Project Management Chapter 2 Quiz

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Questions and Answers

What is the primary purpose of demonstrating project contributions to senior management?

  • To minimize the communication with stakeholders
  • To establish authority over project teams
  • To ensure ongoing support for the project (correct)
  • To solicit funding for unrelated projects

Which of the following best describes the first activity of the strategic management process?

  • Implement strategies through projects
  • Review and define the organizational mission (correct)
  • Set objectives to achieve strategies
  • Analyze and formulate strategies

Why is it important to explain project objectives to stakeholders?

  • To secure buy-in on contentious trade-off decisions (correct)
  • To avoid conflicts in project timelines
  • To facilitate project cancellations when necessary
  • To provide incentive bonuses for stakeholders

What does the strategic management process primarily aim to accomplish?

<p>Develop a long-term plan of action (D)</p> Signup and view all the answers

What is a key aspect of strategy formulation in the strategic management process?

<p>Determining and evaluating alternatives (B)</p> Signup and view all the answers

The objectives within the strategic management process translate strategies into what?

<p>Specific, measurable terms (C)</p> Signup and view all the answers

What do the internal responses to new action programs aim to enhance within a firm?

<p>Competitive position of the firm (D)</p> Signup and view all the answers

Which aspect is crucial for implementing strategies through projects?

<p>Answering how strategies will be realized with available resources (B)</p> Signup and view all the answers

What does the Payback Model primarily measure?

<p>The time taken to recover the initial investment (B)</p> Signup and view all the answers

Which of the following is NOT a characteristic of the Net Present Value (NPV) method?

<p>It ignores the time value of money (D)</p> Signup and view all the answers

Which of the following is an example of a nonfinancial criterion in project selection?

<p>Capturing larger market share (B)</p> Signup and view all the answers

What do multi-weighted scoring models help with in the selection criteria process?

<p>Evaluating projects based on both financial and nonfinancial criteria (D)</p> Signup and view all the answers

Which financial criterion is the simplest and most widely used model?

<p>Payback Model (D)</p> Signup and view all the answers

What is one major limitation of the Payback Model?

<p>It only focuses on cash inflows during the investment period (D)</p> Signup and view all the answers

In the context of financial criteria, what does a negative Net Present Value indicate?

<p>The project's return is less than the minimum desired rate of return (A)</p> Signup and view all the answers

Which option best represents a financial criterion for project selection?

<p>Achieving a certain payback period (B)</p> Signup and view all the answers

Why is it important for project managers to understand their organization’s strategy?

<p>To make appropriate decisions and adjustments. (C)</p> Signup and view all the answers

What is one significant role that projects contribute to the strategic direction of an organization?

<p>They translate strategic objectives into actionable tasks. (B)</p> Signup and view all the answers

What is the purpose of a project priority system?

<p>To determine which projects are most aligned with strategic goals. (B)</p> Signup and view all the answers

Which of the following distinguishes among different kinds of projects?

<p>Project classification relevant to strategic goals. (D)</p> Signup and view all the answers

How does the phase gate model apply to project management?

<p>It introduces checkpoints to assess project viability at different stages. (D)</p> Signup and view all the answers

What criteria should be applied to assess the value of projects?

<p>Both financial and nonfinancial criteria. (B)</p> Signup and view all the answers

How can multi-criteria models be beneficial in project selection?

<p>They allow for a comprehensive evaluation using multiple factors. (A)</p> Signup and view all the answers

Why is it necessary to manage the project portfolio?

<p>To align projects with the overall organizational strategy. (A)</p> Signup and view all the answers

What is a primary disadvantage of Checklist Models in project selection?

<p>They do not allow for comparison with other projects. (A)</p> Signup and view all the answers

Which of the following is a feature of Multi-Weighted Scoring Models?

<p>They help to reduce wasteful projects. (B)</p> Signup and view all the answers

What is one of the main purposes of applying a selection model in project management?

<p>To determine if a project aligns with strategic objectives. (B)</p> Signup and view all the answers

How do Multi-Weighted Scoring Models assist project managers?

<p>They provide a basis for understanding project selection. (D)</p> Signup and view all the answers

What is a method for soliciting project proposals from external sources?

<p>Request for Proposal (RFP) (B)</p> Signup and view all the answers

In the context of project ranking and selection, which of the following is NOT a consideration?

<p>Historical success of the project manager (D)</p> Signup and view all the answers

Why are weighted scoring criteria considered advantageous for project selection?

<p>They clarify project goals and selection rationale. (C)</p> Signup and view all the answers

What is one of the roles of senior management in project selection?

<p>To prioritize projects based on selection criteria. (C)</p> Signup and view all the answers

What are the responsibilities of the governance team in project management?

<p>Publish project priorities and ensure selection process integrity. (A)</p> Signup and view all the answers

Which type of project represents revolutionary commercial advances using proven technology?

