Module 1

Question 1

What are the six criterias to consider when evaluating screening models?

Answer 1

1. Realism - Will the project work as intended? Weighing the risks, cost, time
2. Capability - Will the model be flexible enough to respond to changes in conditions during project?
3. Flexibility. The model should be easily modified if it demands change, for example exchange rates, tax laws, building codes etc
4. Ease of use. The model should be simple enough to be able to use in all areas of the organization
5. Cost. The model should be cost-effective, the cost of obtaining information should be low enough to encourage the use of the model
6. Comparability. The model should be broad enough to be applied to multiple different projects.

Question 2

List some factors to consider when evaluating project alternatives

Answer 2

for example financial risk, technical risk, safety, quality, legal exposure, payback time, market share, change in workforce, change in manufacturing, patent protection etc.

Question 3

What are some issues that a company may face when selecting projects?

Answer 3

Need to develop/train employes
Change in workforce
Change in physical environment
Change in manufacturing
Patent protection
Impact on company image
Strategic fit

Question 4

Name some different methods for screening and selecting projects

Answer 4

1. Checklist model
   Creating a list of criterias and applying them to different possible projects. For example: cost of development, potential return of investment, riskiness, stability of DP, stakeholder interference, durability on market.
2. Simplified scoring modell
   Flaw in scoring model with trade off issues, need weighted criterias for this. Firstly, assign importance weights to each criterion. Secondly, assign score values to each criterion and then multiply the weights and the scores to arrive at a weighted score for each criterion, then add the weighted scores to arrive at an overall project score.
3. AHP - Analytical hierarchical process
   Is done in four steps:
   Structuring the hierarchy of criteria
   Allocating weights to criterias
   Assigning numerical values to evaluation dimension
   Evaluating project proposals
4. Profile models
   Plotting risk and return options for alternatives and then select a project that maximizes return while staying at an acceptable level of risk.

Question 5

Name three commonly used financial models

Answer 5

Discounted cash flow analysis
In the DCF (discounted cash flow) method the firm applies a discount based on the firm’s cost of capital. Basically it’s about estimating the future cash flow and then discounting them back to their present value. Goes by the principle that money earned today is worth more than money we expect to earn in the future. This is due to inflation and inability to invest money.

NPV
NPV, almost the same as DCF but it’s about estimating the expected profit by an investment after accounting for the time value of money. NPV will give a number, either positive or negative that will indicate if the investment will give a positive or negative return.

IRR, Internal rate of return
IRR. The rate of return the project is expected to generate over its lifespan. If the rate of return is higher than the cost of capital the project is considered financially viable.

Question 6

What are the main goals of project portfolio management?

Answer 6

Maximizing the value to the company

Achieving the right balance of projects in tube portfolio, high risk, low risk, short term, long term

Achieving a strategically aligned portfolio, leading companies to have a clear product innovation strategy that directs their R&D project investments

Resource balancing, not having too many different projects that they cannot simultaneously support.

Question 7

Explain the process of project selection (in project portfolio management PPM)

Answer 7

1. Pre-screening
2. Individual project analysis
3. Screening
4. Portfolio selection
5. Portfolio adjustment

Question 8

Explain the The project portfolio matrix

Answer 8

Links the commercial potential with technical feasibility and can be classified amongst four different types

Bread and butter, high technical feasibility and a modest likelihood for commercial potential. For example these are projects that are improvements of existing solutions, an “improved” laundry detergent, e.g.

Pearls, high technical feasibility and high commercial potential, can yield strategic advantage on the market.

Oysters, low technical feasibility but high commercial value, involves unknown revolutionary technologies and if the can overcome the technical challenge the company can make a great deal of money

White elephant, low feasibility and low commercial impact. These are often projects that we think are maybe bread and butter or similar and they never live up to their expected potential.

