Mod 2 Proj Selection (13) Flashcards
1) Organizations that are concerned with workflows that are costly or ineffective will focus on which of the following nonfinancial metrics?
a. Customer retention
b. Employee satisfaction
c. Process improvement
d. Future opportunities
c. Process improvement
You Answered Correctly!
Correct. Process improvement, or the act of increasing the efficiency of organizational procedures, is a common nonfinancial metric that organizations consider.
All other answers are incorrect b/c
Process improvement, or the act of increasing the efficiency of organizational procedures, is a common nonfinancial metric that organizations consider.
2) Which of the following nonfinancial metrics would an organization focus on if it were concerned with the amount of money being spent on recruiting and training new hires?
a. Customer satisfaction
b. Employee retention
c. Public opinion
d. Future opportunities
You Answered Correctly!
Correct. Employee retention, or the process of maintaining employees within the organization, is a common nonfinancial metric that organizations consider.
b. Employee retention
All other answers are incorrect b/c Employee retention, or the process of maintaining employees within the organization, is a common nonfinancial metric that organizations consider.
3) What is the best practice for selecting the right projects?
a. Ignore some of the requirements because they will fall into place once the resources are assigned.
b. Look at your requirements, determine what your final deliverable needs to look like, agree on the benefits to be provided.
c. Disregard the business case and select a project with a short time frame.
d. Select a project where the client agrees to let the project manager determine the requirements.
b. Look at your requirements, determine what your final deliverable needs to look like, agree on the benefits to be provided.
You Answered Correctly!
Correct. Ignoring requirements is never a good practice for delivering a successful project. Project requirements should be reviewed carefully to ensure the team understands what deliverables are expected and the benefits that will be provided.
All other answers are incorrect b/c Ignoring requirements is never a good practice for delivering a successful project. Project requirements should be reviewed carefully to ensure the team understands what deliverables are expected and the benefits that will be provided.
4) Determining if a project aligns with a company’s Key Performance Indicators as part of the project selection process refers to which project selection variable?
a. Expected financial benefit
b. Available funding
c. Strategic alignment
d. Riskiness of the project
c. Strategic alignment
Strategic alignment is a key variable factored in the project selection process and examines if a project aligns with a company’s strategic plan and Key Performance Indicators.
All other answers are incorrect b/c
Strategic alignment is a key variable factored in the project selection process and examines if a project aligns with a company’s strategic plan and Key Performance Indicators.
5) Which of the following metrics takes the present value and deducts the costs of upfront and ongoing expenditures?
a. Future value
b. Net Present Value
c. Payback value
d. Benefit‐cost value
You Answered Correctly!
Correct. Net Present Value (NPV) takes the PV amount and subtracts the cost of the initial and ongoing investments.
b. Net Present Value
You Answered Correctly!
Correct. Net Present Value (NPV) takes the PV amount and subtracts the cost of the initial and ongoing investments.
All other answers are incorrect b/c Net Present Value (NPV) takes the PV amount and subtracts the cost of the initial and ongoing investments.
6) Which of the following best defines a sunk cost?
a. A cost that has already been incurred and cannot be recovered
b. A cost that has already been incurred but can be recovered
c. A cost that has been incurred by selecting one project over another
d. A cost that has not yet been incurred by selecting one project over another
You Answered Correctly!
Correct. A sunk cost is money that an organization has already spent and, becausee it can’t get it back, should not be factored into future expenditures.
a. A cost that has already been incurred and cannot be recovered
You Answered Correctly!
Correct. A sunk cost is money that an organization has already spent and, becausee it can’t get it back, should not be factored into future expenditures.
All other answers are incorrect b/c A sunk cost is money that an organization has already spent and, becausee it can’t get it back, should not be factored into future expenditures.
7) Tektron Industries produces irrigation systems for small farms. Over the last financial quarter, the company noted an increase in requests for collapsible hoses that would lie flat when not in use. The company surveyed its regular customers and 85% of the respondents said they are considering replacing their current irrigation system with one that uses collapsible hoses. Tektron Industries recently initiated a project for developing and manufacturing collapsible hoses. This would be an example of which reason for initiating a project according to the PMBOK® Guide?
a. Market demand
b. Organizational need
c. Legal requirement
d. Social need
You Answered Correctly!
