Project Management & Economic Development

Question 1

Cost-benefit analysis

Answer 1

Estimates the total monetary value of the benefits and costs to the community of a project(s) to determine whether they should be undertaken. Typically used for public projects such as highways and other public facilities.
Requires that all costs and benefits (including social & environmental benefits) be converted to a monetary value.

Question 2

Cost-effectiveness analysis

Answer 2

Method for selecting among competing projects when resources are limited, was developed by the military. For example, if a community has $50,000 to spend on park improvements then several different projects can be prepared, such as adding playground equipment or purchasing a new lawnmower.
CE Ratio = (cost of new strategy - cost of current practice)/(effect of new strategy - effect of current practice).

Question 3

Goals Achievement Matrix (GAM)

Answer 3

A comprehensive way to evaluate a project.
A way to prioritize a long list of projects.
Project evaluation matrix has competing projects in rows and evaluation criteria in columns. The evaluation criteria are based on the various stakeholder groups that may be impacted by the costs or that may receive benefits. The matrix shows the anticipated attainment of a project’s goals and the assignment of accomplishing a goal to a group.

Question 4

Gantt Chart

Answer 4

Chart showing the sequence of tasks necessary for project completion. Each task is a single horizontal bar on an X-Y chart. The X-axis is the time scale for the project. The length of each taskbar corresponds to the duration of each task. The relationship usually shows dependency, where one task cannot begin until another is completed.

Question 5

Linear programming

Answer 5

Attempts to find the optimum design solution for a project. This system takes a set of decision variables within constraints and comes up with an optimum design solution.

Question 6

Program Evaluation and Review Technique (PERT)

Answer 6

Scheduling method that graphically illustrates the interrelationships of project tasks.
A good choice when precise time estimates are not available for project tasks.
Steps:
• Identify the specific activities and milestones;
• Determine the proper sequence of the activities;
• Construct a network diagram;
• Determine the critical path;
• Update the chart as the project progresses.
Event-oriented.
Used mostly in research & development projects.
Time is the controlling factor (minimize time to minimize cost).
A decision-making tool designed to achieve objectives in which time is a critical factor. This technique is most helpful when time expectations are significant.
Often used together with CPM.

Question 7

Critical Path Method (CPM)

Answer 7

Tool to analyze a project. The analysis results in a "critical path” through the project tasks. Each project task has a known amount of time to complete and cannot be completed before the previous one is completed. The longest pathway is the critical pathway.
Activity oriented.
Used extensively in construction.
Cost is the controlling factor.
Often used with PERT.

Question 8

Fiscal Impact Analysis

Answer 8

Estimation of the net impact ON GOVERNMENT of a specific project.
Different from economic impact analysis (impact on private sector).

Question 9

Economic Base Theory

Answer 9

2 kinds of industry:
Basic/export (sells to customers outside the area)
Non-Basic/service (sells to customers within the area, recirculating money)

Question 10

Economic Base Multiplier

Answer 10

Total employment/Basic employment

A multiplier of 4 says 4 total jobs are created for every add’l Basic job

Question 11

Location Quotient

Answer 11

Local employment in a given industry/Total employment in all industries)
Divided by (National employment in that industry/Total national employment in all industries)
LQ>1 means export industry
LQ=1 means area produces just enough to meet needs in the area

Question 12

LQ>1

Answer 12

export industry

Question 13

Shift Share Analysis

Answer 13

Evaluates the strengths and weaknesses of a region’s industries.

Determines what portions of regional economic growth or decline can be attributed to national, industry-specific, and regional factors.

Helps identify industries where a region has competitive advantages.

Total national employment growth rate applied to employment in the region
Industry component = How does industry mix compare to the nation
Regional component = how competitive is the region

Interprets changes in an industry’s local employment over a period of years in 3 components:

1. National SHARE: How much would local industry employment have changed if mirrored change in national employment?
2. Industry MIX: How much would it have changed if it mirrored the difference between national industry employment and national total employment?
3. Local SHIFT: How many jobs did the local industry gain or lose (assumed for local competitive advantage or disadvantage)?

Question 14

Input-Output Analysis

Answer 14

Shows ripple effect in economy and linkages between industries. Tables showing effect of change in one industry on many others.

Question 15

Economic impact analysis

Answer 15

Measures cash flow to private sector in income, jobs, outputs, indirect impacts, etc.
Different from Fiscal impact analysis (impact on government).