality of an analysis.
Time Poor
A term used to describe people with busy schedules.
Slopey Shoulders
A term used to describe someone who passes on responsibility to another to avoid blame or boredom.
business model
A term used to represent core aspects of a business, including purpose, target customers (e.g., consumers or other businesses), product/service offerings, strategies, organizational structures, trading practices, distribution model (e.g., direct sales, wholesale, retail) and operational processes and policies. In an SC environment, special attention must be given to how the resources from different members of the chain will be combined to deliver unparalleled value.
Vision Statement
A vision statement articulates and inspires purpose
POA
Acronym for Plan Of Action.
Backward pass
Add late start and finish.
Profit and loss - new product questions
Advantages and disadvantages to new products?
Alignment
Agreement
Fitness
Appropriateness
Design Phase
Architects and engineers produce construction drawings according to the client's requirements.
Critical Chain Project Management
Based on algorithms derived from the Theory of Constrainsts
Buckets
Categories; this is the extent of this word's definition, so it remains a mystery why people choose to employ the former term; also used as a transitive verb to mean 'categorize'
Driver
Cause
Transformational Change
Changes its strategic direction or re-engineers its culture or operations in response to dramatic changes - Technology - Mergers
Portfolio entry criteria
Characteristics a newly proposed project needs to fulfil in order to be considered for further evaluation.
product scope
Characterize a product, service, system or schedule
End-to-end
Comprehensive; complete
CIP
Continuous Improvement Plan; set of activities to bring gradual yet continual improvement to a process through constant review
Industry analysis - questions
Current industry structure Suppliers Future
Off the Clock
Description for a consultant who is NOT working on a billable project.
Off the Bench
Description for a consultant who is working on a billable project. Similar to On the clock.
Gaps
Difference
The Consultants primary task is to present a fresh picture of what has been __________.
Discovered
Circle Back
Discuss, follow up, or review the progress of an issue at a later time.
Schedule Performance Index
Earned Value / Planned Value
EBITDA
Earnings Before Income, Tax, Depreciation, and Amortization
EBITDA
Earnings before interest, taxes, depreciation, and amortization; one of the ultimate business metrics.
Developing a new product - market strategy questions
Expansion of customer base Prompts to competitive response Barriers to entry Major players and market share
Owner representative
Facility managers: most common owner representative. Found in large organizations and institutions like schools universities and hospitals Job is to understand the goals and objectives of their organization and ensure that facilities are planned to support them Outside consultants: small organizations without large in-house departments often hire consultants
True or False: When you are controlling a meeting you need to clearly state you are controlling the meeting and the act that way regardless of what happens.
False
True or false: A decision to support change is usually made on logic and reason alone?
False
Core business
Flagship; main activity
CMMI Level 5
Focused on continuous process improvement
Organizational Breakdown Structure
Hierarchy definition of the team involved Who is there and what is their work Displays organizational relationships and then uses them for assigning work to resources in a project Allows complex projects to be broken down, providing a more organized representation of the work Provides an organizational structure for the project as it moves to completion Main intent is to communicate how those tasked with delivering the project will be organised and structured as a Project Team Allows for the appropriate resources and responsibilities to be assigned
Pricing strategies - product questions
How does it compare to that of competition? Are there substitutions/alternatives? Where is the product in its growth cycle? Is there a supply-and-demand issue at work?
additivity principle
IR (a+b)^2 = IRa^2 + IRb^2 take square root in the end
Risk Management Framework
Identify Analyze and Prioritize Develop a response Establish Reserves Continuous risk management (through monitoring, updates, etc)
Project Management team must
Identify stakeholders Determine their needs and expectations Manage and influence those expectations
Residential construction
Includes single family houses and apartment building complexes Privately funded by individual owners or developers Developers serve as surrogate owners and take charge, making contractual agreements for design and constructors and financing the sale of the completed structures Designs performed by architects and engineers Construction executed by builders who hire subcontractors for the structural, mechanical, electrical and other specialty work
Growth and increasing sales - industry questions
Is it growing and how is the client growing compared to the industry? Growth relative to market share? Changes in market share? Are the clients' prices in line with its competitors? Customer polls? Competitors' strategies (marketing and prod dev)?