<p>Pearls (A)</p> Signup and view all the answers

What is a key feature of bread-and-butter projects?

<p>Are evolutionary improvements to existing products. (C)</p> Signup and view all the answers

Which of the following best describes a white elephant project?

<p>It showed promise at one time but is no longer viable. (D)</p> Signup and view all the answers

What aspect does senior management NOT provide guidance on?

<p>Assessing the technical feasibility of each project. (A)</p> Signup and view all the answers

Which term refers to the rate of return required to make a project worthwhile?

<p>Payback (D)</p> Signup and view all the answers

What is the purpose of the priority system in project management?

<p>To dictate the resource allocation among projects. (C)</p> Signup and view all the answers

What does the implementation gap refer to?

<p>The difference between project selection and execution. (B)</p> Signup and view all the answers

What is the primary purpose of a project priority system linked to strategy?

<p>To minimize the implementation gap among managers. (B)</p> Signup and view all the answers

What does the term 'sacred cow' refer to in project selection?

<p>A project strongly advocated by a high-ranking official. (D)</p> Signup and view all the answers

What common issue arises due to resource sharing in a multi-project environment?

<p>Increased multitasking among team members. (A)</p> Signup and view all the answers

What does the Phase Gate Model primarily assess at each gate?

<p>Whether to proceed, cancel, or revise the project. (C)</p> Signup and view all the answers

Which of the following describes the implementation gap?

<p>The absence of agreement on the organizational strategy. (A)</p> Signup and view all the answers

Why might project selection be influenced by organization politics?

<p>Powerful advocates can sway decisions regardless of project facts. (A)</p> Signup and view all the answers

Which result can occur at a gate in the Phase Gate Model?

<p>Decision to kill, proceed, or recycle the project. (C)</p> Signup and view all the answers

How does multitasking affect project management in a multi-project environment?

<p>It disrupts focus and can decrease productivity. (C)</p> Signup and view all the answers

Flashcards

Why do project managers need to understand their organization's strategy?

Project managers need to understand their organization's strategic goals to make informed decisions and act as effective advocates.

Why is a project manager's understanding of their organization's strategy important for decision making?

Project managers make more appropriate decisions and adjustments to projects by understanding the strategic goals and objectives.

How do project managers use their understanding of their organization's strategy to advocate for projects?

Project managers effectively advocate for project decisions and resource allocation by linking them to the organization's strategic plan.

What is the main benefit of project managers understanding their organization's strategy?

It helps project managers align their projects with the organization's strategic direction.

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Mission statement

A statement summarizing an organization's purpose, scope, and values, outlining what it aspires to become.

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Strategic management

A process that involves analyzing the organization's current state, setting goals, developing strategies to achieve those goals, and implementing those strategies.

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Internal response (Strategic management dimension)

The art of planning and implementing action programs to enhance the firm's competitive position.

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External response (Strategic management dimension)

Responding to shifts in the external environment and adjusting the firm's resources to stay competitive.

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Strategy

A detailed plan that outlines how the organization will achieve its strategic goals.

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Objectives

Specific, measurable, achievable, relevant, and time-bound statements that translate the organization's strategy into concrete actions.

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Implementation (Strategic management process)

The phase where the organization translates its strategies into practical action plans.

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Project portfolio

A collection of projects that aim to achieve organizational goals and strategies.

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Implementation Gap

A lack of understanding and agreement about the organization's strategy among top and middle managers.

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Sacred Cow

A project that a powerful, high-ranking official is advocating, even if it's not the most strategically important.

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Multi-project Environment

A project management technique that involves managing multiple projects simultaneously, often leading to resource sharing and multitasking.

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Multitasking

Switching between tasks on different projects, potentially causing delays and reducing efficiency.

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Phase Gate Model

A framework that guides a project through a series of checkpoints (gates) to ensure alignment with organizational goals.

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Gate

An important decision point in the Phase Gate model.

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Recycle

When a project is rejected and needs revisions before being resubmitted for review.

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Kill

The decision to cancel a project, typically due to lack of resources or a change in strategic priorities.

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Payback Period

Measures how long it takes to recover the initial investment from a project's cash inflows.

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Net Present Value (NPV)

A method to evaluate projects by comparing the present value of all future cash inflows to the initial investment.

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Weighted Scoring Model

A decision-making tool that assigns numerical weights to different project factors.

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Checklist Model

Using a list of criteria to assess projects, with each criteria given a 'yes' or 'no' answer.

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Strategically Important Projects

Projects that align directly with a company's strategic goals, even if they might not be the most profitable.

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Discount Rate

The rate of return a company requires to justify an investment, used in NPV calculations.

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Extended Cash Flows

A cash flow that occurs beyond the initial payback period, considered in the NPV calculation.

