Project Selection Methods Overview

Questions and Answers

What is a portfolio in the context of project management?

A sum of all projects managed systematically through portfolio management. (correct)

A collection of all completed projects in an organization.

A single project that has high financial returns.

A temporary collection of projects under one manager.

Why is it essential for project organizations to prioritize projects?

To manage risks and maximize the value delivered to the company. (correct)

To complete more projects in less time.

To adhere to government regulations.

To simplify resource allocation for individual projects.

What can happen if an organization starts more projects than its capacities allow?

It will increase human resource satisfaction.

It can lead to a simpler project management process.

It will ensure higher financial returns.

It can jeopardize the survival of the project organization. (correct)

Which component is crucial for the sustained success of a project organization?

Effective controlling and reporting on individual projects. Signup and view all the answers

What does project and portfolio management need to do in order to be effective?

Work together to ensure alignment and success. Signup and view all the answers

What are the consequences of inadequate project resource estimation?

Challenges in managing project scope and timelines. Signup and view all the answers

What does successful implementation of project management require from organizations?

Knowledge and application of portfolio management. Signup and view all the answers

How can project organizations improve their profit opportunities?

By implementing as many projects as possible simultaneously. Signup and view all the answers

What is the key focus of numeric project selection methods?

Assessing financial benefits from projects Signup and view all the answers

When establishing weights for selection criteria, what is the maximum total weight allowed?

100% Signup and view all the answers

Which project category represents those that require low effort and yield low impact?

Fill-ins Signup and view all the answers

What does the Cost-Benefit Ratio formula primarily assess?

Financial efficiency of projects Signup and view all the answers

What does Cost-Value Optimization aim to achieve?

Delivering highest value with the same budget level Signup and view all the answers

Which of the following factors is NOT considered a selection criterion in project evaluation?

Team dynamics Signup and view all the answers

What is the function of resource optimization in project portfolios?

To ensure balanced utilization of human resources Signup and view all the answers

Which project is given the first priority during execution based on the weighted grading system described?

Project B with a grade of 3.3 Signup and view all the answers

What does the Analytical Hierarchy Process combine?

Both numeric and non-numeric methods Signup and view all the answers

Which of the following project categories provides the greatest benefits but also involves more challenges?

Major projects Signup and view all the answers

In establishing a grading scheme, what does a level 1 grade typically indicate?

Worst situation for the project organization Signup and view all the answers

What defines a project in the context of management?

A collection of interrelated tasks with specific timelines Signup and view all the answers

What is the role of portfolio management in an organization?

Grouping projects to achieve strategic objectives Signup and view all the answers

How are 'quick wins' characterized in project management?

Needing low effort with high impact Signup and view all the answers

Which aspect does Supply and Demand optimization primarily focus on?

Aligning resource availability with project needs Signup and view all the answers

Which of the following should be a criterion for selecting projects in portfolio management?

Alignment with the organization's strategic objectives Signup and view all the answers

What is the primary purpose of portfolio optimization in project management?

To manage multiple projects under constraints Signup and view all the answers

What is an example of operations in project management?

Training users on a newly delivered system Signup and view all the answers

Which of the following best describes a program in project management?

Specific projects grouped around common objectives Signup and view all the answers

During project selection, what is crucial to assess regarding the project’s value?

The strategic impact it delivers Signup and view all the answers

How should projects be prioritized according to the principles of project management?

Using different methods based on specific criteria Signup and view all the answers

Why might a project organization need to prioritize project proposals?

Due to capacity constraints in implementing all proposals Signup and view all the answers

Which of the following is NOT a function of project portfolio management?

Conducting daily operational tasks Signup and view all the answers

What differentiates a portfolio from a project?

Portfolios are broader in scope, grouping multiple projects Signup and view all the answers

Which factor is considered a constraint during the project selection process?

Availability of resources Signup and view all the answers

What is the primary objective of a software development program in project management?

To group specific projects by development area Signup and view all the answers

Which of these describes why external projects differ in their objectives compared to internal projects?

Internal projects usually aim for internal improvements Signup and view all the answers

What should happen to projects that do not meet the predetermined threshold value in the selection process?

They should not be considered for implementation Signup and view all the answers

What does a Cost Variance (CV) of zero indicate?

The project is on budget. Signup and view all the answers

Which equation is used to calculate the Schedule Performance Index (SPI)?

SPI = Earned Value ÷ Planned Value Signup and view all the answers

If the Schedule Variance (SV) is negative, what does this signify?

The project is behind schedule. Signup and view all the answers

What is the purpose of calculating Estimate at Completion (EAC)?

To assess whether the project will stay within the initial budget. Signup and view all the answers

How are the Cost Performance Index (CPI) and Cost Variance (CV) related?

CPI provides a ratio of Earned Value to Actual Costs, while CV is the difference between these two. Signup and view all the answers

Which of the following would indicate that a project is likely to require more budget than initially planned?

