Chapter 4 Flashcards

1
Q

The _ _ of the work units of a project is a key determinant for MGT in deciding whether or not to support a project

A

aggregate cost

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2
Q

easier cost to define and measure

A

Tangible costs

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3
Q

more difficult cost to define and measure

A

Intangible costs

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4
Q

costs that are easily associated with a work unit

A

Direct costs

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5
Q

costs not easily associated with a work unit or a project

A

Indirect cost

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6
Q

the balance of benefits over costs of a project

A

Value of a project

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7
Q

_ - how long it will take before their investment in a project results in a positive cash flow

This stresses how quickly costs of a project are recovered (It does not care about the end result)

A

Payback analysis

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8
Q

the length of time that it takes for a company to recover the amount of money invested in the project

A

Payback period

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9
Q

_ - based on the calculation of expected cash flow

This approach uses a rate of interest to calculate today’s value of the future cost and benefit for a project
o The rate of interest use is based on the cost of capital

A

Net present value

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10
Q

o NPV = Sum… A / (1+R)^t

A
T = the year of the cash flows
A = the amount of cash flow each year
R = the discount rate
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11
Q

calculated as discounted benefits minus discounted costs divided by discounted costs multiplied by 100

A

Return on Investment

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12
Q

o Consistency in the approval process
o Ease of communicating selection criteria
o Rapid evaluation process
o Less politics

A

Advantages of rigid standards

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13
Q

o Lack of flexibility for professional judgment

o Fewer innovative proposals by employees

A

Disadvantages of rigid standards

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14
Q

Resources for obtaining estimates

A
  1. Experience
  2. Documentation
  3. Expert Opinion
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15
Q

o Can be affected by organizational culture and top MGT’s decision making style

o Individual tend to overestimate cost and time so they are giving ‘safe’ estimates

A

Experience

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16
Q

o Considered a very useful source when it is relatively current and when it describes similar cases

o Free from bias and offers an advantage over estimates obtained from individuals

o However, it can quickly become dated

A

Documentation

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17
Q

o Outsider expertise can provide potential benefits in the form of broader experience and reduced game-playing

o However, outsider experience may be limited because they might not have a good understanding of the organizational culture

A

Expert opinion

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18
Q

o Used with higher risk projects

A

Scenario planning

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19
Q

These estimates should be gathered using a bottom-up approach and should start after individual work units are determined

A

Multiple estimates

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20
Q

o For each scenario (best case, worst case, etc.) an average weight is assigned

o The smaller the variance for a set of estimates is, the more specific the results

o Where there is a large divergence between estimates, it is prudent to provide for contingency resources

A

Why multiple estimates are strongly recommended

21
Q

making detailed estimates of cost and time for one or two cycles at a given time, and rough estimates are generated for subsequent cycles

A

Phase estimating

22
Q

Any _ in describing why a certain methodology is used will erode the credibility of the estimates, and those preparing the estimates, in the mind of the customer

A

secrecy

23
Q

A _ _ may become a factor when estimating time and cost for repetitive activities

A

learning curve

24
Q

Estimates must be based on _ _ and free from extreme case assumption

A

normal conditions

25
Q

An appropriate way to prepare for extreme situations is through the use of a _ _

A

contingency plan

26
Q

When necessary, contingency situations are described and _ _ are appropriated for them at the planning phase of the project development life cycle

A

contingency funds

27
Q

A _ _ of estimated times is appropriate when there is uncertainty regarding activity duration

A

risk analysis

28
Q
  1. Identify possible risks
  2. Predict the likelihood of risks happening
  3. Estimate the potential impact of risks
  4. Communicate risks to stakeholders
  5. Prepare alternative responses
A

The purposes that risk analysis serves.

29
Q

Modern project management is a process of _ _, communication, and adjustment.

A

constant negotiation

30
Q

A _ _ _ or group can facilitate and encourage change proposals

A

requirements change committee

31
Q
  1. Establish guidelines for submitting proposals for changes in the project
  2. Develop and communicate criteria for the evaluation of proposed change
  3. Evaluate and approve change
  4. Ensure compliance
A

Responsibilities of the requirements change committee.

