Net Present Value Analysis
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Questions and Answers

What is the first step in closing a project or phase?

  • Review stakeholder feedback
  • Analyze project outcomes
  • Finalize all activities (correct)
  • Transfer completed or cancelled work
  • Which of the following is NOT an input for closing a project or phase?

  • Project timeline (correct)
  • Accepted deliverables
  • Agreements
  • Business documents
  • Which tool is commonly used for communication in project integration management?

  • Project management software
  • Communication software (correct)
  • Word processing software
  • Spreadsheets
  • What is one of the main techniques used during the project closure process?

    <p>Expert judgment</p> Signup and view all the answers

    Which software type is primarily used for tracking project progress?

    <p>Spreadsheets or databases</p> Signup and view all the answers

    What is the total discounted cost of the project at the end of Year 3?

    <p>$243,200</p> Signup and view all the answers

    What is the net present value (NPV) at the end of the project?

    <p>$272,800</p> Signup and view all the answers

    Which year shows the maximum return difference between benefits and costs?

    <p>Year 1</p> Signup and view all the answers

    What discount factor is applied to the benefits in Year 2?

    <p>0.86</p> Signup and view all the answers

    Which factor can influence the determination of the discount rate?

    <p>Prime rate</p> Signup and view all the answers

    In what way can project costs be represented for NPV calculations?

    <p>As negative numbers listed first</p> Signup and view all the answers

    What does the term 'payback' refer to in the context of this project?

    <p>The year when benefits exceed costs</p> Signup and view all the answers

    What is the discounted benefit for Year 3?

    <p>$158,000</p> Signup and view all the answers

    What was the total cost for planning the 2002 Olympic Winter Games and Paralympics?

    <p>$1.9 billion</p> Signup and view all the answers

    What software-based system did SLOC use for planning?

    <p>Primavera software</p> Signup and view all the answers

    What is a critical component of an effective change control system?

    <p>Change control board (CCB)</p> Signup and view all the answers

    Which tool was used by SLOC to keep executives informed about progress?

    <p>Executive Roadmap</p> Signup and view all the answers

    Which technology trend is specifically mentioned as a challenge for governments worldwide?

    <p>Rapid changes in technology</p> Signup and view all the answers

    What percentage of wireless broadband penetration was reported in the OECD area by the end of 2013?

    <p>72.4%</p> Signup and view all the answers

    What did the 90-day highlighter indicate in the SLOC planning process?

    <p>Accountability of managers</p> Signup and view all the answers

    What was one of the main objectives of performing Integrated Change Control?

    <p>Ensuring changes are beneficial</p> Signup and view all the answers

    What function does project management software serve in change management?

    <p>Facilitating communication and management of changes</p> Signup and view all the answers

    Which organization promotes policies for economic and social well-being globally?

    <p>Organisation for Economic Co-operation and Development (OECD)</p> Signup and view all the answers

    Which of the following best describes the approach SLOC had towards project functions?

    <p>Functions worked together as an integrated team.</p> Signup and view all the answers

    What can organizations use to help identify and manage changes effectively?

    <p>Written and oral performance reports</p> Signup and view all the answers

    What role did Fraser Bullock play in the SLOC?

    <p>Chief Operating Officer</p> Signup and view all the answers

    What initiative did the OECD promote regarding international mobile roaming?

    <p>Boosting competition in mobile markets</p> Signup and view all the answers

    Which of the following is NOT a main objective of Integrated Change Control?

    <p>Resetting project goals frequently</p> Signup and view all the answers

    What is important to focus on while leading the project team?

    <p>Meeting overall project goals and expectations</p> Signup and view all the answers

    What is a key aspect of iterative and agile approaches in project management?

    <p>They promote the engagement of team members.</p> Signup and view all the answers

    In an adaptive environment, what remains unchanged for the project manager?

    <p>Expectations regarding the project goals.</p> Signup and view all the answers

    What is expected of project managers using any product life cycle in an agile environment?

    <p>To provide opportunities for team members to develop additional skills.</p> Signup and view all the answers

    What is one way that control shifts in agile project management?