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Enabler Product

A project that provides a foundational technology or product for future innovations and growth.

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Multi-Weighted Scoring Model

A selection model that uses weighted criteria to evaluate project proposals, allowing for a more comprehensive assessment and prioritization.

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Project Screening Matrix

A method used in multi-weighted scoring models where project proposals are analyzed against various criteria with assigned weights to determine their overall value.

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Project Classification

The process of categorizing projects based on their alignment with the organization's strategic direction, helping ensure they contribute to overall goals.

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Request for Proposal (RFP)

A formal document requesting proposals from external vendors or contractors for a specific project, allowing for competitive bidding.

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Ranking Proposal and Selection of Projects

The process of evaluating potential projects based on their feasibility, alignment with strategic goals, and how they fit within the current project landscape.

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Project Portfolio Management

A structured approach to managing a collection of projects, ensuring alignment with strategic goals.

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Project Selection

A systematic process for evaluating and selecting projects that align with organizational strategies.

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Bread-and-butter Projects

Projects that involve incremental improvements to existing products or services, offering moderate risk and return.

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Pearl Projects

Projects with high commercial value, employing proven technology for significant advancements.

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Oyster Projects

Projects involving technological breakthroughs with immense commercial potential but high risk.

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White Elephant Projects

Projects that were promising but are no longer viable due to changing circumstances.

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Study Notes

Chapter Two: Organization Strategy and Project Selection

  • The chapter focuses on the importance of understanding organizational strategy for project managers.
  • Two key reasons project managers need to understand strategy are to make appropriate decisions and adjustments and to act as effective advocates for their projects.
  • Project managers need to understand how their project contributes to the firm's overall mission and strategy to gain continued support.
  • Project managers are responsible for explaining project objectives and priorities to stakeholders.

Strategic Management Defined

  • Strategic management is the process of assessing current status and determining future direction, implementing how to get there.
  • It's an ongoing, iterative process for developing an integrated and coordinated, long-term action plan.
  • Critical components include a strong relationship between mission, goals, objectives, strategies, and implementation.

Two Major Dimensions of Strategic Management

  • Strategic management actively responds to external environment changes, allocating resources for better competitiveness.
  • Internal responses to new actions are designed to enhance the firm's competitive position.

Four Activities of the Strategic Management Process

  • Review and define the organizational mission: Describes what the organization aims to become, including its product and service scope.
  • Analyze and formulate strategies: Determines the actions needed to achieve objectives, including selecting the best possible alternative.
  • Set objectives to achieve strategies: Translates strategy into concrete, measurable terms, indicating goals and timelines.
  • Implement strategies through projects: Specifies how strategies will be executed, given available resources.

Why Project Managers Need to Understand Strategy

  • To make appropriate decisions and adjust for strategic considerations.
  • To be effective project advocates and prove their projects support the organizational strategy.

The Need for a Project Priority System

  • Implementation gap: Lack of understanding or consensus on organizational strategy among management levels.
  • Organization politics: Project selection influenced by individuals' persuasiveness and power, not solely on facts.
  • Resource conflicts and multitasking: Managing multiple projects, sharing resources can lead to disruptions and priority conflicts.

Project Classification

  • Strategic projects: Projects critical for the organization’s future direction.
  • Operational projects: Projects supporting current operations.
  • Compliance projects: Projects mandated by regulations and compliance needs.

Phase Gate Model

  • A series of stages or "gates" through which a project must pass to completion.
  • It ensures the organization is investing resources on worthwhile projects aligning with its mission and strategy.
  • Each gate represents a decision point.
  • Possible outcomes at each gate are go (proceed), kill (cancel), or recycle (revise).

Selection Criteria

  • Financial criteria: Methods such as payback and net present value (NPV).
  • Nonfinancial criteria: Strategic importance, value to the organization.
  • Multi-Criteria Selection Models: Checklist Models and Multi-Weighted Scoring Models are used for comparisons.

Multi-Weighted Scoring Models

  • Provides a matrix using various criteria and weights to score different projects.

Project Screening Process

  • Proposing projects involves screening and evaluation.
  • The goal is to match proposed projects with organizational strategies.

Priority Screening Analysis

  • A structured approach to assess projects emphasizing both 'Must' and 'Want' objectives.

Managing the Portfolio System

  • Senior management input: Provides guidance, establishes criteria aligned with the organization.
  • Governance team responsibility: Ensures a transparent and fair selection process, manages risks, and evaluates progress.
  • Balancing organizational resources: Addresses allocation of resources across project types and priorities.

Balancing the Portfolio for Risks and Types of Projects

  • Project types (Bread & Butter, Pearls, Oysters, and White Elephants) offer a classification scheme to manage organizational portfolios for risk evaluation.

Key Terms

  • A list of crucial words and phrases related to project portfolio management.

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