Contemporary Project Management , 3rd Edition solutions manual and test bank by Timothy Kloppenborg
CHAPTER 2
Project Selection and Prioritization
LEARNING OBJECTIVES
This chapter presents a broad introduction to project management. After completing this chapter, each student should be able to perform the following:
1. Explain in your own words the strategic planning and portfolio management processes.
2. Compare strengths and weaknesses of using financial and scoring models to select projects.
3. Describe how to select, prioritize, and resource projects as an outgrowth of strategic planning.
4. Given organizational priorities and several projects, demonstrate how to select and prioritize projects using a scoring model.
5. From a contractor’s viewpoint, describe how to secure projects.
TEACHING STRATEGIES
· Generally the first thing I do in this chapter is to ask the students about their example projects. Most of the student teams will not have met with their sponsors yet. I encourage them to do so as soon as possible. I ask them to tell me why the agency selected this particular project. Often they are not aware. I use that as the basis for this chapter.
· Remind the students that while the concepts behind many project management techniques are the same for all organizations, the mechanics of how they are performed can vary widely. Project selection, for example, can be very simple in a small organization or highly structured in a larger organization. Nevertheless, all organizations should use the idea of starting with strategic planning, identifying potential projects, using appropriate criteria, and choosing the set of projects that help the organization best to achieve its goals. In practice, however, some organizations decide one project at a time without looking at the big picture.
· Tell the students that in many cases they may have limited involvement in project selection and prioritization decisions, but those decisions will have a major impact on their projects, so they need to understand both how the decisions were made and the rationale behind them.
· One topic that lends itself to a quick breakout session is SWOT analysis. I like to give a scenario for a local government organization, sports organization, or company that is in the news and challenge the students to brainstorm a few strengths, weaknesses, opportunities, and threats. I will ask each team to report on one of those four areas. I then ask the students how this knowledge can help them decide which projects they want to pursue. This introduces the concept of multiple criteria decision-making.
· I then introduce the mission statements for both our university and our college of business. I ask the students what they can tell me about the mission or vision statements for their present organizations (Many of our MBA students work full time and many of our undergraduates work part time.). We then discuss how this knowledge can be helpful in selecting projects that will help achieve the vision and mission. Often, students do not claim to know their organizational vision and mission. I encourage them to find those statements and try to understand how they should guide behavior.
· Show both Exhibits 2.5 and 2.6 to get students thinking about what a portfolio really means. I relate a project portfolio for an organization to a personal financial portfolio since most students have had finance and can remember diversifying. Either to follow-on one of the earlier breakouts, or as a standalone breakout, I ask students to brainstorm potential projects of each type shown in Exhibit 2.6 for a particular company or other organization. You can even use your own university.
· Since our entrepreneurship majors need to take project management, I remind them that a vast majority of work in young organizations is project based.
· Quickly present Exhibit 2.8 to emphasize that net present value (NPV) is the most commonly used financial model in project selection, but that other methods are available.
· For another breakout, give a scenario faced by an organization (real or fictitious). Ask students to first brainstorm potential criteria for selecting projects in that situation. The students then weight the projects on each criterion. When they report out, ask them to give the rationale behind their decisions.
· Ask the students to use a scoring model to select and prioritize projects. Demonstrate with Exhibits 2.11 and 2.12. Exercise 1 or 2 could be used for this breakout. Alternatively, with some prior setup of generating several possible projects, a continuation of the scenario of the local organization described in the previous bullet could be used to add authenticity. Yet another alternative is to have the students in groups select a type of car to buy. They will need to decide on the selection criteria first.
· I like to point out Exhibit 2.13 (Alternative Breaks Project Site Selection). I emphasize both how this is an example of selecting projects based upon multiple criteria and that we will have numerous places throughout the course where we will demonstrate points with this same integrated project.
LECTURE AND WORKSHOP OUTLINE
2.1 Strategic planning process
The company’s leadership performs strategic planning to set direction.
Strategic analysis
Internal and external analysis using SWOT.
Guiding principles
Vision (preferred future state) and mission (what we stand for and how we will operate) statements, perhaps purpose and values also.
Strategic objectives
Annual goals to help achieve vision and mission.
Flow-down objectives
In larger organizations an expansion on strategic objectives.
2.2 Portfolio management
Since projects are investments, ensuring the best set of projects is selected.
Portfolio
A collection of projects or programs and other work that are grouped together to facilitate effective management of that work to meet strategic business objectives.