Profit and loss case strategy
Look at external factors first: economy, markets, weather Analyze company: revenue and profit trends, customers, products, brand, channels revenue streams and changes, costs and changes
MBB
McKinsey, Bain, BCG aka the "Big 3″
Ad hoc
Non-structure
Roadmap
Overall timeline- based plan
Heirarchy
Owner -Contractor >PM >Onsite >Tech >Mech -Consultant
Collection of best practices within Project Management
PMBOK
Purchasing Agents
Procurement -Buys subcontracts once job is won -Negotiates to get best price while making sure all contract requirements met -Understand building materials, prices, and construction process -Have broad business sense -Persuasive
Developing a new product questions
Product Market strategy Customers Financing
Profit Margin
Profit Margin = Net Income / Sales
Let's think out of the box
Really means, "Can you creatively anemic people please come up with something?" The person who says, "Let's think out of the box" is usually desperate for a new idea and surrounded by people who are not known for generating ideas. So the phrase is actually an announcement that says, "I'm in trouble."
I need someone who can hit the ground running
Really means, "I am screwed." Because no one can hit the ground running. You need to at least assess what race you're in and who else is running.
Strategic Management
Science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives.
Feasability
Should focus on whether a particular alternative is doable and worth doing. Consider the following: *Economic Feasability *Technical Feasability *Organizational Feasability ▪Other feasibilities—Depending on the situation and the organization, a business case may include other issues, such as legal and ethical feasibility.
Footprint
Significant and powerful presence in something
Henry Gantt
Studied the order of work operations in great detail Developed charts which details the progress in large projects Charts used ever since
Leverage
Taking the advantage of
Coercive Power
Targeted persons comply in order to avoid punishment
Deliverables
Tasks to be completed.
Thinking out of the Box
The ability to be creative or innovative in solving a difficult problem. "Thinking out of the box" typically is a blanket solution to a difficult problem that no one has solved yet.
Risk appetite
The amount and type of risk that an organization is willing to take in order to meet their strategic objectives.
Business Case
The business case defines why the project is being undertaken and provides the financial measurements
Portfolio Management Framework (PMF)
The central repository containing a description of the agreed Portfolio Management practices adopted by the organisation and its governance arrangements.
Early Start
The earliest possibly time that an activity can start.
Reliability
The extent to which a product is unlikely to fail or break down
Late finish
The latest time that an activity can finish
Minimum Efficient Scale
The minimum efficient scale is the smallest amount of production a company can achieve while still taking full advantage of economies of scale with regards to supplies and costs. In classical economics, the minimum efficient scale is defined as the lowest production point at which long-run total average costs (LRATC) are minimized.
Utilization
The number of hours billed to clients, usually expressed in percentages.
Chargeable
The number of hours you get to bill a client for
PROJECT SUCCESS
The project met scope, time, and cost goals. The project satisfied the customer/sponsor. The results of the project met its main business or clinical objective.
Segment
The small piece after breaking down big problem, industry, workstream, etc.
Interventions
These are planned activities targeting specific outcomes such as improving individual, group, or organizational performance or well-being.
Touch base
To catch up with someone, typically a person with whom you've not had much contact lately. For example: "I've been dealing with another client all week and I know I owe you some numbers. We'll touch base after my afternoon conference call."
Fact pack
Typically a "pack" of information that provides the essential "facts" on a project/industry/company, provided or compiled in the first 3 days of an engagement.
MONITORING &CONTROLLING
Updating project Managing resources and tasks Meet management timing, resource, and cost objectives Changing project (On-going)
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We believe in continuous improvement... In getting better day-by-day and shift-by-shift.
Capability
What can you do
Competitive response - competitor introduces new product - questions
What is the competitor's new product and how does it differ from what we offer? What has the competitor done differently/changed? Have any other competitors picked up market share? Have the consumer's needs changed? Did they increase or expand into new channels?
interoperability
a characteristic of a product or system, whose interfaces are completely understood, to work with other products or systems, present or future, in either implementation or access, without any restrictions
assets
a company's physical/intellectual properties that has financial value
Activity relationships
a diagramming technique to illustrate the activity's logical relationships: Finish to Start, Start to Start, Finish to Finish, and Start to Finish
balance sheet
a financial document showing the assets and liabilities of an organization
Work Breakdown Structure
a list of tasks broken down into small manageable activities
vendor
a person who sells something, especially a property
project
a temporary endeavor undertaken to create a unique product, service, or result Projects end when their objectives have been reached, or the project has been terminated
ex-post alpha
alpha measured after actual results have become available and is the average realized residual return over a measurement interval = alpha of portfolio + beta p*excess return on benchmark portfolio + random component
investments in individual countries
are passive, indexed investments
Gain Traction
ave a client or senior person engaged in an idea. This is an important concept for selling new Consulting projects, and/or for suggesting an addition or change to a Consulting workplan.