Estimate at Completion (EAC) is greater than Budget at Completion (BAC). Signup and view all the answers

What does an Earned Value (EV) greater than Planned Value (PV) indicate?

More work has been completed than was planned. Signup and view all the answers

Which of the following components makes up the Budget at Completion (BAC)?

Total planned value for costs. Signup and view all the answers

If a project shows a Cost Performance Index (CPI) less than 1, what should be inferred?

The project is overspending compared to the work completed. Signup and view all the answers

To calculate the cumulative actual costs (AC) up to a certain point in a project, what should be included?

All expenses from the project to date. Signup and view all the answers

What is the primary focus of schedule optimization in project management?

Managing task dependencies Signup and view all the answers

Which estimation technique involves reaching a consensus among several experts?

Delphi technique Signup and view all the answers

What is considered the largest cost component in IT projects?

Human resources costs Signup and view all the answers

Which of the following techniques uses historical data from previous projects for estimation?

Analogous estimating Signup and view all the answers

In the Three-Point Estimating technique, what two distributions can be used for cost estimation?

Triangular and Beta Signup and view all the answers

Why is cost estimation for IT projects challenging?

Projects are usually based on the agile approach with many unknowns. Signup and view all the answers

Which method is typically used to measure the size of software in IT projects?

Lines of Code (LoC) Signup and view all the answers

What does project creep refer to in project management?

The deviation of the project from the original plan Signup and view all the answers

What is a fundamental input needed to estimate software development costs?

Hourly rate of programming Signup and view all the answers

In effort estimation, which of the following techniques is considered moderated expert judgment?

Delphi technique Signup and view all the answers

Which of the following is NOT a step in the estimation process for IT projects?

Establishing a project team Signup and view all the answers

What does the term 'effort' typically refer to in the context of IT project management?

Man-hours or man-days required for tasks Signup and view all the answers

Which of the following best describes 'parametric estimating'?

Estimates based on specific algorithms for similar characteristics Signup and view all the answers

What aspect is crucial for accurate effort estimation in software development?

Understanding programmer productivity levels Signup and view all the answers

What is the primary characteristic of scope creep?

It includes changes that are uncontrolled and unexpected. Signup and view all the answers

What is the purpose of establishing Key Performance Indicators (KPIs) in project management?

To evaluate the success of a project with quantifiable measures. Signup and view all the answers

Which of the following best describes feature creep, also known as Gold Plating?

Adding features without customer approval, believing it will add value. Signup and view all the answers

What is the role of scope validation in project management?

To validate changes through formal acceptance by the customer. Signup and view all the answers

What does a Gantt chart typically represent in project management?

The planned schedule and progress of specific tasks. Signup and view all the answers

What information does Earned Value Management (EVM) primarily help to monitor?

Scope, schedule, and costs of the project. Signup and view all the answers

What does the term 'Actual Costs (AC)' refer to in project management?

The costs incurred for the work that has been completed. Signup and view all the answers

How are Key Performance Indicators (KPIs) ideally formulated?

SMART: Specific, Meaningful, Achievable, Relevant, Timely. Signup and view all the answers

What kind of tool is a project dashboard considered to be?

An informative visual for tracking project performance indicators. Signup and view all the answers

What is the significance of milestones in a project schedule?

They indicate points in the project where progress is evaluated. Signup and view all the answers

Which of the following reflects the scope baseline in Earned Value Management?

The total amount of work defined through the Work Breakdown Structure. Signup and view all the answers

What does a project manager typically assess for controlling project progress?

Deviations from planned and actual performances. Signup and view all the answers

In which scenario is scope creep more likely to occur?

When the project team is unaware of changes and lacks agreements. Signup and view all the answers

Study Notes

Unit Overview

Key goals include using tools for IT project selection, estimating resources and effort, developing project budgets, and applying controlling tools.

Portfolio Management

A portfolio encompasses all projects managed systematically within an organization.
Portfolio management aids in maximizing profit potential while mitigating risks associated with multiple simultaneous projects.
Successful project organizations must align project selection and prioritization with company value.

Prioritization in Project Management

Project and portfolio management are interconnected; portfolio management oversees a collection of projects to achieve strategic objectives.
Projects must be selected based on their strategic alignment and potential value, informed by rigorous evaluation techniques.
Selection methods include both numeric (like NPV, IRR) and non-numeric methods (like Qsort Method).

Project Definition

Portfolio: All ongoing projects in a company.
Program: Grouped projects focused on a specific criteria or objective.
Project: A set of interrelated tasks with defined start and end dates aimed at delivering a unique product/service.
Operations: Routine tasks supporting the organization's strategic goals.

Strategic Alignment

Projects should support organizational strategies, such as market expansion, regulatory compliance, improved profitability, and enhanced customer satisfaction.
The selection process involves aligning projects with strategic objectives and assessing their potential impact.

