Chapter 2 Flashcards
What is strategic planning?
determines long term objectives and provides info to help orgs identify potential problems .
can use a swot analysis here
Why should projects be aligned with business strategy?
bc orgs take many projects on and must be aware of resource limitations and other constraints.
the businesses overall strategy should guide the project selection process and management of the projects
Strategic planning process steps? (4)
- Strategic planning (determine org strategy, goals, and objectives
- Business area analysis (analyze how various business areas can help achieve the strategic goals)
- project planning (identify potential porkers to help me strategic goals)
- resource allocation (allocate resources to selected projects)
three main financial projections for a project?
- net present value of a project
- return on investment
- payback analysis
What is a NPV?
What does it compare to?
calculates the net monetary gain or loss from a project by discounting all expected cash inflows and outflows.
higher the NPV the better
NPV is compared to and should exceed the opportunity cost of capital, that is, the return available by investing the capital elsewhere.
Calculation for ROI?
(total benefits - total costs) / total costs
How is the Payback period method calculated?
main issues with this method?
cost of project / annual cash inflows
- ignores benefits that occur after the period so does not measure profitability
- ignores the time value of money
Weighted scoring model is what?
Balanced scorecard?
systematic process for selecting projects based in many criteria.
BS: methodology that converts an orgs value drivers like customer service, innovation, and financial performance, and puts them into a series of defined metrics
What is a program?
a group of projects managed in a coordinated way to obtain benefits and control not available from managing them individually .
efficiencies of scale