32
Q

_ _ _ _ and Critical Path Method (CPM) are the most widely-used for scheduling, monitoring, and communicating time aspects of projects

A

Program Evaluation Review technique (PERT)

33
Q

_ programs are decision tools that enable decisions makers to formulate and build a decision model and to be able to analyze results and outcome

A

Simulation

34
Q

_ _ _ integrate functions of earlier tools and are intended to analyze current situations as well as forecast future trends

A

Business intelligence software

35
Q
o	allocate resources 
o	monitor progress
o	control quality
o	maintain team moral
o	award merit
o	ultimately ensure project success
A

What cost estimates are necessary for

36
Q

from people in the organization; considers workplace culture, talent pool, inter-organizational relations, and HR policies.

A

Where to find experience (source of estimate)

37
Q

from archives of previous projects.

A

Where to find experience (documentation)

38
Q

widely used and includes a pool of internal and external experts.

o Similar to experience in pros and cons.
o Used for new projects where little record exists.
o More formalized and expensive.
o May require visits by external experts and sharing of information.

A

Where to find experience (expert opinion)

39
Q

Based on history and experience, project managers may adjust estimates given by individuals; this, in turn, may result in further adjustment (overestimation or underestimation) by those providing estimates.

o This cycle creates ‘_ _’ and a non-productive environment.

A

game play

40
Q

● Use work units and bottom-up approach.
● Define clearly work units and tasks.
● Avoid memory recollection

A

Considerations for estimates

41
Q

● Obtain:
The best case scenario.
The most probable scenario.
The worst case scenario.

● Assign weights to these estimates.

● Use average scores and variance.
● Provide contingency resources for estimates with large variance.
● Calculate ‘upper limit’ and ‘lower limit’ to measure project duration.

A

Multiple estimates

42
Q

● Sometimes, due to uncertainty, estimates are feasible for initial _ only.

● Only rough estimates of subsequent _ are initially feasible.

● Project development life cycle (initiation, planning, development, implementation, closure) can be the base for _ _.

● Project owners and sponsors must commit to a project with incomplete information about cost and time – not always an easy situation.

A

phase

phases

phase estimating

43
Q

● Estimates are used to request funding, make decisions, schedule, negotiate, set goals, evaluate performance, etc.

● Events happen, technology advances, priorities change, and biases creep in.

● Methods, their appropriateness, strengths, and weaknesses must be explained.

● Assume ‘normal conditions’ – free from extreme case assumptions.

A

Considerations of multiple estimates

44
Q

● For out-of-ordinary situations funds should be set aside at the planning phase of a project development life cycle.

● Documentation and communication around contingency situations is crucial.

● Such funds are not directly accessible by the project manager.

● Simply adding a margin to estimates must be avoided.

A

Contingency planning

45
Q

● Appropriate where there is uncertainty regarding activity duration.

● Leads to developing alternative responses.

● Includes prediction or likelihood of happening.

● Includes estimate of risk impact.

● Depending on the nature and size of a project, it could be more or less extensive, detailed, or formalized.

● Leads to a change management process.

A

Risk analysis

46
Q

● Change is beneficial - innovative ideas or suggestions are often made by team members.

● A _ _ committee can facilitate and encourage change proposals.

● With the approval of management, additional resources can be provided through contingency funds.

● Change may also become necessary for external reasons, such as change related to the competition, vendors, and the law

A

change management

47
Q

o Establish guidelines for change proposals

o Develop and communicate criteria for the evaluation of proposed change

o Evaluate and approve change

o Ensure compliance

A

Responsibilities of Change Committee:

48
Q

● Changes must be consistent with the overall _ _ _ of the organization and the broad scope of the project.

● Response to change requests must be _, especially for time-sensitive changes.

● Proposals to drastically change a project may replace the project with _ _ _.

A

goals and objectives

timely

a new one