Project & Program Mgmt Flashcards
Cost-benefit analysis
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, this is used for public projects such as highways and other public facilities.
Challenges is everything must be in monetary value including social and environmental factors
Jules Dupuit
1848, created Cost/Bene Analysis.
In the United States, cost-benefit analysis became common as a result of the Federal Navigation Act of 1936. This act required that the U.S. Army Corps of Engineers undertake waterway system projects when the total benefits exceed the costs of the project.
Cost-effectiveness analysis
a 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.
Cost Effectiveness Ratio
CE Ratio = (cost of new strategy - cost of current practice)/(effect of new strategy - effect of current practice).
Net Present Value
Shows the net monetary value of a project, discounted to today’s present value. For example, if the net present value of a proposed hockey arena is greater than zero then one can conclude that the monetary benefit of the hockey arena outweighs its monetary costs. To calculate net present value you need to know the years of the project’s lifespan, the quantified monetary benefits, the monetary costs and the interest rate for discounting purposes.
internal rate of return.
Alt to NPV.
In this case, the project’s net present value is at zero and the interest rate is blank. If the calculation results in an interest rate that is greater than the available market interest rate then the project would be financially beneficial.
Goals Achievement Matrix (GAM)
Comprehensive way to evaluate a project.
It consists of a project evaluation matrix that includes competing projects in rows and the 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.
Gantt Chart
Developed in 1917 by Charles Gantt
This chart focuses on the sequence of tasks necessary for project completion. Each task is represented as a single horizontal bar on an X-Y chart. The X-axis is the time scale over which the project will endure.
Linear programming
project management method that 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.
Program Evaluation and Review Technique (PERT)
is a scheduling method that graphically illustrates the interrelationships of project tasks.
Developed by the Navy in 1950s
PERT steps
- Identify the specific activities and milestones;
- Determine the proper sequence of the activities;
- Construct a network diagram;
- Determine the critical path;
- Update the PERT chart as the project progresses.
Critical Path Method (CPM)
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.
Which project management techniques work on a large scale?
PERT and CPM work when a project is of a large-scale. Typically, project management software is used to perform this kind of analysis. Over time these two methods evolved and are now considered one method, PERT/CPM.