Program
A group of related projects managed in a coordinated way to obtain benefits and control not available from managing them individually.
Subproject
A smaller portion of the overall project created when a project is subdivided into more manageable components or pieces.
Assess organization’s ability to perform projects
Understanding the type and amount of projects the organization can successfully perform.
Identify potential projects
Systematically and entrepreneurially by everyone in the organization.
Methods for project selection
Based upon organizational priorities, including financial and other considerations.
Using a cost-benefit analysis model to select projects
Comparing expected project costs with benefits often by using net present value analysis.
Using a scoring model to select projects
When multiple criteria such as timing, risk, and resource needs are important in selection decisions.
Prioritizing projects
Once selected determining when each project will start and how conflicts will be resolved.
Resourcing projects
After the priorities of each project has been determined, leaders should start assigning resources from the highest priority project down until resource availability limits additional projects.
2.3 Securing projects
Client company perspective of finding contractors to perform and contractor company perspective of finding projects to perform.
Identify potential project opportunities
Contractor companies use many methods to uncover possible projects.
Determine which opportunities to pursue
Decide whether to pursue all projects or only select projects.
Prepare and submit project proposal
Proposals often include technical, management, and financial considerations.
Negotiate to secure the project
Both parties need to agree to terms that make sense.
CHAPTER REVIEW QUESTIONS – SUGGESTED ANSWERS
1. List and describe each step in the strategic planning process (objective #1, pp.28-31).
· Strategic analysis – analyze strengths and weaknesses within the organization and opportunities and threats external to the organization.
· Guiding principles – create statements of organizational vision, mission, purpose and/or values to guide decision-making.
· Strategic objectives – often annual planning to establish short and long term results that will support guiding principles.
· Flow-down objectives – optional for large or complex organizations to ensure that appropriate goals are established.
· Portfolio alignment – selecting a set of projects to support organizations’ goals.
2. Name at least four things a mission statement should include. (objective #1, p.30)
The mission statement should include the organization’s purpose, beliefs, core values, culture, primary business, and primary customers.
3. What does the strategic analysis acronym SWOT stand for? (objective #1, p.28)
Strengths, weaknesses, opportunities, and threats.
4. What is the most widely accepted financial model for selecting projects? (objective #2, p.36)
Net present value (NPV) is the most widely accepted model as all the other models, though offering additional perspective, have more weaknesses.
5. What are some advantages and disadvantages of using a financial model for selecting projects? (objective #2, pp.37-38)
Financial models are useful in ensuring that selected projects make sense from a cost and return perspective, but they do not take into account a company’s strategic goals, so objectives, timing, resource needs, and risk should often be considered also.
6. What are some advantages and disadvantages of using a scoring model for selecting projects? (objective #2, pp.38-40)
Scoring models allow leadership teams to perform sensitivity
analyses—that is, to examine what would happen to the decision if factors affecting it
were to change. They are more time-intensive than financial models.
7. What are some common reasons for project failure? (objective #3, p.33)
• Not enough resources
• Not enough time
• Unclear expectations
• Changes to the project
• Disagreement about expectations
8. Who should be involved in the second part of aligning projects with the firm’s goals, which is identifying potential projects? (objective #3, p.35)
All parts of the organization should help identify potential projects.
9. If there is a conflict between resource needs for two projects, who decides which one gets
the needed resources first? (objective #3, p.41)
Generally this is determined by the project sponsor; under especially important circumstances, the decision may require the leadership team.
10. In a project scoring model, why is each decision criteria given a weight? (objective #4, p.38)
The weights are assigned according to each criterion’s relative importance. Therefore, the more important criteria will have a greater effect on the outcome than criteria deemed less important.
11. What purpose do sensitivity analyses serve in using scoring models to choose projects? (objective #4, p.39)
Allows decision makers to examine what would happen to the decision if factors affecting it were to change.
12. If several projects have close scores as the result of a scoring model, what can be done to break the virtual tie? (objective #4, p.39)
The group can use other criteria or discussion to break a tie.
13. Why might a contractor company perform a SWOT analysis prior to bidding on a potential project? (objective #5, p.42)
A quick SWOT analysis could be used to decide whether to pursue a potential project.
Decision makers can also ask how well a potential project will help achieve
their objectives. If they determine a project will help achieve their objectives, the next
considerations are the cost to pursue the work and the probability of successfully securing
the project given the likely competition. A company frequently considers risks both
of pursuing and not pursuing a potential project. Finally, does the company have the
capability to perform the work if it is awarded?
