What is the definition of a project? Choose two.
A. A group of interrelated activities that create a unique benefit to the organization
B.Through the use of project management techniques, which are repeatable processes, a series of actions that are performed to produce the same result multiple times
C. A temporary endeavor undertaken to create a unique product, service, or result
D. A process used to generate profit, improve market share, or adhere to legal requirements
E. A time-constrained endeavor with assigned resources responsible for meeting the goals of the project according to the quality standards
C, E. A project creates a unique product, service, or result and has defined start and finish dates. Projects must have resources in order to bring about their results, and they must meet the quality standards outlined in the project plan. Interrelated activities are not projects because they don’t meet the criteria for a project. Project management processes are a means to manage projects, and processes used to generate profits or increase market share do not fit the definition of a project. Processes are typically ongoing; projects start and stop.
2. What organization is recognized worldwide for setting project management standards?
B. The Project Management Institute (PMI) is the leading professional project management association, with more than 400,000 members worldwide.
3. What is the term for a group of related projects managed in a coordinated fashion?
A. Life cycle
C. Process group
D. A program is a group of related projects that can benefit from coordinated management. Life cycles are the various stages a project goes through, and process groups consist of Initiating, Planning, Executing, Monitoring and Controlling, and Closing.
4. Which of the following are the requirements to complete a pre-project setup? Choose three.
A. Conduct a feasibility analysis.
B. Identify the project.
C. Validate the project.
D. Validate the business case.
E. Prepare a project charter and obtain approval of the charter.
F. Identify and analyze stakeholders.
B, C, E. The steps in pre-project setup include the following: identifying the project, validating the project, preparing a project charter, and obtaining approval of the charter.
5. Which of the following general management skills does a project manager employ up to 90 percent of their time?
D. Problem solving
B. Project managers can spend up to 90 percent of their time communicating. The other skills listed here are important as well, but the clue in this question is the 90 percent figure that relates to the amount of time project managers may spend communicating.
You receive a request from customer service to develop and implement a desktop management system for the customer-support staff. What type of project request is this?
A. Business need
B. Market demand
C. Legal requirement
D. Technological advance
A request to develop a product for use by an internal department is a business need. Market demands are driven by the needs of the market, legal requirements come about because of rules or regulations that must be complied with, and technological advances are because of improvements in expertise or equipment.
You are working in a matrix organization. Choose two responses that describe this type of structure.
A. Project resources are members of another business unit and may or may not be able to help you full-time.
B. Matrix organizations can be structured as strong, weak, or balanced.
C.Project managers have the majority of power in this type of structure.
D.This organizational structure is similar to a functional organization.
E. Employees are assigned project tasks by their project manager in this type of structure.
B, E. A matrix organization can be structured as a strong, weak, or balanced matrix. Employees are assigned to projects by their functional managers, and the project tasks are assigned to them by the project manager. The project manager has the majority of power in a project-based organization.
A project manager has the most authority under which organizational structure?
C. Balanced matrix
D. Strong matrix
A. A project-based organization is designed around project work, and project managers have the most authority in this type of structure. Project managers have the least amount of authority in a functional organization, they have some authority in a balanced matrix, and, a little more authority in a strong matrix, but not as much authority as they have in a project-based organization.
Your project has expected cash inflows of $7.8 million in today’s dollars. Which cash flow technique was used to determine this?
A. Discounted cash flow
D. Cost-benefit analysis
A. The discounted cash flow technique compares the total value of each year’s expected cash inflow to today’s dollar. IRR calculates the internal rate of return, NPV determines the net present value, and cost-benefit analysis determines the cost of the project versus the benefits received.
Which of the following are the steps required to validate a project? Choose two.
A. Analyze the feasibility.
B. Justify the project.
C. Align it to the strategic plan.
D. Validate the business case.
E. Identify and analyze stakeholders.
D, E. The steps required to validate a project are validating the business case (which encompasses a feasibility analysis, justification for the project, and alignment to the strategic plan) and identifying and analyzing stakeholders.
This general management skill concerns obtaining mutually acceptable agreements with individuals or groups.
B. eProblem solving
C. Negotiating involves obtaining mutually acceptable agreements with individuals or groups. Leadership involves imparting a vision and motivating others to achieve the goal. Problem solving involves working together to reach a solution. Communicating involves exchanging information.
Frederico, the director of the marketing department, has approached you with an idea for a project. What are the steps you’ll take for the pre-project setup of this project? Choose three.
