Flashcards and Answers – Chapter 1 Project Management
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Definition of a project
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creates a unique product, service, or result and has a defined start and finish date. They must have resources in order to bring about their results and they must meet the quality standards outlined in the project plan.
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Organization recognized worldwide for setting project management standards
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Project management Institute
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Term for a group of related projects managed in a coordinated fashion
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Program
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Requirements to complete a pre-project setup
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identify project, validate project, prepare project charter and obtain approval for charter
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General management skill that project manager employ up toe 90 percent of their time
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communicating
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You receive a request from customer service to develop and implement a desktop management system from the customer-support staff. What type of project request is this?
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business need
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request to develop a product for use by an internal department
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business need
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Describe matrix organization structure
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can be structured as strong, weak or balanced. Employees assigned to projects by their functional managers and the project tasks are assigned to them by the project manager.
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Project manager has the most authority under which organizational structure?
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project based organization
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Project managers have the least amount of authority in in what type of organization
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functional organization
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Your project has expected cash inflows of 7.8 million in today's dollars. What cash flow technique was used to determine this?
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Discounted cash flow
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discounted cash flow
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compares total value of each year's expected cash inflow to today's dollar
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IRR
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calculates the internal rate of return
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NPV
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determines the net present value
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cost-benefit analysis
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determines cost of project versus the benefits received
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Steps required to validate a project
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validating business case and identifying and analyzing stakeholders
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validating business case
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encompasses a feasibility analysis, justification for the project, and alignment to the strategic plan
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this general management skill concerns obtaining mutually acceptable agreements with individuals or groups
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negotiating
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involves imparting a vision and motivating others to achieve the goal
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leadership
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involves working together to reach a solution
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problem solving
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involves exchanging information
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communicating
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Fredrico, the director of marketing department, has approached you with an idea for a project. What are the steps you will take for the pre-project setup of this project?
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identify the project, validate the project, write a project charter and obtain approval for the charter
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used after pre-project setup, not as part of pre-project setup
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project selection methods
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Your project has expected cash inflows of 1.2 million in year 1, 2.4 million in year 2, 4.6 million in year three. Project pays for itself in 23 months. Which cash flow technique was used to determine this?
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payback period
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technique that calculates the expected cash inflows over time to determine how many periods it will take to recover the original investment
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payback period
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determines amount of cash flows in today's dollars
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Discounted cash flow
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You have been given an idea for a project by an executive in your organization. After writing the business-case analysis, you submit it to the executive for review. After reading the business case, he determines the project poses a significant amount of risk to the organization. what do you recommend next?
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perform a feasibility study
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typically undertaken for projects that are risky, new to the organization or those that are highly complex
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feasibility study
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projects with significant risk should not be taken to the selection committee without having a
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feasibility study
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You are a project manager working on a software development project. You are working hand in hand with the a system analyst who is considered an expert in her field. She has years of experience working for the organization and understands not only the systems development but also the business area the system will support. Which person should make the decisions about the management of the project?
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Project manager with input from systems analyst
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Ultimately responsible for the managing the work of the project but that doesn't mean they should work without the benefit of input from others
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project manager
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What is one disadvantage of a project-based organization
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once the project is completed, the project team members may not have other projects to work on
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Needs or demands that bring about a project
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market demand, strategic opportunity/business need, customer request, technological advances, legal requirements, ecological impacts and social needs
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feasibility study
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conducted to determine the viability of a project
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business case
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documents the reason for the project and the justification for the project
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NPV
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calculated by subtracting the total of the expected cash inflows stated in today's dollars from the initial investment
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Your project has expected cash inflows of 7.8 million in today's dollars. The project's initial investment is 9.2 million. Which of the following is true?
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NPV is less then zero so the project should be rejected
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The executives in your organization typically choose which projects to perform first by reviewing the business case and then determining, based on their experience with similar projects, which will likely perform well and which will not. What form of project selection method is this?
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Expert judgment
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What should always be included in a business case analysis?
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justification for the project and the alignment to the strategic plan.
