Project Management Chapter 2

Nondiscretionary

The core category of projects labeled as ____________________ costs must be funded for a company to stay in business.

True

The main goal of programs is to obtain benefits and control not available from managing projects separately.

True

The required rate of return is the minimum acceptable rate of return on an investment.

False

When using the hierarchical four-stage planning process for selecting projects, you must start at the bottom of the pyramid.

Thresholds

You can determine minimum scores or ____________________ for specific criteria in a weighted scoring model.

Payback

___________________ analysis determines how much time will lapse before accrued benefits overtake accrued and continuing costs.

False

With respect to NPV, all organizations start discounting in Year 0 (immediately).

internal rate of return

You can determine a project's ____________________ by finding what discount rate results in an NPV of zero for the project.

Net Present Value

___________________ analysis is a method of calculating the expected net monetary gain or loss from a project by discounting all expected future cash inflows and outflows to the present point in time.

Return on Investment

___________________ is the result of subtracting the project costs from the benefits and then dividing by the costs.

Payback

____________________ analysis determines how much time will lapse before accrued benefits overtake accrued and continuing costs.

Financial

____________________ considerations are often an important aspect of the project selection process, especially during tough economic times.

Projects

Grouping related ____________________ into programs helps improve coordination through better communications, planning, management, and control.

True

If you assign weights to criteria based on percentage, the sum of all the criteria's weights must total 100 percent.

False

In practice, organizations usually use a single approach to select projects.

Portfolios

It is important for organizations to develop a fair, consistent, and logical process for selecting projects, programs, and ____________________.

True

Just as projects are unique, so are project portfolios.

False

Low- or medium-priority projects that can be finished in less time than high-priority projects should always be completed first.

False

From the viewpoint of NPV only, if Project 2 has a higher NPV than Project 1, Project 1 should be chosen.

Threats

A SWOT analysis involves the examination of Strengths, Weaknesses, Opportunities, and ____________________.

Scorecard

A balanced ____________________ is a methodology that converts an organization's value drivers—such as customer service, innovation, operational efficiency, and financial performance—to a series of defined metrics.

Economies

A construction firm using ____________________ of scale can purchase materials, obtain services, and hire workers for less money if it is managing the construction of 100 houses instead of just one house.

infrastructure

A program for IT ____________________ projects might include purchasing new hardware, software, and networking equipment, or determining standards for IT.

True

A weighted scoring model is a tool that provides a systematic process for selecting projects based on many criteria.

Program

A(n) ____________________ is a group of projects managed in a coordinated way to obtain benefits and control not available from managing them individually.

Discount

A(n) ____________________ rate is the rate used in discounting future cash flows.

False

According to Dr. Robert Kaplan and Dr. David Norton, a balanced scorecard rejects most traditional financial measures.

True

An organization should consider only projects with a negative NPV if financial value is a key criterion for project selection.

True

Core projects are those that are required to run the business.

False

Most crucial projects, such as drug development or major transportation projects, will achieve payback in less than a year.

Comparison

NPV analysis is a method for making equal ____________________ between cash flow for multiyear projects. Comparison

nondiscretionary

Organizations have no choice in whether to fund projects that use __________ costs.

True

Organizations need to narrow down the list of potential projects to those projects that will be most beneficial.

False

Organizations should only pursue projects that have the best financial value.

True

Organizations—both large and small—cannot undertake most of the potential projects identified because of resource limitations and other constraints.

True

Payback occurs in the year when the cumulative benefits minus costs reach zero.

Strategic

Project portfolio management focuses on ____________________ issues while individual projects often focus on tactical issues.

True

Projects with higher NPVs are preferred to projects with lower NPVs if all other factors are equal.

Factor

The annual discount ____________________ is a multiplier for each year that is based on the discount rate and year.

Strategic

____________________ planning involves determining long-term objectives by analyzing the strengths and weaknesses of an organization, studying opportunities and threats in the business environment, predicting future trends, and projecting the need for new products and services.