14. Why is it important for a contractor to understand the source selection criteria a client uses to decide to whom they will award a project? (objective #5, p.43)
By understanding what a client is looking for, a contractor can demonstrate his company’s capabilities in terms of the specific job proposed, thus increasing his chances of being selected for the work.
15. Name five things that may be negotiated between a client company and a contractor company. (objective #5, p.44)
• Amount of money to be paid
• Contractual terms
• Schedule
• Personnel
• Quality Standards
• Reporting Mechanisms
DISCUSSION QUESTIONS – SUGGESTED ANSWERS
1. How might the internal and external parts of a SWOT analysis affect one another? (objective
#1, Analyzing)
The internal analysis (elements within the project team’s control)
consists of asking what strengths and weaknesses the organization possesses in itself. The
external analysis (elements over which the project team has little or no control) consists
of asking what opportunities and threats are posed by competitors, suppliers, customers,
regulatory agencies, technologies, and so on. Together, these two can give a company an idea of what its competitive advantage is relative to others in the market and where they should go from here.
2. Describe the interaction between vision and mission statements. (objective #1, Applying)
The vision is normally a description of a desired future state of the organization that may take multiple years of effort to achieve. The mission statement should evolve from the vision and be a means to achieve it.
3. How is a company’s portfolio similar to and different from a financial portfolio? (objective
#1, Evaluating)
A portfolio is “projects, programs, subportfolios, and operations managed as a group to achieve strategic business objectives.” Project portfolios are similar to financial portfolios. In a financial portfolio, efforts are made to diversify investments as a means of limiting risk. However, every investment is selected with the hope that it will yield a positive return. The returns on each investment are evaluated individually, and the entire portfolio is evaluated as a whole.
4. What is the best way for an organization to prioritize among selected projects? Does it vary
among organizations? (objective #2, Analyzing)
There are several ways to prioritize among selected projects, and the method(s) used may vary from organization to organization. If using a scoring model, further discussion and/or additional criteria can be used to prioritize among projects with similar scores. Executives may have pet projects, despite the scoring model results. And sometimes a single consideration (such as timing the debut of a new system) outweigh other criteria and lead to project prioritization.
5. Describe three different ways decision makers might select projects while considering both financial and non-financial factors. (objective #2, Remembering)
(i) Financial analysis can be the only method of selecting projects.
(ii) Financial analysis can be a screening device to qualify potential projects for consideration using a scoring model to make selection decisions.
(iii) Financial considerations can be one factor in a multifactor scoring model used to select projects.
6. Why is aligning potential projects with the parent organization’s goals the first step in avoiding project failure? (objective #3, Analyzing)
Aligning potential projects with the parent organization’s goals makes it far likelier that a project will receive support from company decision makers. This buy-in or good will can greatly impact the likelihood of a project succeeding.
7. Why is it good practice for organizations to identify twice as many potential projects as they plan to implement? (objective #3, understanding)
Some potential projects may not be a good fit. Any company that accepts practically every potential project will probably waste some of its resources on projects that do not support its organizational goals.
8. Suppose you are purchasing a new car, and you decide to use a scoring model to decide among four options. What would be your top three criteria and what would be each criteria’s relative weight? (objective #4, evaluating)
Example: Appearance—5 (on 1-5 scale of importance)
MPG—3
Cost—2
9. Under what circumstances should a selected project take precedence over other selected projects? (objective #4, analyzing)
If a project is urgent, its delay would be extremely costly either financially or in terms of hoped-for benefits, or it is mandated by the government or other controlling body.
10. If you are a contractor looking for project work, why might you decide not to pursue a particular project opportunity? (objective #5, synthesis)
You might decide not to pursue an opportunity if your company had no strategic advantage and/or was likely to be outbid by a competitor; you do not have the resources to complete the project according to its performance criteria; or if being awarded this contract would inhibit your chances at other work that is a better fit for your company.
11. What are the four main areas of competency a client company is looking for in a project manager? How can you best demonstrate these competencies to a potential client? (objective #5, applying)
Technical, Management, Financial, Operational; show examples/references for previous work; come up with a risk management plan, etc.