Question 9

Explain the six steps for project scope management

Answer 9

1. Conceptual development - Choosing the best method for achieving project goals. Problem statements, information gathering, constraints, project objectives.
2. The scope statement - Definition of all parameters necessary for the project to succeed. WBS (Work breakdown structure), the work is broken down and creates hierarchy of activities based priorities, creating work packages, tasks and subtasks. This can be coupled with a RAM - Responsibility assignment matrix where responsible personnel are assigned to different activities.
3. Work authorization - Sanctioning project work, formulating contractual obligations to vendors, suppliers and clients
4. Scope reporting - Reporting to control systems and documentation to assess projects overall status. What who, when, how
5. Control systems - Systems put in place to track the status of the project and compare actual baseline projects and offer corrective measures
6. Project closeout - Represents the teams best determination about the information and transition materials necessary to ensure a smooth transfer of the project to its intended clients

Question 10

Explain the process of developing the scope statement

Answer 10

Establishing the goal criteria, defining what will demonstrate project success and what decision gates are for evaluating deliverables

Developing the management plan for the project, determining structure of the team, key rules, procedures, control systems

Establishing the WBS, dividing the project into components substeps in order to establish critical interrelations among project activities

Creating a scope baseline, providing a summary description of each component of the projects goal, including budget and schedule information for each activity

Question 11

What are some reasons for changing project scope? How do we control it?

Answer 11

Initial planning errors that must be corrected
New information about the project or environmental conditions
Uncontrollable mandates
Client request

Control systems allow the team to monitor and assess the status of the project, and track required changes. Configuration management is a system of procedures to monitor the emerging project scope to its original baseline, controlling the change.

Question 12

How can project practices support sustainability?

Answer 12

By engaging in sustainable projects or projects that will cause no harm to the planet or its inhabitants
Through employing sustainable practices while undertaking the projects
Through developing sustainable supplier practices
Through emphasizing sustainability in project design.

Question 13

Explain WBS

Answer 13

WBS - Work Breakdown structure
Each deliverable is decomposed or broken down into specific bite size pieces representing the work to be completed. (hierarchical decomposition). Goals

Echoes project objectives
Organization chart for the project
Creates logic for tracking costs, schedule and performance specification
Communication project status
Improves project communication
Demonstrates control structure

Project -> Deliverable -> Sub Deliverable -> work package

Work package - individual level, one owner, size may be expressed in labor hours, cost, risks

Question 14

Explain why some projects fail

Answer 14

Politics, naive promises, startup mentality, intense competition, pressure by government, unplanned crises

Question 15

Define risk and how it is also calculated

Answer 15

The possible event that can negatively affect the viability of the project and its effect.

Risk event = probability of event*Consequence of event

Needs to be done at an early stage in project life.

Risk scoring
Low: RF < 0.30. We monitor these risks
Medium 0.30 to 0.70. We plan for these
High risk >0.70. We need to put it into action immediately.

Calculating risks
Pf = Sum(Pn)/3

Sum up all the probability of failure category (maturity, complexity and dependency) and divide by 3

And then Consequence of failure category (cost, schedule ,reliability, performance)
Cf = sum(Cn)/4

Overall risk is then: RF = Pf + Cf - (Pf/Cf)

Question 16

What are the four steps in risk management?

Answer 16

Risk identification
Setting a set of realistic risk factors that the project will face.

Analysis of probability and consequences
Analyzing the probability of occurrence and its consequences, assessing the impact factor of each risk. The impact factors are determined either by a qualitative or quantitative manner.

Risk mitigation strategies
Once a clear vision of risk factors is determined the team develops risk mitigation strategies.

Control and documentation
Based on the knowledge that risk mitigation strategies are most effective when they have been codified, being documented and introduced as part of standard operating procedures. Creating systematic and repeatable strategies.

Question 17

What are some common causes of project risks? And some common methods for identifying these?

Answer 17

Financial risk
Technical risk
Commercial risk
Execution risk
Contractual or legal risk

Brainstorming meetings
Expert opinion
Past history
Team-based assessment

Question 18

What are the four main risk mitigation approaches?

Answer 18

Accepting the risk, maybe it’s small enough to be acceptable
Minimize the risk, maybe entering partnerships or joint venture to lower company exposure
Share risk with other project stakeholders
Transfer risk to other project stakeholders

Question 19

Explain PRAM

Answer 19

PRAM - Project risk analysis and management.

It’s a step to step approach to creating a comprehensive and logically sequences method for analyzing and addressing project risks

Define - the project, scope etc

Focus - plan risk management project, addressing project risks given the unique nature of the project
Identify - Assess the specific risks. Search for all sources of risk and their responses, classify the risks

Structure - determine if there are commonalities in the classifications, and create a prioritization scheme

Clarify ownership of risks - the difference between the risks the project team will handle and the ones the clients are expected to assess, allocate responsibilities for managing risks

Estimate - Estimate the impact of the risks and its proposed solutions on the project, what are their costs?