Project Selection Criteria

Essential criteria for project selection include profitability, risk level, technical complexity, execution duration, and resource requirements.
Criteria are often weighted according to their importance to the organization, with specific grading schemes used to assess project suitability.

Cost-Benefit Analysis

Cost-benefit ratio is crucial for prioritizing projects, where higher ratios indicate superior project rankings.
Projects are typically categorized based on their effort and impact using an action priority matrix, optimizing resource allocation.

Portfolio Optimization

Portfolio optimization enhances the effectiveness of project execution while considering constraints (financial, human, material).
Key optimization types include:
- Cost-Value Optimization: Maximizing project value within a budget.
- Work Type Optimization: Defining investment ranges for projects.
- Resource Optimization: Ensuring balanced resource utilization.
- Supply and Demand Optimization: Timing resource availability accurately.
- Schedule Optimization: Managing task dependencies for efficiency.

Effort Estimation Techniques

Estimation is essential for budgeting and resource planning, particularly in IT projects where human resources drive the majority of costs.
Common methods include:
- Expert Judgment: Utilizes insights from subject matter experts.
- Analogous Estimating: Relies on historical data from similar past projects.
- Parametric Estimating: Uses algorithms for projects with similar characteristics.
- Three-Point Estimating: Accounts for optimism, pessimism, and likely scenarios to derive estimates.

Cost Estimation Process

Cost estimation for IT projects can be complex due to uncertainty and evolving project specifications.
Common costs include hardware, training, and human resources, calculated in man-hours or man-days.
Effective estimation relies on breakdown structures, project scope, and programming productivity levels.

Project Controlling

Project creep refers to deviations from the initial project plan, with scope creep being the most prevalent form.
Effective project controlling includes monitoring project alignment with the original plan and adjusting as necessary.### Scope Creep and Feature Creep
Scope creep refers to uncontrolled changes in project requirements that exceed initial project boundaries.
It is frequently cited as a major cause of software project failure.
Occurs when project management or clients are unaware of changes, lack agreements, or do not review change impacts.
Feature creep, or Gold Plating, involves adding features without prior customer agreement, potentially leading to customer dissatisfaction.

Project Control Processes

Essential for a project manager to implement controlling procedures.
Scope Control: Continuous assessment of actual vs. planned performance.
Scope Validation: Inspection conducted by customer for formal project acceptance.
Agile projects conduct regular scope validation.

Project Management Areas and Tools

Control areas include schedule, costs, quality, risks, and procurements.
Effective project management relies on a solid management plan established during the planning stage.

Key Performance Indicators (KPIs)

KPIs are quantifiable measures that help evaluate project success.
Must be defined using SMART criteria: Specific, Measurable, Achievable, Relevant, Timely.
Important for measuring outcomes post-project and ensuring alignment between project organization and customer expectations.

Milestones and Dashboards

Milestones are critical checkpoints in project schedules indicating completion of tasks or events.
Dashboards provide visual progress updates on multiple KPIs using graphs for easy tracking.

Gantt Charts and Earned Value Management

Gantt Charts visually represent task schedules and progress, showing deviations at a glance.
Earned Value Management (EVM) integrates scope, schedule, and cost to monitor project progress.
- Planned Values (PV): Work defined in hours or days to complete tasks.
- Schedule Baseline: Predicted task completion timelines.
- Cost Baseline: Time-phased budget showing estimated spending.

EVM Metrics and Interpretation

Earned Value (EV): Measures completed project work against the scope baseline.
Actual Costs (AC): Represents the actual expenditure on the project.
Variances provide insights into project status:
- Cost Variance (CV) = EV - AC indicates budget performance.
- Schedule Variance (SV) = EV - PV indicates timeline adherence.
Performance Indices assess overall project health:
- Cost Performance Index (CPI) = EV ÷ AC.
- Schedule Performance Index (SPI) = EV ÷ PV.

Estimate at Completion (EAC)

EAC forecasts total project costs considering current deviations.
Calculated as EAC = BAC ÷ CPI where BAC is Budget at Completion.
EAC helps anticipate budget needs and identifies financial adjustments early.

Portfolio Management

Managing multiple projects can be challenging; effective portfolio management is crucial.
Focus on selecting and optimizing projects to benefit the organization and ensure smooth operation.
Estimation techniques are critical, especially in IT projects due to their complexity.
Proper controlling processes and tools are vital for achieving project goals and customer satisfaction.

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Description

This quiz covers various project selection methods, detailing both financial approaches such as Internal Rate of Return and Net Present Value, as well as non-numeric techniques like the Qsort Method. It emphasizes the categorization proposed by Farahbod & Varzandeh (2021), highlighting the importance of optimizing project portfolios. Test your understanding of these essential concepts in project management.