PMBOK ® Guide Questions
1) A collection of projects, programs, and operations managed as a group to achieve strategic
objectives is called a:
a) Process
b) Portfolio
c) Subprogram
d) Life cycle
Answer: b
Page 32 in textbook
Page 9 PMBOK 5th Edition
2) Projects may be undertaken as a result of any of the following strategic reasons except:
a) Social need
b) Market demand
c) Executive discretion
d) Environmental considerations
Answer: c
Page 35 in textbook
Page 10 PMBOK 5th Edition
3) A narrative description of products, services or results to be delivered by the project is a:
a) Request for information
b) Business case
c) Project statement of work
d) Elevator pitch
Answer: c
Page 35 in textbook
Page 68 PMBOK 5th Edition
4) Program management helps determine the optimal approach for managing interdependent
projects in order to achieve benefits and control. Program management activities might
include all of the following except:
a) Aligning organizational and strategic direction
b) Managing shared client relationships
c) Resolving issues and change management
d) Resolving resource constraints
Answer: b
Page 32 in textbook
Page 9 PMBOK 5th Edition
5) A project statement of work (SOW) would use or include information from each of the
following sources except:
a) Project charter
b) Strategic plan
c) Business need
d) Product scope description
Answer: a
Page 35 in textbook
Page 68 PMBOK 5th Edition
6) All projects should be aligned with their organization’s strategic plan, which includes the
organization’s vision, goals, and objectives. Which of these is the definition of a vision
statement?
a) Conveys a larger sense of organizational purpose, and is both inspiring and guiding.
b) Describes short and long term results along with measures to determine if they have
been achieved.
c) Includes the organization’s core purpose, core values, beliefs, culture, primary business,
and primary customers.
d) Is SMART: specific, measurable, achievable, results-based, and time-specific.
Answer: a
Page 29 in textbook
Page 10 PMBOK 5th Edition
7) Which group within the organization is responsible for integrating data and information from
corporate strategic projects, and using corporate measurement systems to evaluate how
strategic objectives are being fulfilled?
a) Chief Information Officer
b) Project Management Office
c) Project Sponsors
d) Operations Management
Answer: b
Page 32 in textbook
Page 11 PMBOK 5th Edition
8) The document that includes the necessary information to determine whether a project is
worth the required investment, and is used for decision making by upper management, is
called the:
a) Project Scope Statement
b) Project Charter
c) Business Case
d) Case Study
Answer: c
Page 35 in textbook
Page 69 PMBOK 5th Edition
9) The author notes that contractors seeking external customers should also use a project
selection / portfolio alignment process. Once an external customer and contractor have
reached a consensus on the initial intentions for the contracted work, their understanding is
documented in:
a) A statement of work (SOW)
b) A business case
c) An agreement
d) A strategic alliance
Answer: c
Page 44 in textbook
Page 70 PMBOK 5th Edition
10) A business case typically contains information regarding the business need and a financial
analysis. Which financial model divides the cash flow by the initial cash outlay?
a) Benefit-Cost Ratio (BCR)
b) Internal Rate of Return (IRR)
c) Net Present Value (NPV)
d) Payback Period (PP)
Answer: a
Page 69 PMBOK 5th Edition
EXERCISES – SOLUTIONS
1. Complete the following scoring model. Show all your work. Tell which project you would pick first, second, third, and last. How confident are you with each choice? If you lack confidence regarding any of your choices, what would you prefer to do about it?
I would select Project A first. I am quite confident about that selection since Project A scored considerably higher than all others. The second project to be selected is Project B, but Project C is in a virtual tie, so I would prefer to discuss the relative merits of each, perhaps considering additional “tie-breaking” criteria, before making the final selection. Project D is a distant fourth, so if given the ability to perform three projects, I would be very comfortable with A, B, and C.
2. Complete the following scoring model. Show all your work. Tell which project you would pick first, second, third, and last. How confident are you with each choice? If you lack confidence regarding any of your choices, what would you prefer to do about it?
I would pick Project C first and Project B second. I feel confident in those selections as the scores are quite different than the others. I would be hard pressed to select a third project without additional information. Projects A and D are in a virtual tie.
3. Pretend you are the leadership team for a pharmaceutical company that is in a difficult financial situation due to patents that have expired on two of your most profitable drugs. Brainstorm a list of criteria by which you would select and prioritize projects. Weight the criteria.
Answers will vary. The criteria developed would apply to projects that either are starting with a new compound (entirely new drug which may take a long time to get to market), a variation on a compound that is already partially studied (getting a variation of a drug to market sooner), or the purchase of a drug another company has fully or partially developed (perhaps getting the drug to market much quicker). Some criteria might include: speed in getting a new pharmaceutical to market, probability of success, cost of the project, and similarity with the company’s existing products (alignment). The weightings can also vary, but students should be prepared to explain the logic behind why they chose the weights they did. Speed in getting a drug to market should be one of the highly rated criteria.
