Chapter 2

Question 1

nonnumeric models

Answer 1

sacred cow (project that has taken a life of its own), operating necessity (required to protect lives/property/company), competitive necessity (maintain position in marketplace)

Question 2

numeric models

Answer 2

models that look at costs/revenues, payback period, ROI

Question 3

advantages of profitability models

Answer 3

easy to understand, modifiable to include risk, well understood

Question 4

disadvantages of profitability models

Answer 4

ignore nonmonetary factors and time-value of money, biased towards short-term, sensitive to errors, nonlinear

Question 5

advantages of scoring

Answer 5

multiple criteria, easily altered, easy sensitivity analys

Question 6

disadvantages of scoring models

Answer 6

relative measure, linear in form, large number of criteria, unweighted models assume equal importance

Question 7

purpose of project portfolio process

Answer 7

identify nonprojects, prioritize list of project, limit # of projects, id codependent projects, eliminate risky projects, balance resources with needs