A. Write a business-case analysis.
B. Identify the project.
C. Determine the strategic opportunity/business need that brought about the project.
D. Determine the project selection methods you’ll use to justify the project.
E. Validate the project.
F. Write a project charter and obtain approval for the charter.
B, E, F. The steps in pre-project approval are identifying the project, validating the project, and writing the project charter and obtaining approval of the project charter. A business case is part of the project validation process, the strategic opportunity or business need is typically documented in the business case, and project selection methods are used after pre-project setup, not as part of the pre-project setup.
Your project has expected cash inflows of $1.2 million in year 1, $2.4 million in year 2, and $4.6 million in year 3. The project pays for itself in 23 months. Which cash flow technique was used to determine this?
C. Discounted cash flow
D. Payback period
D. Payback period is a technique that calculates the expected cash inflows over time to determine how many periods it will take to recover the original investment. IRR calculates the internal rate of return, NPV determines the net present value, and discounted cash flows determine the amount of the cash flows in today’s dollars.
You’ve 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 that the project poses a significant amount of risk to the organization. What do you recommend next?
A. Proceed to the project selection committee.
B. Reject the project based on the analysis.
C. Proceed to writing the project plan.
D. Perform a feasibility study.
D. The next best step to take in this situation is to perform a feasibility study. Feasibility studies are typically undertaken for projects that are risky, projects that are new to the organization, or projects that are highly complex. Projects of significant risk to the organization shouldn’t be taken to the selection committee without having a feasibility study first and writing the project plan doesn’t make sense at this point because you don’t know if the project will be chosen or not. You also can’t reject the project because there isn’t enough information to determine if it should be rejected until the feasibility study is completed.
You’re a project manager working on a software development project. You are working hand in hand with a systems analyst who is considered an expert in her field. She has years of experience working for the organization and understands not only systems development but also the business area the system will support. Which person should make the decisions about the management of the project?
A. Project manager
B. Systems analyst
C. Project manager with input from systems analyst
D. Systems analyst with input from project manager
C. The project manager is ultimately responsible for managing the work of the project. That doesn’t mean that they should work without the benefit of input from others.
What is one disadvantage of a project-based organization?
A. The organization doesn’t work on anything that isn’t project-related.
B. Costs are high because specialized skills are required to complete projects in this type of structure.
C. The functional managers have control over which team members are assigned to projects.
D. Once the project is completed, the project team members may not have other projects to work on.
D. The key problem with a project-based organization is that there may not be a new project in place at the conclusion of the one team members were released from. This leaves specialists “sitting on the bench” with no work to do and is costly to the organization. It’s an advantage to a project-based organization to work on projects. Costs aren’t necessarily any higher in this type of organization than others. Costs will depend on the type of project you’re working on, not the organizational structure. And the project managers have control over who works on the projects in a project-based organization.
Which of the following are reasons for bringing about a project? Choose three.
A. Feasibility study
B. Market demand
C. Business case justification
D. Strategic opportunity
E. Stakeholder needs
F. Social needs
B, D, F. The needs or demands that bring about a project include the following: market demand, strategic opportunity/business need, customer request, technological advances, legal requirements, ecological impacts, and social needs. A feasibility study is conducted to determine the viability of a project, and the business case documents the reasons for the project and the justification for the project. Stakeholder needs may bring about a project, but their needs will fall more specifically into one of the seven needs or demands that bring about a project.
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?
A. The discounted cash flows are lower than the initial investment, so this project should be rejected.
B. The discounted cash flows are lower than the initial investment, so this project should be accepted.
C. NPV is less than zero, so this project should be rejected.
D. NPV is greater than zero, so this project should be accepted.
C. NPV is calculated by subtracting the total of the expected cash inflows stated in today’s dollars from the initial investment. In this question, the initial investment is higher than the cash flows, so the resulting NPV is less than zero, and the project should be rejected. Discounted cash flows tell you the value of the cash flows in today’s dollars.
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?
A. Business case analysis
B. Expert judgment
C. Feasibility analysis
D. Decision model technique
B. This question describes the expert judgment form of project selection. The question states the executives already read the business case analysis. The feasibility study is a study conducted to determine the risks and potential benefits to the project, and decision models are mathematical models that use differing variables to determine a decision.
Which two elements should always be included in a business case analysis? Choose two.
A. Feasibility study
B. Project selection methodology
C. Alignment to the strategic plan
E. Cash flow techniques to determine financial viability.
C, D. The business case analysis may include the feasibility study but should always include the justification for the project and the alignment to the strategic plan. It’s a good idea to also include high-level timelines and estimated budgets.
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