4. Pretend you are the leadership team of a manufacturing company that is currently challenged by low-cost competition. Brainstorm a list of criteria by which you would select and prioritize projects. Weight the criteria.
Answers will vary. Projects may include cost reduction improvement projects and new product development projects. Cost will certainly be one of the higher rated criteria. Others may include probability of success and alignment with current products and/or organizational strategy.
EXAMPLE PROJECT
The primary thing students can do in this chapter regarding their example project is to discover why the organization selected the project. This involves learning enough of the organization’s vision and mission to understand how the project will help achieve both. Remind students that executives consider projects to be investments (of money, workers time, or both) and they want to have confidence they will get a good return on their investment. I generally do not have an assignment for this, but have a class discussion. I tell the students I want them to be able to articulate how the project will be of value to the organization. This not only gives the students a great start on writing the business case section in the project charter (Chapter 4), but it also starts to help the students develop a strong attachment to their project. This can lead to more student work on the project and to discussions regarding passion for a project and how that helps when projects go through difficult periods.
Chapter 2 - Project Selection and Prioritization
TRUE/FALSE
1. Strategic analysis is an important first step in setting strategic direction.
ANS: T DIF: Easy REF: P. 28 OBJ: CPMT.KLOP.15.02.01
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Knowledge
2. Strategic analysis is often called SWOT - Strengths, Weaknesses, Opportunities and Threats (SWOT).
ANS: T DIF: Easy REF: P. 28 OBJ: CPMT.KLOP.15.02.01
NAT: BUSPROG: CPMT.KLOP.15.03 KEY: Bloom's: Knowledge
3. Strategic analysis is often called SWOT - Start With Objectives Template (SWOT).
ANS: F DIF: Moderate REF: P.28 OBJ: CPMT.KLOP.15.02.01
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
4. The internal part of strategic analysis considers opportunities and threats posed by competitors, suppliers and regulatory agencies among others.
ANS: F DIF: Moderate REF: P. 28 OBJ: CPMT.KLOP.15.02.01
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
5. The organization’s leadership should establish guiding principles such as the vision and mission for an organization before developing strategic objectives.
ANS: T DIF: Moderate REF: P. 28 OBJ: CPMT.KLOP.15.02.01
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
6. The organization’s leadership should establish the strategic objectives to set the stage for the strategic analysis.
ANS: F DIF: Challenging REF: P. 31 OBJ: CPMT.KLOP.15.02.01
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Blooms: Application
7. The vision should present a positive, inspiring and vivid description of the organization as it currently exists.
ANS: F DIF: Moderate REF: P. 29 OBJ: CPMT.KLOP.15.02.01
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
8. Strategic objectives should focus decisions regarding which projects to select and how to prioritize them.
ANS: T DIF: Moderate REF: P. 31 OBJ: CPMT.KLOP.15.02.03
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
9. Strategic objectives describe both long and short term results that are desired, along with measures to determine their achievement.
ANS: T DIF: Easy REF: P. 31 OBJ: CPMT.KLOP.15.02.03
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Knowledge
10. Projects tend to be the primary method for implementing many objectives.
ANS: T DIF: Moderate REF: P. 31, 33 OBJ: CPMT.KLOP.15.02.01
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
11. A portfolio is a collection of projects, programs, subportfolios, and operations managed as a group to achieve strategic business objectives.
ANS: T DIF: Easy REF: P. 32 OBJ: CPMT.KLOP.15.02.03
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Knowledge
12. A project portfolio is a useful storage medium that enables the project manager to consolidate all project information in a single, convenient location.
ANS: F DIF: Moderate REF: P. 32 OBJ: CPMT.KLOP.15.02.03
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
13. Portfolio management aligns with organizational strategies by selecting the right projects, prioritizing work, and providing needed resources.
ANS: T DIF: Easy REF: P. 31 OBJ: CPMT.KLOP.15.02.03
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Knowledge
14. If an organization does not have the right capabilities, a project may be too difficult to complete successfully.
ANS: T DIF: Moderate REF: P. 34 OBJ: CPMT.KLOP.15.02.03
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
15. The degree of formality used in selecting projects varies widely across organizations.
ANS: T DIF: Moderate REF: P. 31 OBJ: CPMT.KLOP.15.02.03
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
16. While there is a wide variety of projects across organizations, the degree of formality used in selecting them is largely uniform.