    <p>Detailed planning and delivery control is delegated to the team.</p> Signup and view all the answers

    What should project managers focus on in an agile environment?

    <p>Fostering a collaborative decision-making environment.</p> Signup and view all the answers

    Which of the following statements about team dynamics in agile environments is true?

    <p>Team skills development is encouraged and facilitated.</p> Signup and view all the answers

    Which of the following is NOT a characteristic of Agile/Adaptive environments?

    <p>Focus on traditional management structures.</p> Signup and view all the answers

    What role does the project manager play in an agile project in terms of decision making?

    <p>Creates an environment for collaborative decision making.</p> Signup and view all the answers

    Study Notes

    Net Present Value Analysis (NPV)

    • NPV is a method used to analyze the profitability of a project or investment.
    • To calculate NPV, estimated costs and benefits for the project are determined, along with a discount rate.
    • The discount rate is used to account for the time value of money; money received today is worth more than money received in the future.
    • Costs are discounted back to the present value using the discount rate, and benefits are also discounted.
    • The discounted benefits are then subtracted from the discounted costs to arrive at the NPV.
    • A positive NPV indicates that the project is expected to be profitable, while a negative NPV indicates that the project is expected to be unprofitable.

    Important considerations for NPV analysis

    • Costs can be viewed as occurring at year zero (Year 0) of the project and do not need to be discounted.
    • Organizations often determine the discount rate based on the prime rate and other economic factors.

    Project of the Year Award - 2002 Olympic Winter Games

    • The Salt Lake Organizing Committee (SLOC) was awarded the Project of the Year by PMI for delivering the 2002 Olympic Winter Games.
    • The project took five years to plan and cost over $1.9 billion.
    • The SLOC used a Primavera software-based system with a cascading color-coded Work Breakdown Structure (WBS) to integrate planning.
    • They also used an Executive Roadmap, a one-page list of the top 100 Games-wide activities.

    Performing Integrated Change Control

    • The main goal of performing integrated change control is to manage changes effectively while maintaining the project's objectives.
    • Change control helps to ensure that changes are beneficial to the project.

    Change Control System

    • Formal Change Control System - This system outlines a formal process for managing changes, typically including a change control board (CCB) and an IT steering committee.
    • Use Effective Configuration Management - Establish clear procedures for tracking and managing changes to project deliverables.
    • Define Procedures for Making Timely Decisions - Create a process for making timely decisions regarding smaller changes to avoid delays.
    • Project Management Software - Project management software tools can help manage and communicate changes effectively.
    • Focus on Project Goals - Continuously guide the project team and ensure the project stays aligned with its overall goals.

    Global Issues in IT Project Management

    • Rapid advances in technology are constantly changing the landscape of IT projects.
    • The increased use of mobile roaming for communications often results in government action due to compatibility issues between hardware, software, and networks.
    • The Organization for Economic Co-operation and Development (OECD) advocates for policies to improve economic and social well-being globally.
    • The OECD has called upon member governments to boost competition in international mobile roaming markets.

    Closing Projects or Phases

    • To close a project effectively, all activities need to be finalized.
    • Completed or canceled work must be transferred to relevant stakeholders.
    • The project charter, project management plan, project documents, and any other relevant documentation are used as inputs for this closure process.
    • The project team utilizes expert judgment, data analysis, and meetings to finalize the project closure.

    Using Software to Assist in Project Integration Management

    • Various software can be used to aid in project integration management.
    • Software includes word processing to create documents, presentation software for creating presentations, spreadsheets and databases for tracking information, and communication software.
    • Project management software integrates all aspects of the project and provides a central hub for information, including detailed and summarized data.

    Considerations for Agile/Adaptive Environments

    • Agile and iterative approaches encourage team member engagement.
    • In adaptive environments, the project manager's role does not fundamentally change, but control over detailed product planning and delivery is delegated to the team.
    • The project manager must cultivate a collaborative decision-making environment and provide opportunities for team members to expand their skills.

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    Description

    This quiz explores the concept of Net Present Value (NPV) and its role in project profitability analysis. Learn about the calculation methods, the importance of the discount rate, and the implications of positive and negative NPV. Assess your understanding of how NPV can influence investment decisions.

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