Chapter 1

Review Questions for Unit 1 Chapter -1

End of Chapter Review Questions1.Define a project. What are five characteristics which help differentiate projects from other functions carried out in the daily operations of the organization?A project is a complex, non routine, one-time effort limited by time, budget, resource, and specifications. Differentiating characteristics of projects from routine, repetitive daily work are below:

a.A defined life span

b.A well-defined objective

c.Typically involves people from several disciplinesd.A project life cycle

e.Specific time, cost, and performance requirements.2.What are some of the key environmental forces that have changed the way projects are managed? What has been the effect of these forces on the management of projects?

Some environmental forces that have changed the way we manage projects are the product life cycle, knowledge growth, global competition, organization downsizing, technology changes, time-to-market. The impact of these forces is more projects per organization, project teams responsible for implementing projects, accountability, changing organization structures, need for rapid completion of projects, linking projects to organization strategy and customers, prioritizing projects to conserve organization resources, alliances with external organizations, etc.

3.Why is the implementation of projects important to strategic planning and the project manager?Strategic plans are implemented primarily through projectse.g., a new product, a new information system, a new plant for a new product. The project manager is the key person responsible for completing the project on time, on budget, and within specifications so the projects customer is satisfied. If the project is not linked to the strategic plan of the organization, resources devoted to the project are wasted and a customer need is not met. This lack of connectivity occurs more in practice than most would believe.

4.The technical and sociocultural dimensions of project management are two sides to the same coin. Explain.The technical system and sociocultural dimensions of project management are two sides of the same coin because successful project managers are skillful in both areas. The point is successful project managers need to be very comfortable and skillful in both areas.

5.What is the impact of governance to managing an individual project? Why is this approach important in todays environment?

Governance signals to the project manager that decisions at a higher level can impact management of an individual project. Reviews (called Gating) during project implementation assess current performance and priorities and decide to continue, halt, hold, or revised the project.Governance is most frequently used to balance resources and risk over all organizational resources. It is also used to enforce or alter priorities and to ensure project align with organizational strategies and goals. In todays fast-paced world priorities can change quickly and can impact in process projects.Additional Q & A

1. Define Project Management

Nov/Dec 2014

Project Management is the process of managing a group of ongoing, inter-dependent, related projects in a coordinated way to achieve strategic objectives. In other words, it is the application of knowledge, skills, tools & techniques to project activities to successfully managing a project. The knowledge, skills, tools & techniques associated with good management practices, the desired results or outputs from them and the necessary data or other inputs for using these techniques are collectively identified as project management process. These processes can be classified to groups according to project life cycle stage with which they are associated.

2.Write down the objectives of project team.

Nov/Dec 2014

(or) What are the goals of Project Management?Effective objectives in project management are specific. A specific objective increases the chances of leading to a specific outcome. Therefore objectives shouldn't be vague, such as "to improve customer relations," because they are not measurable. Objectives should show how successful a project has been, for example "to reduce customer complaints by 50%" would be a good objective. The measure can be, in some cases, a simple yes or no answer, for example, "did we reduce the number of customer complaints by 50%?" Objectives need to be SMART Specific, Measurable, Assignable, Realistic & Time related.

Project objectives can often be set under five headings:

1. Performance and Quality

The end result of a project must fit the purpose for which it was intended. 2. Budget

The project must be completed without exceeding the authorised expenditure. 3. Time to Completion

Actual progress has to match or beat planned progress. All significant stages of the project must take place no later than their specified dates, to result in total completion because late completion of a project is not very likely to please the project purchaser or the sponsor.4. Keep Customers HappyTo ensure that your project sponsor, customer and other stakeholders are happy at the end of your project, you need to manage their expectations carefully. Make sure you always keep them properly informed of progress.5. Keep Team Members HappyStaff satisfaction is critical to your project's success. So keep your team happy by rewarding and recognizing them for their successes. Assign them work that complements their strengths and conduct team building exercises to boost morale. With a happy, motivated team, you can achieve anything.3. Discuss the stages of Project life cycle in detail

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Note: Please understand each stage/element listed above to be able to explain if needed in Part B type of question4. Describe the roles and responsibilities of Project manager

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(or) Explain the role of Project Management?Project Manager manages temporary, non-repetitive activities and frequently acts independently of the formal organization.

Marshals resources for the project.

Is linked directly to the customer interface. Provides direction, coordination and integration to the project team. Is responsible for performance and success of the project.Must induce the right people at the right time to address the right issues and make the right decisions.

Oversee project selection.

Monitor aggregate resource levels and skills.

Encourage use of best practices.

Balance projects in the portfolio in order to represent a risk level appropriate to the organization.

Improve communication among all stakeholders.

Create a total organization perspective that goes beyond silo thinking.