ANS: F DIF: Moderate REF: P. 35 OBJ: CPMT.KLOP.15.02.03
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
17. The prioritization of projects in a portfolio should consider whether the demands of performing each project are clearly understood.
ANS: T DIF: Moderate REF: P. 36 OBJ: CPMT.KLOP.15.02.03
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
18. Payback period models do not consider the amount of profit that may be realized after the costs are paid.
ANS: T DIF: Moderate REF: P. 37 OBJ: CPMT.KLOP.15.02.02
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
19. None of the financial project selection models ensure alignment of the project with an organization’s strategic goals.
ANS: T DIF: Moderate REF: P. 38 OBJ: CPMT.KLOP.15.02.02
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
20. Scoring models are most useful when there are multiple projects and several criteria to consider.
ANS: T DIF: Easy REF: P. 38 OBJ: CPMT.KLOP.15.02.04
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Knowledge
21. Traditional financial models are most useful when there are multiple projects and several criteria to consider.
ANS: F DIF: Moderate REF: P. 38 OBJ: CPMT.KLOP.15.02.04
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
22. There are times that certain projects must be selected regardless of any considerations such as strategic fit, profitability or probability of success.
ANS: T DIF: Moderate REF: P. 38 OBJ: CPMT.KLOP.15.02.03
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
23. In addition to considering financial factors, project selection should often consider how well each project fits with the organization’s strategic planning.
ANS: T DIF: Easy REF: P. 38 OBJ: CPMT.KLOP.15.02.04
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
24. Scoring models are very useful in providing input regarding the starting order of projects.
ANS: T DIF: Easy REF: P. 40 OBJ: CPMT.KLOP.15.02.04
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Knowledge
25. Project selection scoring models are very useful in providing performance data that can be used to terminate a project.
ANS: F DIF: Challenging REF: P. 38 OBJ: CPMT.KLOP.15.02.04
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Application
26. When a firm prepares to submit a proposal, it is really conducting a small project with the primary deliverable of the project being a compelling and complete proposal.
ANS: T DIF: Easy REF: P. 43 OBJ: CPMT.KLOP.15.02.05
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Knowledge
27. When a client company decides to engage an external contractor to perform project work, it must be prepared to submit a proposal and prepare a bid.
ANS: F DIF: Challenging REF: P. 43 OBJ: CPMT.KLOP.15.02.05
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Application
MULTIPLE CHOICE
1. Which of the following statements concerning strategic analysis is true?
| a. | Strategic analysis focuses exclusively upon external analysis. |
| b. | External analysis focuses on the strengths and weaknesses of the organization. |
| c. | Internal analysis focuses on the threats and opportunities facing the organization. |
| d. | External analysis focuses on the threats and opportunities facing the organization. |
ANS: D DIF: Moderate REF: P. 28 OBJ: CPMT.KLOP.15.02.01
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
2. All of the following factors influence the opportunities and threats an organization must consider when performing a strategic analysis EXCEPT:
| a. | competitors |
| b. | suppliers |
| c. | regulatory agencies |
| d. | employees |
ANS: D DIF: Easy REF: P. 28 OBJ: CPMT.KLOP.15.02.01
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Knowledge
3. A clear and compelling vision will have all the following characteristics EXCEPT:
| a. | often requires extra effort to achieve. |
| b. | often requires several years to achieve. |
| c. | provides detailed roadmap for managing a project |
| d. | helps stakeholders to understand the direction of the firm. |
ANS: C DIF: Moderate REF: P. 29 OBJ: CPMT.KLOP.15.02.01
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
4. Which of the following responses most accurately depicts the correct sequence of activities in the strategic planning process?