Toolkit
collection of methodologies or tools that consultants can use to help solve a problem
The number of products or operations that are performed at the same time and the resulting degree of difficulty best defines
complexity
COGS
costs of goods sold; costs directly related to the purchase or production of whatever the company sells
Design Phase Outputs
designed using a computer CAD project phases optimized thru BIM
Mutually Exclusive, Collectively Exhaustive (MECE)
grouping principle that allows coverage of every idea without any overlap
using historical numbers
have to estimate very large number of inputs and there is a large amount of estimation error
Government officials
involved early in project w/ respect to zoning approvals and issuing building permits
Late Start
latest time an activity can start without delaying the project
Facility managers
most common owner representative. Found in large organizations and institutions like schools universities and hospitals Job is to understand the goals and objectives of their organization and ensure that facilities are planned to support them
specific
not stereotyped
strategic inflection point
occurs when a company's competitive position goes through a transition. it is the point at which the organization must alter the path it is on - adapting itself to the new situation or risk going into decline. it is concerned with how companies recognize and adapt to "paradigm changes"
market share
percentage of any of its markets that it holds; companies will discount products to saturate the marketplace with them and thereby gain a greater market share
5000 Mile/ 20,000 Foot View
phrase used to describe a high-level, summary view of the situation where most details are omitted. (5000 can be replaced by any large number)
cost-based pricing
pricing method in which some percentage of desired profit margins is added to the cost of the product to obtain the final price
Case Team
project team
program manager
provides leadership and direction for the project managers heading the projects within the program
Key Performance (Success) Indicators
quantifiable measurements, agreed to beforehand, that reflect the critical factors (of the company, department, project)
competition-based pricing
refers to a method in which an organization considers the prices of competitors' products to set the prices of its own products
business operations
repetitive, permanent, or semi-permanent functional activities to produce products or services.
Solvency risk
risk that the entity does not survive or succeed because it runs out of cash to meet its financial obligations
Project schedule network diagrams
schematic depiction of scheduled activities and dependencies (logical relationships of activities); model of sequenced activities
Continuous Improvement Plan (CIP)
set of activities designed to bring gradual, but continual improvement to a process through constant review
company culture
shared values/practices of employees
bundle-ing
term referring to the sales increase strategy that involves increasing the amount of each sale by putting different products together people buy in a package
leveraged buyout (LBO)
the acquisition of another company using a significant amount of borrowed money to meet the cost of acquisition, with assets of the company often used as collateral for the loans, along with the assets of the acquiring company -- allows companies to make large acquisitions without having to commit a lot of capital
business process modelling (BPM)
the activity of representing processes of an enterprise, so that the current ('as is') process maybe analysed and improved in future ('to be'0
PROJECT MANAGEMENT
the application of knowledge, skills, tools and techniques to project activities to meet the project requirements process of initiating, planning, executing, controlling, and closing a project
linear management
the application of reductionism to management problems, often relying on the ability to predict, engineer and control outcomes by manipulating the component parts of a business (organization, operation, policy, process and so on). Business process reengineering (BPR) is a popular example of linear management at work. The key defining characteristic of linear management is that order is imposed - usually from above.
bottom line
the bottom line of an income statement. shows the net income available to shareholders. when a company talks about increasing the bottom line, they mean doing things to either increase the revenue or decrease the expenses so the company's income increases
capital market line
the capital allocation line in a world in which all investors agree on the expected returns, standard deviations, an correlations of all assets
process management
the ensemble of administrative activities of planning and monitoring the performance of a business process. It usually includes (1) defining a process, (2) establishing responsibilities, (3) evaluating process performance, and (4) identifying opportunities for improvement.