Evaluate - the results of the estimated impacts, prioritize risk tasks

Plan - offering risk mitigation strategies

Manage - Monitor the process, respond to change, variances.

Question 20

What are some common project costs?

Answer 20

Cost of labor - human resources
Cost of materials - supply need
Subcontractors - project budget, consultants etc
Cost of equipment and facilities - plant equipment, location
Travel - necessary expense

Question 21

What are some different types of project costs?

Answer 21

Direct versus indirect.
Direct are those that can be directly assigned to a specific project activity. Indirect are cost related to company overhead, may include health benefits, retirement contributions, or shipping costs, support, sales commission etc

Recurring versus non recurring
Recurring, such as labor, material costs, appearing across projects lifecycle. Nonrecurring are a one time purchase such as training or purchasing a building.

Fixed versus variable
Fixed does not vary with respect to usage, variable costs increase in proportion to the degree they are used

Normal versus expedited
Normal are the ones scheduled, expedited are costs referred to as “crashing costs” and increase due to extra resources needed to speed the completion of a specific project activity.

Question 22

What are some problems when doing cost estimations?

Answer 22

Low initial estimates
Unexpected technical difficulty
Lack of definition
Specification changes
External factors

Question 23

What are some different budget strategies for project?

Answer 23

Top-down budgeting
Seeks to first ascertain the opinion and experience of top management regarding project costs, assuming the senior manager is experienced with past projects and can provide accurate feedback and cost.

Bottom-up budgeting
The budget must identify all project activities and specify funds requested to support these tasks, it sums up the total costs associated with the package level and deliverable level at which point all task budgets are combined.

Activity based costing ABC
Identify activities that consume resources and assign costs to them, as is done in bottom up budgeting process
Identify the cost drivers associated with the activity, resource in form of personnel and materials are key cost drivers
Compute cost rate per cost driver unit or transaction, labor for example is commonly simply the cost of labor per hour
Assign the cost to the whole project.

Time-phase budget
Allows the project team to link time and cost into the unified baseline that can be set to serve as the project plan. Project cost control as the project moves forwards is predicated on creating the time phased budget.

Variable costs
Putting aside some budget money for uncertainties and unexpected costs that could not have been anticipated. This is referred to as a project contingency fund, often a normal part of the project budget.

Question 24

Explain some important aspects when doing project scheduling

Answer 24

It’s important to apply logic to the tasks in order to identify activities that are predecessors (coming earlier in the network) and those who are successors.

Examining predecessor relationships among the project activities (the nodes). Once these are known it’s possible to link the activities together and create a project network. (AON)

Question 25

How can we estimate the duration of each activity in a project schedule?

Answer 25

Is accomplished through identifying tasks in a project then applying a method for estimating the duration of each of these activities. Non-computational techniques, examining past records for similar tasks Deriving duration estimates through mathematical analysis PERT, program evaluation and review technique. uses probabilities to estimate tasks duration. (optimistic, most likely, pessimistic estimated times)

Question 26

Explain forward and backwards passes, slack etc. Use a graphical representation as well in a network diagram.

Answer 26

Adding early start plus activity duration to determine early finish and then applying this early finish value to the next node in the network, where it becomes that activity's early start. We then use the decision rule for the backward pass to identify all activities and paths with float (slack time associated with them) and the critical path (the path with no float time). Once all networks are linked with all activities the estimated duration can be determined. Network diagram - Any schematic display of the logical relationships of project activities Path - A sequence of activities defined by the project network logic Event - A point when activity either started or completed (burst - outwards, merge, combines) Node - A junction point joined to some or all of the other dependency lines (paths)

Question 27

What are some means to accelerate projects?

Answer 27

Adding resources to the project Fast-tracking Compromising quality Reducing project´s scope Using overtime Crashing project activities. Links all activities to their respective costs and allows us to calculate the cost for each day we choose to accelerate the project.

Question 28

What are some critisism towards using project networks when scheduling?