| a. | strategic objectives - strategic analysis - guiding principles - flow-down objectives |
| b. | guiding principles - strategic analysis - strategic objectives - flow-down objectives |
| c. | strategic analysis - guiding principles - strategic objectives - flow-down objectives |
| d. | guiding principles - strategic objectives - flow-down objectives - strategic analysis |
ANS: C DIF: Challenging REF: P. 28 - 31 OBJ: CPMT.KLOP.15.02.01
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Application
5. Many writers have stated that effective objectives should be:
| a. | broad - to cover many dimensions of the business |
| b. | measurable - to track progress |
| c. | unachievable - to inspire maximum performance |
| d. | resource based - to focus on the inputs |
ANS: B DIF: Moderate REF: P. 31 OBJ: CPMT.KLOP.15.02.01
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
6. All of the following statements concerning project portfolios are true EXCEPT:
| a. | The projects in a portfolio are grouped to be managed collectively. |
| b. | Portfolios cannot include operations and programs. |
| c. | Portfolios usually include a mix of high-risk and low-risk projects. |
| d. | All projects in a portfolio contribute to the organization’s goals. |
ANS: B DIF: Moderate REF: P. 32 OBJ: CPMT.KLOP.15.02.01
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
7. Portfolios deal with all of an organization’s projects, while programs deal with:
| a. | ongoing operations |
| b. | a specific group of related projects |
| c. | resource availability |
| d. | tradeoffs between schedule, scope and quality |
ANS: B DIF: Moderate REF: P. 32 OBJ: CPMT.KLOP.15.02.01
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
8. Portfolio management helps an organization achieve its strategic goals in all of the following ways EXCEPT:
| a. | managing ongoing projects |
| b. | providing needed resources |
| c. | selecting the right projects |
| d. | prioritizing work to be done |
ANS: A DIF: Moderate REF: P.31 OBJ: CPMT.KLOP.15.02.01
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
9. The document that describes why the project is needed, and may include estimated costs and benefits, is called a:
| a. | program management plan |
| b. | business case |
| c. | SWOT analysis |
| d. | guiding principle |
ANS: B DIF: Moderate REF: P. 35 OBJ: CPMT.KLOP.15.02.03
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
10. All of the following factors should be assessed to determine an organization’s ability to perform projects EXCEPT:
| a. | Does the organization have free and open communication, creativity, and empowered decision making? |
| b. | Does the organization have a clearly defined project management process? |
| c. | Do teams and individuals follow instructions well? |
| d. | Does the organization monitor and understand it’s external environment? |
ANS: C DIF: Moderate REF: P. 34 OBJ: CPMT.KLOP.15.02.03
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
11. All of the following represent appropriate sources to identify new potential projects EXCEPT:
| a. | existing and potential customers |
| b. | the operations staff within the organization |
| c. | industry and trade journals |
| d. | lessons learned from previous projects |
ANS: D DIF: Moderate REF: P. 35 OBJ: CPMT.KLOP.15.02.03
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
12. Which of the following statements best describes the contemporary use of financial models and scoring models for project selection?
| a. | These methods are often used together to ensure financial and non-financial factors are both considered. |
| b. | Financial methods are preferred because they ensure alignment with the organization’s strategic goals. |
| c. | Scoring models are unreliable because they fail to consider financial factors. |
| d. | One of these techniques is typically used to the exclusion of the other, due to time demands. |
ANS: A DIF: Moderate REF: P. 36 OBJ: CPMT.KLOP.15.02.03
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Application
13. Which of the following statements correctly describes a weakness associated with the financial project selection model?
| a. | The benefit-to-cost models favor projects which generate the smallest absolute return over a specified period. |
| b. | Payback period models do not consider the profit to be realized after the costs are paid. |
| c. | The Net Present Value (NPV) method does not consider the time value of money. |
| d. | The Internal Rate of Return (IRR) method is difficult to use when a project has conventional cash flows. |
ANS: B DIF: Challenging REF: P. 37 OBJ: CPMT.KLOP.15.02.02
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Application
14. All of the following criteria serve as a valid basis for identifying potential projects in most organizations EXCEPT:
| a. | social need |
| b. | environmental considerations |
| c. | technological advances |
| d. | internal politics |
ANS: D DIF: Easy REF: P. 35 OBJ: CPMT.KLOP.15.02.03
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Knowledge
| Criteria: Weight: Project | Strategic Fit 10 | Risk 6 | Market Potential 7 | Probability of Success 5 | Weighted Total Score |
| Project A | 5 50 | 3 18 | 3 21 | 3 15 |
104 |
| Project B | 3 30 | 4 24 | 5 35 | 4 20 |
109 |
| Project C | 3 30 | 4 24 | 3 21 | 2 10 |
85 |
| Project D | 2 20 | 2 12 | 5 35 | 3 15 |
82 |
Figure 2-1 Project Selection and Prioritization Matrix
15. Based on the information provided in Figure 2-1, which criterion is most important to the leadership team?
| a. | strategic fit |
| b. | risk |
| c. | market potential |
| d. | probability of success |
ANS: A DIF: Moderate REF: P. 40 OBJ: CPMT.KLOP.15.02.04
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Application
16. Based on the information provided in Figure 2-1, which project has the highest probability of success?
| a. | Project A |
| b. | Project B |
| c. | Project C |
| d. | Project D |
ANS: B DIF: Moderate REF: P. 40 OBJ: CPMT.KLOP.15.02.04
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Application
17. Consider the information provided in Figure 2-1. Based on the results in the project selection and prioritization matrix, which project would you select if you were limited to selecting only one project?