Correct. Tektron Industries is initiating a project to develop a new product based on the demands of their market.
a. Market demand
Correct. Tektron Industries is initiating a project to develop a new product based on the demands of their market.
All other answers are incorrect b/c Tektron Industries is initiating a project to develop a new product based on the demands of their market.
8) During a company retreat, a team of employees brainstormed about ways to improve the efficiency and accuracy of the system for paying part‐time employees and independent contractors. The company approved the changes, which will be phased in over the next year. This would be an example of which reason for initiating a project according to the PMBOK® Guide?
a. Organizational need
b. Market demand
c. Client request
d. Elements of a contract
You Answered Correctly!
Correct. Projects based on organizational need can include business process improvement projects, relocations, reorganizations, or any kind of project designed to improve the efficiency and effectiveness of the organization.
a. Organizational need
Correct. Projects based on organizational need can include business process improvement projects, relocations, reorganizations, or any kind of project designed to improve the efficiency and effectiveness of the organization.
All other answers are incorrect b/c Projects based on organizational need can include business process improvement projects, relocations, reorganizations, or any kind of project designed to improve the efficiency and effectiveness of the organization.
9) Project Alpha has a benefit‐cost ratio of 1:1.1, Project Beta has a benefit‐cost ratio of 1:1.33, and Project Charlie has a benefit‐cost ratio of 1:1.17. Using a financial analysis, which project is the best investment?
a. Not enough information to determine the answer
b. Project Alpha
c. Project Beta
d. Project Charlie
You Answered Correctly!
Correct. Project Beta has the best benefit‐to‐cost ratio.
c. Project Beta
Correct. Project Beta has the best benefit‐to‐cost ratio.
All other answers are incorrect b/c Project Beta has the best benefit‐to‐cost ratio.
10) What is the value of the best alternative choice that was not taken when, given limited resources, a choice needs to be made between two or more mutually exclusive alternatives?
a. Sunk cost
b. Incurred cost
c. Opportunity cost
d. Recoverable cost
You Answered Correctly!
Correct. Opportunity cost is incurred by selecting one project instead of another.
c. Opportunity cost
Correct. Opportunity cost is incurred by selecting one project instead of another.
All other answers are incorrect b/c Opportunity cost is incurred by selecting one project instead of another.
11) Which of the following metrics would be the most useful in looking at the reward or income of a project and comparing it with the project’s expenses?
a. Benefit‐cost ratio
b. Present value
c. Future value
d. Payback period
You Answered Correctly!
Correct. The benefit‐cost ratio compares the benefit or revenue of a project with the cost of or investment in a project.
a. Benefit‐cost ratio
Correct. The benefit‐cost ratio compares the benefit or revenue of a project with the cost of or investment in a project.
All other answers are incorrect b/c The benefit‐cost ratio compares the benefit or revenue of a project with the cost of or investment in a project.
12) Some of the variables an organization must consider when selecting projects include strategic alignment, project risk, and
a. Project prestige
b. Client experience
c. Client location
d. Funding
You Answered Correctly!
Correct. Some variables that organizations look at include strategic alignment, funding, and project risk.
d. Funding
You Answered Correctly!
Correct. Some variables that organizations look at include strategic alignment, funding, and project risk.
All other answers are incorrect b/c Some variables that organizations look at include strategic alignment, funding, and project risk.
13) Which financial measurement identifies how soon you will recapture your investment and start making a profit?
a. Benefit‐cost ratio
b. Payback period
c. Net Present Value
d. Sunk costs
You Answered Correctly!
Correct. The payback period calculates the initial investment and the estimated income over time to determine when you should recapture your investment.
b. Payback period
You Answered Correctly!
Correct. The payback period calculates the initial investment and the estimated income over time to determine when you should recapture your investment.
All other answers are incorrect b/c The payback period calculates the initial investment and the estimated income over time to determine when you should recapture your investment.
