Project Selection Methods Flashcards
What are the 2 Approaches to determine what method to use in Project Selection?
1) Mathematical Approach Constrained Optimization Method, 2) Comparative Approach (Benefit Measurement Method)
What are the criteria in using Comparative Approach?
1) Scoring Models, 2) Peer Review, 3) Murder Boards - panel that tries to poke holes in your argument, 4) Economic Models
What are types of Economic Models?
1) Benefit-cost Analysis (choose highest ratio), 2) Payback Period - how long it takes to payback the project costs (select lowest payback period), 3) Discounted Cash Flow - calculate value of dollar today over a period of time, 4) Net Present Value (NPV) - present value of a series of future cash flows, 5) Internal Rate of Return (IRR) - discount interest rate when NPV equals zero (chose project with the highest IR; negative means losing money)
What is the formula to calculate Present Value?
PV = FV / (1 + i) nth(power)
What is Sunk Costs?
Project costs spent to date.
What is Law of Diminishing Return?
Adding resource doesn’t proportionally increase productivity.
What is Working Capital?
Current assets - current liabilities
What is Depreciation?
Transfer of a portion of the asset’s cost from the balance sheet to the income statement during each year of the asset’s life.
What is Assumptions?
Believe to be true.
What is Constraints?
Limits the project teams options; any restrictions placed on the project.
What is Opportunity Costs?
Opportunity given up by choosing another project. (select lowest value)
What is Progressive Elaboration?
An iterative approach to planning; plans are created in multiple passes rather than all at once.
What is the difference from Project Team and Project Management Team?
Project Team consists of project manager, management team and team members whereas Management Team is a subset of the Project Team and responsible for the project management.
What are the responsibilities for the Project Team?
1) Carry out work, 2) Determine what processes are needed, 2) Prepare Estimates, 3) Initially resolve interpersonal conflicts.
What are the responsibilities for the Project Management Team?
1) Works directly with sponsor, 2) Initial plans the project, may help write project charter, 3) Analyze and understand the scope, 4) Approve or reject changes, 5) Asses teams effectiveness