| a. | Project A |
| b. | Project B |
| c. | Project C |
| d. | Project D |
ANS: B DIF: Easy REF: P. 40 OBJ: CPMT.KLOP.15.02.04
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's:Application
18. Based on the information provided in Figure 2-1, which project is least attractive based on the strategic fit?
| a. | Project A |
| b. | Project B |
| c. | Project C |
| d. | Project D |
ANS: D DIF: Moderate REF: P. 40 OBJ: CPMT.KLOP.15.02.04
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Application
19. Once selected projects have been prioritized, it is time to assign resources to projects based on their order of priority. Resources could include all of the following EXCEPT:
| a. | subject matter experts | c. | quality metrics |
| b. | equipment | d. | money |
ANS: C DIF: Easy REF: P. 41 OBJ: CPMT.KLOP.15.02.03
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Knowledge
20. Which of the following is NOT a typical source selection criterion that an organization would use to evaluate potential contractors?
| a. | life cycle cost |
| b. | references |
| c. | personalities |
| d. | technical approach |
ANS: C DIF: Easy REF: P. 43 OBJ: CPMT.KLOP.15.02.05
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Knowledge
21. All of the following organizations can effectively use a scoring model to select and prioritize competing projects EXCEPT:
| a. | the leadership team |
| b. | client companies |
| c. | contractor companies |
| d. | program management office |
ANS: D DIF: Challenging REF: P. 43 OBJ: CPMT.KLOP.15.02.04
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Application
22. All of the following may be negotiated between a client company and a contractor EXCEPT:
| a. | the amount of money to be paid. |
| b. | quality standards |
| c. | selection criteria for scoring models |
| d. | personnel assignments |
ANS: C DIF: Moderate REF: P. 44 OBJ: CPMT.KLOP.15.02.05
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
ESSAY
1. Describe the relationship between the strategic planning process and portfolio management in an organization.
ANS:
Key concepts to be covered in the response could include, but are not limited to:
Project selection should begin with the organization’s strategic planning process, which could include a strategic analysis of the organization’s strengths and weaknesses (SWOT analysis).
A vision and mission statement would then be developed, and would be used to set strategic objectives for the organization.
Portfolio management would follow, as it “aligns with organizational strategies by selecting the right projects, prioritizing the work, and providing needed resources”.
DIF: Challenging REF: P. 31, 44 OBJ: CPMT.KLOP.15.02.01
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Application
2. Describe the advantages and limitations of financial models in project selection.
ANS:
Key concepts to be covered in the response could include, but are not limited to:
Financial models are helpful because projects are investments. These models can help to ensure that selected portfolio of projects meets the organization’s requirements for revenue, costs and returns.
Organizations often temper financial analysis with non-financial factors, which are sometimes included with the financial factors in a weighted scoring model.
All financial analysis techniques have both strengths and weaknesses and on their own, and cannot insure alignment with the organization’s strategic goals. They must be tempered with other considerations.
DIF: Moderate REF: P. 37 - 38 OBJ: CPMT.KLOP.15.02.02
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Comprehension
3. Describe the advantages and limitations of scoring models in project selection.
ANS:
Key concepts to be covered in the response could include, but are not limited to:
Scoring models are helpful in selecting and prioritizing potential projects. They are useful if there are several criteria for project selection, and multiple projects to consider.
Project selection criteria should include how well each potential project fits with the organization’s strategic planning. The company’s leaders should agree on these criteria.
Mandatory “must do” criteria should be identified and all criteria should be assigned weights.
Projects can then be scored according to each criterion and assigned a weighted score.
When completed the weighted scoring models can serve as a starting point for project selection and order of priority However, other factors should be considered such as the urgency of each project, practical details concerning the timing, the cost of delaying expected benefits from selected projects, and conflicting resource needs.
DIF: Challenging REF: P. 38 - 41 OBJ: CPMT.KLOP.15.02.04
NAT: BUSPROG.CPMT.KLOP.15.03 KEY: Bloom's: Application
No comments:
Post a Comment