Podcast
Questions and Answers
What is the main purpose of project governance in project portfolio management?
What is the main purpose of project governance in project portfolio management?
- Enhancing individual project contributions
- Reducing the overall cost of projects
- Maximizing the number of projects in the portfolio
- Establishing an integrative approach for project selection (correct)
Which of the following is NOT a financial criterion for project selection?
Which of the following is NOT a financial criterion for project selection?
- Net Present Value (NPV)
- Internal Rate of Return (IRR)
- Market Share Growth (correct)
- Payback Period
Which multi-criteria selection model is characterized by a checklist method?
Which multi-criteria selection model is characterized by a checklist method?
- Checklist model (correct)
- Cost-benefit analysis
- Weighted scoring model
- Decision tree analysis
What is a key benefit of promoting transparency in project selection?
What is a key benefit of promoting transparency in project selection?
What does the term 'portfolio risk' refer to in project management?
What does the term 'portfolio risk' refer to in project management?
What is the primary purpose of a Project Portfolio Management System?
What is the primary purpose of a Project Portfolio Management System?
Which financial metric evaluates the profitability of a project based on expected future cash flows?
Which financial metric evaluates the profitability of a project based on expected future cash flows?
Which of the following represents a non-financial criterion for project selection?
Which of the following represents a non-financial criterion for project selection?
What distinguishes an integrated management approach in project management?
What distinguishes an integrated management approach in project management?
What is the necessity of project selection in project management?
What is the necessity of project selection in project management?
What is a primary responsibility of a project manager?
What is a primary responsibility of a project manager?
Which phase of the project life cycle involves actual implementation of the project plan?
Which phase of the project life cycle involves actual implementation of the project plan?
How does a project differ from a program?
How does a project differ from a program?
What is NOT a characteristic of a project?
What is NOT a characteristic of a project?
In agile project management, what is emphasized more compared to traditional project management?
In agile project management, what is emphasized more compared to traditional project management?
What typically distinguishes a project from a product life cycle?
What typically distinguishes a project from a product life cycle?
Which of the following is a key current driver of project management?
Which of the following is a key current driver of project management?
What is a major difference between the roles of a project manager and a functional manager?
What is a major difference between the roles of a project manager and a functional manager?
What is a key component of the design of a project portfolio system?
What is a key component of the design of a project portfolio system?
Which of the following is NOT a step in the program prioritization methodology?
Which of the following is NOT a step in the program prioritization methodology?
In the context of project portfolio management, what is an example of a prioritization metric?
In the context of project portfolio management, what is an example of a prioritization metric?
What should project evaluation consider regarding potential delays?
What should project evaluation consider regarding potential delays?
What aspect does operational priority focus on when evaluating projects?
What aspect does operational priority focus on when evaluating projects?
Which of the following statements about funding resource priority is accurate?
Which of the following statements about funding resource priority is accurate?
In project portfolio management, evaluation of proposals should include which factor?
In project portfolio management, evaluation of proposals should include which factor?
What is a focus area for prioritization within the project portfolio?
What is a focus area for prioritization within the project portfolio?
What primarily influences the prioritization of ongoing programs over new programs in a portfolio management system?
What primarily influences the prioritization of ongoing programs over new programs in a portfolio management system?
Which model assesses projects based on both financial and non-financial criteria?
Which model assesses projects based on both financial and non-financial criteria?
In a financial consideration of Project X and Project Y, what is the significance of considering inflation?
In a financial consideration of Project X and Project Y, what is the significance of considering inflation?
What is the expected minimum return on investment for the projects being evaluated?
What is the expected minimum return on investment for the projects being evaluated?
Which of the following financial models is primarily concerned with the amount of time required to recoup an investment?
Which of the following financial models is primarily concerned with the amount of time required to recoup an investment?
Which project would potentially be prioritized if both are ongoing but Project Y shows a better immediate cash flow?
Which project would potentially be prioritized if both are ongoing but Project Y shows a better immediate cash flow?
What is the main disadvantage of using the Payback model?
What is the main disadvantage of using the Payback model?
How are projects typically compared in a portfolio management system?
How are projects typically compared in a portfolio management system?
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Study Notes
Project Management: Basic Concepts
- Project management is crucial for effectively meeting organizational goals and ensuring efficient resource allocation.
- Major characteristics defining a project include specific objectives, defined lifespan, cross-functional team involvement, unique deliverables, and constraints on time, cost, and performance.
- Distinction between a project, program, and portfolio based on scope, complexity, and management approach.
- Project life cycle phases: Feasibility/Define, Design/Plan, Execution, and Termination/Closure.
- Role of a Project Manager includes resource marshaling, acting independently, maintaining customer relationships, and achieving project success, contrasting with Functional Managers who focus on ongoing operations.
Organization Strategy and Project Selection
- Strategic alignment is essential, establishing linkages between organizational goals and project initiatives.
- Integrated management of projects ensures coherence between strategy and execution.
- Project Portfolio Management Systems (PPMS) facilitate the classification of projects and financial/non-financial criteria for selection.
- Financial metrics for project selection: Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period.
- Non-financial criteria could include risk assessment and strategic relevance to the organization.
Portfolio Management System
- Design considerations include classification of projects, establishing selection criteria, and evaluating proposals for alignment with strategic objectives.
- Effective prioritization uses a two-step approach: investment classification by objective, and objective-specific prioritization using quantitative metrics such as profitability index (PI) and urgency evaluation.
- Ongoing programs receive priority over new initiatives to ensure continuity in strategic targets.
Financial Models in Project Evaluation
- Payback Model assesses the time required to recover project investments, weighing pros and cons.
- The NPV model factors discounted future cash flows to evaluate project financial health.
- IRR helps in understanding the return expected on investments, factoring in cash flow timing and size.
Activity: Project Evaluation Case
- Alpha Co. is assessing two projects, X and Y, based on initial investments and expected future cash flows over five years.
- Calculation of financial metrics (Payback Period, NPV, Profitability Index) involves analyzing cash flows against a minimum expected return of 14% and considering inflation rates.
- Decision-making on project funding will rely on which project demonstrates superior financial viability based on the calculated metrics.
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