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Concept of Project Management 1 > Chapter 3 – Project Integration Management > Flashcards

Chapter 3 – Project Integration Management Flashcards

1
Q

Types of Project Selection Models

A
  • Nonnumeric Models

* Numeric Models

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2
Q

Nonnumeric Models

A

• Do not return numeric value
- Cannot be compared
• It is a justification
• Does not make them all ‘bad’

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3
Q

Types of Nonnumeric Models

A
  • Sacred Cow
  • Operating Necessity
  • Competitive Necessity
  • Project Line Extension
  • Comparative Benefit
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4
Q

Sacred Cow

A

• Project has taken life of its own
• Not due to any justification
- but “Just because”

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5
Q

Operating Necessity

A

• A project required to:

- Protect lives or property
- Keep company in operation
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6
Q

Competitive Necessity

A

• Project required to:

- Maintain company’s position in marketplace

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7
Q

Project Line Extension

A

• Project expanding a product line:

- How well the new product meshes with existing product line (new <> old)

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8
Q

Comparative Benefit

A

• Projects:

- Subjectively rank ordered based on perceived benefit (to the company)

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9
Q

Numeric Models

A 
• Returns a numeric value
	- Can be easily compared
• Two major categories:
	- Profit/profitability
	- Scoring
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10
Q

Profit/Profitability Models

A 
• Looks at:
	- Costs
	- Revenues
		~ Payback period
		~ Discounted cash flow (NPV)
		~ Internal rate of return (IRR)
		~ Profitability index
• More common:
	- NPV
	- IRR
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11
Q

Payback Period

A 
• Length of time
	- Until project’s original investment has been recouped
	- Shorter payback period is better
• Drawbacks:
	- Time value of money:
		~ Not considered
	- More difficult to use
		~ Cash flow change over time
	- Less meaningful
		~ Over longer periods of time
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12
Q

Discounted Cash Flow

A 
• Value of cash:
	- Inflows
	- Outflows
• Also known as:
	- Discounted cash flow
	- Discounting
• Widely used to evaluate:
	- Projects
	- Time value of money
	- Inflows
	- Outflows
	- Payback point
• Requires a percentage
	- To reduce future cash flows
• Discount rate:
	- Hurdle rate
	- Cutoff rate
• Usually be one overall discount rate
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13
Q

Internal Rate of Return [IRR]

A 
• Discount rate (k)
	- Causes NPV to be equal to 0
• Higher the IRR = better
	- Possible to have multiple IRR’s
	- Not a practical issue
• Finding the IRR requires:
	- Financial calculator
	- Computer
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14
Q

Profitability Index

A 
• Benefit cost ratio
• NPV:
	- Divided by initial cash investment
• Ratios:
	- Greater than 1.0
		~ Good
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15
Q

Advantages of Profitability Models

A 
• Easy to:
	- Use
	- Understand
• Based on:
	- Accounting data
	- Forecasts
• Familiar &amp; well understood
• Give:
	- Go/no-go indication
• Can be modified:
	- To include risk
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16
Q

Disadvantages of Profitability Models

A 
• Ignores:
	- Non-monetary factors
	- Time value of money
	- Cash flow after payback
• Discounting models (NPV, IRR):
	- Biased to the short-term
17
Q

Scoring Models

A
  • Unweighted factor model

* Weighed factor model

18
Q

Unweighted

A 
• Weighted the same
• Less important factors:
	- Same as important ones
• Easy to compute
• Total/average the scores
19
Q

Weighted

A 
• Weighted relative to its importance
	- Allows important factors stand out
• Include non-numeric data 
	- In the analysis
• Need to sum to one
• All weights are set up:
	- Higher values = more desirable
• Small difference in totals:
	- Not meaningful
20
Q

Integrated Change Control

A 
Basic causes results project changes:
• Uncertainty
	- Technology on which the work of the project or its output is based
• Increase in:
	- Knowledge base
	- Sophistication of the client user
		~ Leads to scope creep
• Modification of the rules
	- Applied to:
		~ Process of project’s execution/output
21
Q

3 main integrated control objectives

A 
• Influencing factors that create changes:
	- Ensure changes are beneficial
• Determine:
	- Change has occurred
• Managing:
	- Actual occurring changes
22
Q

Change Control on Information Technology Projects

A 
• Former view:
	- Project team:
		~ Do exactly as planned
		~ Within budget
• Problem:
	- Stakeholders:
		~ Rarely agreed up-front on project scope
		~ Inaccurate:
			\+ Time estimates
			\+ Cost estimates
• Modern view:
	- Project management:
		~ Process of:
			\+ Constant communication
			\+ Negotiation
• Solution:
	- Changes:
		~ Beneficial
	- Project team:
		~ Make plans
23
Q

Change Control System

A 
• Formal, documented process
	- Describes when and how official project documents and work may be changed
• Describes who is authorized to:
	- Make changes
	- How to make changes
24
Q

Change Control Board (CCB)

A 
• Formal group of people
	- Responsible for:
		~ Approving
		~ Rejecting
•	Changes on a project
• Provides guides for:
	- Preparing change requests
	- Evaluate change requests
	- Manage implemented of approved changes
• Includes:
	- Stakeholders from the entire organization
25
Q

Making Timely Changes

A

• CCBs:
- Only meet occasionally
~ May take too long for changes to occur
• Policies in place for time-sensitive changes (by organizations):
- 48-hour policy
~ Allows decisions to be made
~ Can reverse decisions made within 48 hours (pending senior management approval)
- Delegate changes
~ To the lowest level possible but keep everyone informed of changes

26
Q

Configuration Management

A 
• Ensure:
	- Project’s products description:
		~ Correct
		~ Complete
• Involves:
	- Identifying &amp; controlling:
		~ Product and support documentation’s functional &amp; physical design characteristics
• Configuration management specialists:
	- Identify &amp; document:
		~ Configuration requirements
		~ Control changes
		~ Record changes
		~ Report changes
		~ Audit the products
	- To verify conformance to requirements
27
Q

Suggestions for Performing Integrated Change Control

A 
• View project management as:
	- Process of constant communication and negotiation
• Plan for change
• Use:
	- Effective configuration management
	- Written &amp; oral performance
		~ Help identify and manage change
	- Project management and other software
		~ Help manage and communicate changes
• Define procedures for:
	- Making timely decisions
		~ On smaller changes
28
Q

Closing Projects and Phases

A 
• Finalize all activities
• Transfer the completed/cancelled work to the appropriate people
• Main outputs include:
	- Final product
	- Service 
	- Result transition
	- Organization process asset updates
29
Q

Using Software to Assist in Project Integration Management

A 
• Documents:
	- Word processing software
• Representations:
	- Presentation software
• Tracking:
	- Spreadsheets
	- Databases
• Communication software:
	- E-mail
	- Web authoring tools
		~ Facilitate communications
• Business Service Management (BSM)
	- Track the execution of business process flows

Concept of Project Management 1 (5 decks)

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