FPM Week 2 - Project Initiation

Questions and Answers

What is the probability used for the attendance at the PMExpo event in the example?

60%

10%

90%

40% (correct)

What is the expected monetary value for the Virtual Conference with pre-recorded content?

$59,400

$68,000

$12,880 (correct)

$7,200

Which calculation directly contributes to the expected monetary value of $68,000?

$5,000 * 10% * 40%

$20,000 * 10% * 60%

$110,000 * 90% * 60% (correct)

$20,000 * 90% * 40%

What percentage represents the probability of the attendees being able to travel to an in-person event?

90% Signup and view all the answers

What is the total budget allocated for the project?

$200,000 Signup and view all the answers

In the decision tree example, which calculation leads to a result of $1,800?

$5,000 * 90% * 40% Signup and view all the answers

Which milestone is scheduled for October?

PMExpo Stream Signup and view all the answers

Which figure represents the calculated expected monetary value for the total of all events combined?

$68,000 Signup and view all the answers

What is the financial result from the calculation $1,000 * 10% * 40%?

$40 Signup and view all the answers

What method will be used for the development approach of the project?

Critical path method Signup and view all the answers

If the virtual conference has a $5,000 budget and a 90% chance of success, what would be the expected value of that portion if the attendance rate is 60%?

$1,800 Signup and view all the answers

What criteria must be met for the project to be considered successful?

Completed on time, within budget, and high quality Signup and view all the answers

What is one of the risks associated with the project?

There is not enough bandwidth Signup and view all the answers

What does the first column in the product roadmap indicate?

The individuals responsible for each task Signup and view all the answers

Which aspect of the project does the modified project charter NOT focus on?

The anticipated budget for the project Signup and view all the answers

What is the cumulative cash flow at the end of Year 3?

$55,000 Signup and view all the answers

In the context of the project brief, what does 'done' refer to?

Acceptance or release criteria for the product Signup and view all the answers

What role do contingencies play in the completion of tasks within the product roadmap?

They indicate that some tasks may depend on the completion of others Signup and view all the answers

Which statement best describes the significance of Net Present Value (NPV)?

It compares the value of money today with its future worth. Signup and view all the answers

Which of the following best describes the nature of iterative and adaptive projects as mentioned in the project brief?

Projects that continually evolve based on feedback Signup and view all the answers

When is the payback period achieved in the provided cash flow data?

Year 2 Signup and view all the answers

What is the initial cash outflow for the project referenced in the content?

$110,000 Signup and view all the answers

How does increasing the discount rate affect the NPV of a project?

It typically decreases the NPV. Signup and view all the answers

In the virtual conference example, what are the total benefits received over the four years?

$70,000 Signup and view all the answers

What implication does a positive NPV have on project selection?

The project may generate value and should be considered. Signup and view all the answers

Which year in the cash flow data has only expenses with no corresponding benefits?

Year 1 Signup and view all the answers

What is the primary purpose of a project charter?

To formally authorize the existence of a project Signup and view all the answers

Who is primarily responsible for developing the project charter?

The project manager Signup and view all the answers

Which of the following is NOT typically included in a project charter?

Detailed task allocation Signup and view all the answers

What role do key internal project stakeholders play regarding the project charter?

They must sign the charter to acknowledge agreement Signup and view all the answers

Which of the following items is likely to be found in a project charter?

Success criteria Signup and view all the answers

What signifies that a project has been approved and is ready to be initiated?

Signing of the project charter Signup and view all the answers

Which section is essential for identifying who is accountable in the project?

Stakeholder roles and responsibilities Signup and view all the answers

What is one of the major outputs of the project charter process?

Agreements Signup and view all the answers

Which key input to the project charter is often linked to organizational strategy?

Business need Signup and view all the answers

What document typically initiates a predictive project?

Project charter Signup and view all the answers

Study Notes

Expected Monetary Value (EMV)

EMV is calculated by multiplying the potential monetary outcomes by their associated probabilities.
An example calculation: 20,000witha9020,000 with a 90% probability and a 40% success rate results in an EMV of 20,000witha907,200.
Total EMV from multiple scenarios provides insight into overall financial expectations.

Decision Tree Analysis

Decision trees visualize uncertain events and their impacts on outcomes.
Event probabilities directly influence financial projections and decision-making.
Example: Travel restrictions during the COVID pandemic influenced the attendance probability and potential revenue.

Project Selection: Virtual Conference

Analysis between Live Streaming and Pre-recorded options shows financial implications of each choice.
Cash flow analysis indicates an initial expenditure of $110,000 with benefits expected in subsequent years.
Payback period calculated to occur in 2 years, though cumulative cash flow shows breakeven in year 3.

Net Present Value (NPV) Analysis

NPV reflects the time value of money, emphasizing that current earnings have more value than future earnings.
Positive NPV indicates favorable investment opportunities; comparing future cash inflows and outflows is crucial.
Example for NPV calculation: Costs of $60,000 with expected benefits over four years results in valuation based on a 10% discount rate.

Project Charter Purpose

A project charter formally authorizes a project and outlines management objectives.
Essential for gaining stakeholder approval and aligning project goals.
Inputs into the project charter include agreements, milestones, risks, and overall budget.

Project Charter Key Contents

Must encompass project title, manager's details, business needs, description, budget, milestones, and success criteria.
Should identify stakeholder responsibilities and include a sign-off section for approvals.

Specific Project Example: Virtual Conference

Project manager: Janet Symthe; project start: June 1; budget total: $200,000.
Milestones include demo completion and broadcast of PM Expo.
Emphasizes the importance of high-quality output on time and budget compliance.

Project Roadmap and Tasks

Product roadmap outlines responsibilities and expected completion timelines for project phases.
Milestones can be set for various durations (monthly, quarterly) based on project type.

Project Brief for Adaptive Projects

Modified project charters are used for iterative projects, focusing on product vision and stakeholder benefits.
Clarity on "done" criteria and collaboration methods is essential for project success.

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Description

Test your skills in financial calculations with this quiz. It covers various scenarios involving percentages and monetary values. Challenge yourself and see how well you understand the concepts of finance.