A/P
the monies the company owes for goods and services received, but not yet paid for
strike price
the price at which the holder of a stock option may purchase the stock. if the strike price is below the price at which the stock is trading on the open market, the option holder may be able to make a profit. if the stock price on the open market is below the strike price, the options are said to be "underwater." it would make no sense to exercise an underwater option because that would mean buying the stock through the stock option at a higher price than you would pay on the open market
benchmarking
the process of gathering information about other companies in your industry to compare your performance against and to use to set goals
Overall success factor of a project is...
the realized value of the project that can be measured by the project stakeholders
Black-Scholes Equation
used to determine the value or price of a stock option
Professional construction management services
when constructors are hired earlier and asked to provide technical, cost and scheduling advice to the owner. Constructor acts as a constructing consultant.
Compound Annual Growth Rate (CAGR)
year-over-year growth rate of an investment over a specified period of time
Let's run the numbers and see how they look
"I know they look bad on first blush. But the true use of Excel is to keep changing the formulas until you find a format that makes the numbers look good."
I'm calling to touch base
"I want something from you but I can't say it up front" or "I am worried that you are lost and I'm sniffing around for signs to confirm my hunch" or "I'm calling because you micromanage me."
Buckets
"categories" or "groups" when talking about a project
Porter's Five Forces
(Michael Porter's explanation of the five forces that drive industry competition) potential entrants, suppliers, substitutes, buyers, and competitors
3.) People typically do voice their doubts and tell the truth in organizations...
- In private
Credit Risk
- the risk that a counter party will not pay an amount owed
Risk shifting
-hedging with derivatives
Types of power used by PM
1. Reward power 2. Coercive Power 3. Legitimate Power
What does Refreeze look like?
1.) Reinforcement and institutionalization of all the change 2.) Make the change second nature to employees
Return on Assets (ROA)
= (Net Income)/(Total Assets)
ex-post information ratio
= t-statistics of alpha / sq root n
Expense Ratio
= total expenses / sales
In line
About the same. Ex: "The steel plant performed in line with the market average but room for improvement exists."
Change Initiative
An umbrella term for Projects and Programs
Project Charter
Authorizes the project and ensures that necessary resources and management commitments are provided to attain success
CAGR
Compound annual growth rate
Defined Benefit Plan
Employer promises to make period payments to the employee after retirement. Because the employee's future benefit is defined, the employer assumes the investment risk
Profit and loss - increasing volume
Expand into new areas Increase sales (volume and force) Increase marketing Reduce prices Improve customer service
Feasibility
How possible something is
Big 3
McKinsey, Bain, BCG aka "MBB"
Mechanism
Method
project review
Project reviews take place during the lifecycle of a project in order to check the likely or actual achievements of the objectives specified in the Project Management Plan (PMP) and the benefits detailed in the Business Case. They should be planned through the project and aligned to the business cycles, and with portfolio or programme reviews.
Insurance
Property insurance to owner Liability insurance to designers Bonding insurance to constructor Lawyers advise clients on ways to minimize liability and risk
IR of constrained portfolios
TC * IC * sq root BR E(R) = TC * IC * sq root BR * risk
Scope
The area covered by a consulting project, including its purpose and limits.
budget constraint
The limit that the size of a consumer's income (and the prices that must be paid for goods and services) imposes on the ability of that consumer to obtain goods and services.
MOV Statement Format
Time Period MOV 6 months 1 year 2 years
PM Triple constraints
Time, cost, scope
Touch Base
To get in touch with someone in the consulting industry.
True or false: Membership behavior is more vital than leadership behavior?
True
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We function as a team... "We all look good together, we all look bad together.
Deck
Your Powerpoint slides (anything more than 3 slides), and sometimes referring to the master "deck" for the team.
ex-ante alpha
forward looking *forecast* of residual return while ex-post alpha is backward-looking average of *realized* returns
system(s) integrator
is a person or company that specializes in bringing together component subsystems into a whole and ensuring that those subsystems function together,
SWOT analysis
method of identifying whether to use a component or a feature in a project
goals
objective, measurable expectations set to measure progress toward desired results
FMEA
process in product development and is used in managing operations, and potential failure modes within a system
Back-of-the-Envelope Calculation
rough, on-the-spot estimate
income statement
summarizes a company's revenue and expenses for a specific period of time; usually a quarter or entire fiscal year
Project Selection Decision
▪The project must align with the organization's values, vision, mission, and strategies. ▪The project must provide measurable organizational value that can be verified at the completion of the project.
