Chapter 4

Net present value (NPV) analysis

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

discount factor

A multiplier for each year based on the discount rate and year

Configuration management

A process that ensures that the descriptions of a project's products are correct and complete

What is considered a plan of plans?

A project management plan

balanced scorecard

A strategic planning and management system that helps organizations align business activities to strategy, improve communications, and monitor performance against strategic goals

weighted scoring model

A technique that provides a systematic process for selecting projects based on numerous criteria

mind mapping

A technique that uses branches radiating from a core idea to structure thoughts and ideas

SWOT analysis

Analyzing Strengths, Weaknesses, Opportunities, and Threats; used to aid in strategic planning

cash flow

Benefits minus costs or income minus expenses

Organizational process assets

Formal and informal plans, policies, procedures, guidelines, information systems, financial systems, management systems, lessons learned, and historical information that can influence a project's success

How does a weighted scoring model select projects - what criteria is used?

Identify criteria important to the project selection process Assign weights (percentages) to each criterion so they add up to 100% Assign scores to each criterion for each project Multiply the scores by the weights and get the total weighted scores

interface management

Identifying and managing the points of interaction between various elements of a project

Integrated change control

Identifying, evaluating, and managing changes throughout the project life cycle

_____________ should sign a project charter to acknowledge agreement on the need and intent of the project; a signed charter is a key output of project integration management

Key project stakeholders

what is project integration management?

Management of the entire project by integrating other knowledge areas, tools, and techniques through a project's life cycle processes of initiating, planning, executing, monitoring, controlling, and closing.

Directives

New requirements imposed by management, government, or some external influence

Project integration management

Processes that coordinate all project management knowledge areas throughout a project's life, including developing the project charter, developing the preliminary project scope statement, developing the project management plan, directing and managing the project, monitoring and controlling the project, providing integrated change control, and closing the project

T/F Changes are inevitable on most projects, so it's important to develop and follow a process to monitor and control changes

T

T/F Many organizations want IT projects to have a fairly short payback period

T

T/F Project planning and execution are intertwined and inseparable activities

T

T/F The application area of the project directly affects project execution because the products of the project are produced during execution

T

T/F the majority of time and money is usually spent on execution

T

T/F Financial considerations are often an important consideration in selecting projects

T

Payback period

The amount of time needed to recoup the total dollars invested in a project, in terms of net cash inflows

baseline

The approved project management plan plus approved changes

internal rate of return (IRR)

The discount rate that results in an NPV of zero for a project

required rate of return

The minimum acceptable rate of return on an investment

discount rate

The rate used in discounting future cash flow; also called the capitalization rate or opportunity cost of capital

cost of capital

The return available by investing capital elsewhere

Problems

Undesirable situations that prevent an organization from achieving its goals

Which of the following items is not normally included in a project charter? a) the name of the project manager b) budget information c) stakeholder signatures d) a Gantt chart

d) a Gantt chart

What is the last step in the four-stage planning process for selecting IT projects? a) IT strategy planning b) business area analysis c) mind mapping d) resource allocation

d) resource allocation

Expert judgement

experts can help project managers and their teams make many decisions related to project execution

The _____________ the ROI the better

higher

What is included in monitoring project work?

includes collecting, measuring, and disseminating performance information

What is involved in project execution?

involves managing and performing the work described in the project management plan

Baseline

is the approved project management plan plus approved changes

Plans created in the other knowledge areas are _________________ of the overall project management plan

subsidiary parts

Projects with a positive NVP indicate

that the project should be considered if financial value is a key criterion The higher the NPV the better

What is a problem that many new project managers have?

trouble looking at the big picture and they want to focus on details

When does payback occur?

when the net cumulative discounted benefits equals the costs

What are the methods for selecting projects?

◦Focusing on broad organizational needs; Categorizing information technology projects ◦Performing financial analyses ◦Using a weighted scoring model ◦Implementing a balanced scorecard ◦Measures other than ROI?

As a part of strategic planning, organizations do what:

◦Identify potential projects ◦Use realistic methods to select which projects to work on ◦Formalize project initiation by issuing a project charter

What are the three primary methods for determining the projected financial value of projects?

◦Net present value (NPV) analysis ◦Return on investment (ROI) ◦Payback analysis

What are the project execution tools and techniques?

- Expert judgement - Project management information systems

What are some important skills for project execution?

- General management skills like leadership, communication, and political skills - Product, business, and application area skills and knowledge - Use of specialized tools and techniques

What are the common elements of a project management plan?

- Introduction or overview of the project - Description of how the project is organized - Management and technical processes used on the project - Work to be done, schedule, and budget information

What are the six main processes that are involved in project integration management?

1. Developing the project charter 2. Developing the project management plan 3. Directing and managing project work 4. Monitoring and controlling project work 5. Performing integrated change control 6. Closing the project or phase

project charter

A document that formally recognizes the existence of a project and provides direction on the project's objectives and management

project management plan

A document used to coordinate all project planning documents and guide project execution and control

change control board (CCB)

A formal group of people responsible for approving or rejecting changes on a project

change control system

A formal, documented process that describes when and how official project documents may be changed

Return on investment (ROI)

A method for determining the financial value of a project; the ROI is the result of subtracting the project costs from the benefits and then dividing by the costs

Opportunities

Chances to improve an organization

Strategic planning

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

_____________________ ensures that the descriptions of the project's products are correct and complete. a) configuration management b) integrated change control c) integration management d) a change control board

a) configuration management

Which of the following processes is not part of project integration management? a) developing the project business case b) developing the project charter c) developing the project management plan d) closing the project or phase

a) developing the project business case

A is a document that formally recognizes the existence of a project and provides direction on the project's objectives and management. a) project charter b) contract c) business case d) project management plan

a) project charter

Which of the following is not a suggestion for performing integrated change control? a) use good configuration management b) minimize change c) establish a formal change control system d) view project management as a process of constant communication and negotiation

b) minimize change

Which of the following is not a best practice for new product development projects? a) aligning projects and resources with business strategy b) selecting projects that will take less than two years to provide payback c) focusing on customer needs in identifying projects d) assigning project managers to lead projects

b) selecting projects that will take less than two years to provide payback

If estimates for total discounted benefits for a project are $120,000 and total discounted costs are $100,000, what is the estimated return on investment (ROI)? a) 20,000 b) 120,000 c) 20 percent d) 120 percent

c) 20 percent

A new government law requires an organization to report data in a new way. Which of the following categories would include a new information system project to provide this data? a) problem b) opportunity c) directive d) regulation

c) directive

What tool and technique is used for all processes of project integration management? a) project management software b) templates c) expert judgement d) all of the above

c) expert judgement

What are the keys to success in project integration management?

◦Project Integration management is a collection of processes required to ensure that the various elements of the projects are properly coordinated. ◦It involves coordinating all plans to accomplish project objectives. ◦It involves making trade-offs among competing objectives and alternatives to meet or exceed stakeholder needs and expectations.