Decision making CPA

Question 1

What is critical path analysis

Answer 1

It is a technique used to identify the order in which activities need to be completed.

Question 2

What is the number on the left of a node?

Answer 2

The number node which is the order it is drawn in.

Question 3

What is the number on the top right?

Answer 3

The earliest start time.

Question 4

What is the number in the bottom right?

Answer 4

The latest finish time.

Question 5

What number does node 1 always start on?

Answer 5

0
0

Question 6

What does each line represent?

Answer 6

An activity
And how long it takes

Question 7

How are earliest start time calculated?

Answer 7

It is done from left to right by adding the duration to the previous EST.

Question 8

What happens when there are 2 activities going to one node when calculating EST?

Answer 8

You put the highest number you get

Question 9

How are latest finish time calculated?

Answer 9

It is calculated by subtracting from right to left

Question 10

What happens when there 2 activites going to one node when calculating LFT?

Answer 10

You subtract and see which is the lowest and you put that

Question 11

What will the final node look like?

Answer 11

The numbers will be the same

Question 12

How do you identify the critical path?

Answer 12

The nodes with the same numbers up and down.

Question 13

What does it mean when there is a critical path?

Answer 13

These activities need to be done or the whole thing will be delayed

Question 14

How do you show which path is the critical one?

Answer 14

You put a line through it.

Question 15

Which are the non critical nodes?

Answer 15

The nodes which don’t have the same top and bottom number.

Question 16

What does it mean when there are non critical nodes?

Answer 16

It means there is leeway (spare time) to complete these tasks.
Known as float time

Question 17

How to calcualte float time?

Answer 17

LFT - duration - EST

Question 18

What are the advantages of CPA?

Answer 18

Identifies the critical activities
Shortens the overall time of the project
Allows for Just In Time
Greater productive efficiency

Question 19

What are the disadvantages of CPA?

Answer 19

Is only the starting point for a successful project
Can not stop unexpected delays
Does not take into account of external influences

Question 20

What is Cost Benefit Analysis? (CBA)

Answer 20

It is a technique used by firms to see whether the benefits of a project over weigh the costs

Question 21

How can the CBA be categorised?

Answer 21

Internal - The private costs and benefits to the firm itself
External - The costs and benefits to the society (others)

Question 22

What are the principles of CBA?

Answer 22

All costs and benefits have a monetary value
Probability theory is used to asses the risk of a project

Question 23

What is discounting?

Answer 23

It calculates the total return on the investment taking into account the time value of money.

Question 24

What is shadow pricing?

Answer 24

It occurs when the cost of a project are estimated when the actual market price is unknown

Question 25

What are the benefits of CBA?

Answer 25

Putting a monetary value on project is EASY TO UNDERSTAND
Allows the assessment of externalities that might be created by a project
Taking into account the needs of society that private costs of a firm

Question 26

What are the limitations of CBA?

Answer 26

The cost of undertaking the analysis
The monetary values for external costs and benefits are estimates and will become less accurate in the future