Answer 28

Networks can become too large and complex to be meaningful Faulty reasoning can lead to oversimplification or incorrect representations Networks can be used for tasks which they are not well suited Network diagramming has special dangers when used to control subcontractors behaviors

Question 29

Explain resource loading, resource leveling and resource smoothing

Answer 29

Resource loading ensures that the team is capable of supporting the schedule by ensuring that all activities have the necessary level of resources assigned to support their completion within the projected time estimations. Resource leveling is a technique to block out activities including required resources across the project's baseline schedule, recognizing peaks and valleys in the resource commitment over time. Resource smoothing in order to minimize the problems associated with excessive fluctuations in the resource loading diagram, by rescheduling activities to make it easier to apply resources continuously over time. Identify relevant activities to determine which are candidates for modification Which activity should be adjusted? Select the activity to be reconfigured, with the most slack time

Question 30

What are the steps to do resource smoothing across a projects lifecycle?

Answer 30

Create the activity network diagram for the project Produce a table for each activity that includes resources required, the duration and the early start time, slack and late finish time List the activities in order of increasing slack (or in order of the latest finish time for activities with the same slack) Draw an initial resource loading chart with each activity scheduled at its earliest start time, building it up following the order shown in step 3, to create a loading chart with the most critical activities at the bottom and those with the greatest slack on the top Rearrange the activities within their slack to create a profile that is as level ass possible within the guidelines of not changing the duration of activities or their dependence Use judgment to interpret and improve activity leveling by moving activities with extra slack in order to smooth the resource chart across the project

Question 31

How do you make decisions when managing multiple projects?

Answer 31

Decisions can be based on Which projects are first in line Which projects have the greatest resource demand Which projects will enable our firm to use the greatest resource utilization Which will enable us to reach the goal of minimizing late finish time Mathematical programming

Question 32

What are the four steps in a general project control model?

Answer 32

Setting goals (WBS - establishes all deliverables and work packages associated with the project, assigns the personnel responsible, creates a visual chart). The project baseline is created, each task is laid out in a network diagram and resources are assigned to it. Measuring progress - have a system in place, know what to measure for, useful information Comparing actual progress with plans - analyzing the gap between how the projects status is actually living up to the goals Correcting significant deviations - (taking actions) - Engage in actions to minimize or remove deviations, corrective action. After this the cycle begins again.

Question 33

What are some downsides with common project evaluation methods?

Answer 33

S-curves Most basic one, seeks to reconcile the project schedule baseline with planned budget expenditures. Milestone analysis and tracking gantt charts Links them to project baseline, rather than project budget. They all lack the ability to monitor and assess the status of the ongoing project activities, and therefore the true status of the project in a meaningful way.

Question 34

How can EVM solve the downsides of the common project evaluation methods (S-curve, tracking gantt charts)

Answer 34

Earned value management, EVM A powerful tool to directly link project progress to schedule and budget baseline. Provides the missing piece of the above mentioned. Can be used for project portfolio analysis, an overall evaluation of the firm's project portfolio can be calculated, determining overall efficiency in terms of cost and time. EVM is only useful when it's used correctly, the better the decision rules are employed the better final assessment.

Question 35

Explain earned schedule method

Answer 35

Determining project schedule variance, performance index and estimates to completion. Alternative method for determining the status of a project's schedule to completion. Recognizing that schedule is different, earned schedule identifies the possible schedule estimation errors EVM can be prone to offer some corrective procedures to adjust these calculations Instead of using cost-related metrics like EVM, ESM uses the concept of "Earned Schedule," which represents the time value of completed work.

Question 36

What are the main four types of project termination?

Answer 36

Extinction - All activities end Addition - Bringin the project into the organization as a separate entity. Integration - bringing project into organization and distributing activities among existing functions Starvation - Cutting the projects budget to stop progress but not actually killing the project

Question 37

What are the seven key steps in a formal project closout?

Answer 37

Finishing work Handing over the project Gaining acceptance for the project Harvesting the benefits Reviewing how it all went Putting it all to bed Disbanding the team

Question 38

What are the key reasons for early termination of a project?

Answer 38

Recognizing changes in the following critical factors: static factors, task-team factors, sponsorships, economics, environment and user requirements. Decision rules for terminating project can be: Cost exceeds business benefits The project no longer meets strategic fit criteria Deadlines continue to be missed Technology evolves beyond projects scope

Question 39

What are some main challenges when doing a project closout and a final project report?

Answer 39

Being willing to take a candid and honest look at how the project progressed, highlighting both its strengths and weaknesses. Developing reports in such a manner that they contain a combination of descriptive analysis and prescriptive material for future projects. Important to reflect on what went wrong and right but also forward looking on how to improve the processes to make future projects more effective, more productive, personnel more knowledgeable.