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Not all business cases will or should include a
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feasibility study
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project
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brings about a unique product, service, or result and has a definite beginning and ending dates
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temporary endeavor to create a unique product or service
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project
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Operations
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ongoing, repetitive, with no beginning or end date,
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Providing janitorial services on a contract is considered
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operations
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providing contract java programmers for 18 months to work on an IT project is considered a
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project
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project manager
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core function is project integration, leads the project team and oversees all the work required to complete the project goals to the satisfaction of the stakeholders
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Most common project selection methods are:
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benefit measurement methods such as cost-benefit analysis, scoring models, payback period, economic models (which include discounted cash flows, NPV, and IRR), as well as expert judgment.
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Skills needed to manage a project beyond technical knowledge of the product
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leadership, communication, problem solving, negotiation, organization and time management
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A Guide to the Project Management Body of Knowledge
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project management standard developed by the Project Management Institute
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Benefit Measurement Method
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Type of decision making model that compares the benefits obtained from a variety of new project requests by evaluating them using the same criteria and comparing results
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collocated
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when team members work together at the same physical location
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constrained optimization models
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decision models that use complex principles of statistics and other mathematical concepts to assess a proposed project
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cost-benefit analysis
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commonly used benefit measurement method that calculates the cost of producing the product, service, or result of the project and compares this to the financial gain the project is expected to generate
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decision model
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formal method of project selection that helps managers make the best use of limited budgets and human resources. Includes benefit measurement methods and constrained optimization models
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discounted cash flow
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compares the value of the future cash flows of the project to today's dollars
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economic model
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type of benefit measurement method. It is a series of financial calculations that provide data on the overall financials of the project and is generally used as a project selection technique.
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expert judgment
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Technique used in project selection, determining estimates, and determining other related project information that relies on the knowledge of those with expertise on the requested subject matter. Can come from stakeholders, other departments, consultants, team members, vendors or industry groups.
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feasibility study
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undertaken to determine whether the project is a viable project, the probability of project success, and the viability of the product of the project.
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functional organization
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form of organization structure, traditional organizations with hierarchical reporting structures
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internal rate of return
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discount rate when the present value of the cash inflows equals the original investment. Projects with higher values are generally considered better than projects with lower values.
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matrix organization
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organizational structure where employees report to one functional manager and at least one project manager. Functional managers assign employees to projects and carry out administrative duties, project managers assign tasks associated with project to team members and execute the project
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net present value
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evaluation of cash inflows using the discounted cash flow technique, which is applied to each period the inflows are expected. The total present value of the cash inflows is deducted fro the initial investment; assumes the cash inflows are reinvested at the cost of capital. Similar to discounted cash flows.
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operations
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typically involve ongoing functions that support the production of goods or services. They do not have a beginning or an end.
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payback period
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length of time it takes company to recover initial cost of producing the product or service of the project
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program
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grouping of related projects that are managed together to capitalize on benefits that couldn't be achieved if the projects were managed separately.
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project
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temporary in nature with definite start and end date; creates a unique product, service or result. It is completed when the goals and objectives have been met and signed off on by stakeholders
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project-based organizations
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organizational structure focused on projects. Project managers generally have ultimate authority over the project, and sometimes supporting departments such as human resources and accounting might report to project manager. Project managers are responsible for making project decisions and acquiring and assigning resources.
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Project Management
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applying skills, knowledge, and project management tools and techniques to fulfill the project requirements
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Project Management Institute
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The world's leading professional project management association
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Project Management Knowledge Areas
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Nine project management groupings or knowledge areas that bring together common or related processes. Integration, Scope, time, cost, quality, human resources, communication, risk, and procurement
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project managers
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person responsible for applying the skills, knowledge and project management tools and techniques to the project activities to successfully complete the project objective.
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project selection methods
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used to determine which projects are approved to move forward
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scoring model
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one of the benefit measurement methods used for project selection. It constrains the predefined list of criteria against which each project is ranked. Each criterion has a scoring range and a weighting factor. Can also be used as a tool to select from among competing vendors.
