PROJECT MANAGEMENT
7th Edition
ISBN: 9781264341719
Author: Larson
Publisher: MCG
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Textbook Question
Chapter 2, Problem 5E
You are the head of the project selection team at SIMSOX. Your team is considering three different projects. Based on past history, SIMSOX expects at least a
Given the following information for each project, which one should be SIMSOX’s first priority? Should SIMSOX fund any of the other projects? If so, what should be the order of priority based on
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The chart below shows the initial investment and expected yearly payback for Project A and Project B
Project A
Project B
Initial Investment
$ 300,000
$ 450,000
Expected Yearly PayBack
$ 45,000
$ 90,000
For Project A, There has been a change in the expected yearly payback.
Years 1 and 2 – you are expecting $45,000 each year.
For the next three years, you are expecting $70,000 each year.
What would be the average ROI for this alternative?
The ABC Manufacturing Company has set up a weighted scoring matrix for evaluating some potential projects. Following are five projects under consideration.
Using the scoring matrix below which project would you rate highest? Lowest?
If the weight for “Sponsor Support” is changed from 2.0 to 5.0, will the project selection change? What are the three highest-weighted project scores with this new weight?
Why is it important that the weights mirror critical strategic factors?
Project Screening Matrix
Criteria
Weight
Project 1
Project 2
Project 3
Project 4
Project 5
Sponsor Support
2
9
3
6
1
3
Strategic Alliance
5
5
7
8
0
10
Urgency
4
2
2
2
5
10
Fills a market gap
3
0
0
3
10
1
Sales
3
2
5
6
6
8
Competition
1
5
1
8
9
0
Refer to either Case 7.1 Alaska Fly-Fishing Expedition, 7.2 Silver Fiddle Construction, 7.3 Trans LAN Project, and 7.4 XSU Spring Concert of your text. Each of these cases presents you with a project scope statement for a fictional project. You are to pick 1 of these cases on which to perform a risk analysis. After picking a case of your choice, you should address the following:
Identify potential risks associated with this project (you must come up with at least 5 different risks).
Chapter 2 Solutions
PROJECT MANAGEMENT
Ch. 2 - Describe the major components of the strategic...Ch. 2 - Explain the role projects play in the strategic...Ch. 2 - How are projects linked to the strategic plan?Ch. 2 - The portfolio of projects is typically represented...Ch. 2 - Why does the priority system described in this...Ch. 2 - Why should an organization not rely only on ROI to...Ch. 2 - Discuss the pros and cons of the checklist versus...Ch. 2 - You manage a hotel resort located on the South...Ch. 2 - Two new software projects are proposed to a young,...Ch. 2 - A five-year project has a projected net cash flow...
Ch. 2 - You work for the 3T company, which expects to earn...Ch. 2 - You are the head of the project selection team at...Ch. 2 - You are the head of the project selection team at...Ch. 2 - The Custom Bike Company has set up a weighted...Ch. 2 - What is our major problem?Ch. 2 - Identify some symptoms of the problem.Ch. 2 - What is the major cause of the problem?
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- Can you help me with this problem The Custom Bike Company has set up a weighted scoring matrix for evaluation of potential projects. Following are five projects under consideration. 1. Using the scoring matrix in the following chart, which project would you rate highest? Lowest? 2. If the weight for “Strong Sponsor” is changed from 2.0 to 5.0, will the project selection change? What are the three highest-weighted project scores with this new weight? 3. Why is it important that the weights mirror critical strategic factors?arrow_forwardYou are conducting a small IT project. The duration of this project is 30 days, and you have allocated $60,000 for it. Your manager asked you to check how the project is doing financially at the end of day 25. You have spent $40,000 and completed 95% of the work. Calculate the following values for the project so far. The cost variance (CV). The cost performance index (CPI). How is the project doing, is it under budget or over budget? Use the CPI to calculate the estimate at completion (EAC) for this project. Is the project performing better or worse than planned?arrow_forwardRefer to either Case 7.1 Alaska Fly-Fishing Expedition, 7.2 Silver Fiddle Construction, 7.3 Trans LAN Project, and 7.4 XSU Spring Concert of your text. Each of these cases presents you with a project scope statement for a fictional project. You are to pick 1 of these cases on which to perform a risk analysis. After picking a case of your choice, you should address the following: Use a risk assessment form to analyze identified risks.arrow_forward
- There are various types of project organizations. Certain types of project organizations work best for certain types of projects. For example, there are pure project organizations, functional project organizations, centrally-organized project organizations, matrix project organizations, and mixed project organizations. Select any one type of project, such as software development, research and development, building construction (commercial, residential, etc.), public sector work, accounting, procurement, or financial, and discuss the best project organization that would suit the project type you selected.arrow_forwardSelect a project based on the definition "A project is a temporary endeavor undertaken to create a unique product, service, or result" What project have you selected? Explain. Provide reasons for selecting the project. What kind of organization or industry does your selected project belongs to? How does the project you selected fit the definition of a project? Is your selected project constrained by performance, cost, or schedule? Why or why not?arrow_forwardAny project's success hinges on accurate cost assessment. Explain the various tools and approaches that are used in the cost estimate process.arrow_forward
- Given a project with the following characteristics, answer the following questions:You are the project manager of a project to build fancy birdhouses.You are to build two birdhouses a month for 12 months.Each birdhouse is planned to cost $100.Your project is scheduled to last for 12 months.It is the beginning of month 10. You have built 20 birdhouses and your CPI is 9091. a. Assuming that the COST variance experienced so far in the project will continue, how much more moneywill it take to complete the project? b. If the variance experienced so far were to stop, what is the project's estimate at completion?arrow_forwardRefer to exercise #6 (page 54) in your textbook. Given the information in that exercise, which one should be Broken Arrow's first priority (you must include values for NPV/ROR/ROI and/or other information used to finalize your decision)? Calculate NPV for the project with first/highest priority. What is the maximum investment level for the project with the lowest priority that will lead to the same NPV as that for the project with first/highest priority (assume that the revenue stream does not change for that project)? Hint: You may use Excel's goal seek method (shown in the Chapter2_help file) to find the unknown investment value in year 0, given known revenue stream, final NPV value known from the project with highest priority, and rate of return (ROR) as 20%. Note: You must include values for NPV/ROR/ROI and/or other information used to finalize your priority. Answers provided without quantitative reasons will receive zero credits. Use the editor to format your answerarrow_forwardWhich company to be selected for project execution consiering the weighting factor for each criterion given in the attached table? show all your calculations?arrow_forward
- The project management plan specifies that a predictive development approach has been selected to produce the project deliverables. Suggest when in the project life cycle will the overall project risk be the lowest and demonstrate how it should be donearrow_forwardthere are two approaches to project cost estimation, the top down and bottom up approaches. These approaches help the project manager to estimate the cost in the project. Differentiate between the different techniques of project cost estimation?arrow_forwardProject Typhoon has a net present value of $10,000 and a profitability index of 1.01. Project Cyclone has a net present value of $10,000 and a profitability index of 1.10. Project SurfsUp has a net present value of $10,000 and a profitability index of 1.05. If only one project could be undertaken, what should the oraganiztion select?arrow_forward
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