Improve overall management of projects over time.The role of the project manager encompasses many activities including:

Planning and Defining Scope

Activity Planning and Sequencing

Resource Planning

Developing Schedules

Time Estimating

Cost Estimating

Developing a Budget

Documentation

Creating Charts and Schedules

Risk Analysis

Managing Risks and Issues

Monitoring and Reporting Progress

Team Leadership

Strategic Influencing

Business Partnering

Good project managers balance their attention to both dimensions namely technical and sociocultural aspects of project management.

5. Distinguish between Project and Program

Program is applied to a group of related projects managed in a coordinated way to obtain benefits and control, which are not available if managing them individually. Program may include elements of related work outside the scope of the discrete projects in a program. In other words, the program would need to set up a number of projects which would be managed in a coordinated way and which would share critical resources for optimized usage.

For example, golden quadrangle corridors connecting four metro cities in India is a program; the highways connecting two specific metro cities would be a specific project. 6. Distinguish between Product Life Cycle & Project Life Cycle

Project life covers the project span, that is time during which a specific product, result or service is created by the project. The project creates the product, result or service and hands it over to operation.

The operation then uses the projects product and maintains it till products utility is exhausted. Thus, product life cycle is the whole life of the product whereas project life cycle constitutes only a small part of it. So, it is fair to say the project life cycle is a sub-set of the product life cycle. Project life cycle typically shows overlapping stages wherein it can co-exist for example Planning & Exceuting activities can overlap whereas product at any time exists only in one of the stages of its life cycle, namely Introduction, Growth, Maturity or Decline. Chapter -2

End of Chapter Review Questions

1.Describe the major components of the strategic management process.

The strategic management process involves assessing what we are, what we want to become, and how we are going to get there. The major generic components of the process include the following:a.Defining the mission of the organization

b.Analysis of the external and internal environments

c.Setting objectives

d.Formulating strategies to reach objectives

e.Implementing strategies through projects.2.Explain the role projects play in the strategic management process.Strategy is implemented primarily through projects. Successful implementation of projects means reaching the goals of the organization and thus meeting the needs of its customers. Projects that do not contribute to the strategic plan waste critical organization resources.

3.How are projects linked to the strategic plan?Projects are linked to the strategic plan because projects represent how a strategy is to be implemented. Since some projects are more important than others, the best way to maximize the organizations scarce resources is through a priority scheme which allocates resources to a portfolio of projects which balance risk and contribute the most to the strategic plan.

4.The portfolio of projects is typically represented by compliance, strategic, and operations projects. What impact can this classification have on project selection?By carefully aligning your project proposal with one classification, you may increase the chances of it being selected. Remember, senior management typically allots budgets for each category independent of actual project selection. Knowledge of funds available, risk portfolio, senior management bias, etc. may cause some to attempt to move their project proposal to a different classification to improve the chances of the project being selected.5.Why does the priority system described in this chapter require that it be open and published? Does the process encourage bottom-up initiation of projects? Does it discourage some projects? Why?An open, published priority system ensures projects are selected on the basis of their contribution to the organization. If the priority system is not open, squeaky wheels, strong people, and key departments all get their projects selected for the wrong reasons. Bottom-up is encouraged because every organization member can self evaluate their project idea against priorities and so can everyone else in the organization. To some, this approach may look intimidating but rarely is in practice; however, it does discourage projects that clearly will not make positive, significant contributions to the organization vision.6.Why should an organization not rely only on ROI to select projects?

Financial criteria, like ROI alone, will not ensure that selected projects contribute to the mission and strategy of a firm. Other considerations such as developing new technology, public image, brand loyalty, ethical position, and maintaining core competencies should be considered. Furthermore, it is difficult or next to impossible to assess ROI for many important projects (e.g., Y2K projects). While ROI is likely to be a key consideration for many organizations, multiple screening criteria are recommended for selecting and prioritizing projects.7.Discuss the pros and cons of the checklist versus the weighted factor methods of selecting projects.Checklist Model

Flexible

Applies over a wide range of different types of projects, divisions, and locations

Impossible to rigorously compare and rank project by priority

Politics, power, and manipulation of project selection is very possible.

Weighted Factor Model

Allows comparison and ranking of potential projects

Open system

Allows for self evaluation of proposed project

Power and politic games are exposed.Exercise Numericals (Refer Page No: 81 & 82)

2.Two new software projects are proposed to a young, start-up company. The Alpha project will cost $150,000 to develop and is expected to have annual net cash flow of $40,000. The Beta project will cost $200,000 to develop and is expected to have annual net cash flow of $50,000. The company is very concerned about their cash flow. Using the payback period, which project is better from a cash flow standpoint? Why?

Payback = Investment / Annual Savings

Project Alpha: $150,000 / $40,000 = 3.75 yearsProject Beta: $200,000 / $50,000 = 4.0 yearsProject Alpha is the better payback.3.A five-year project has a projected net cash flow of $15,000, $25,000, $30,000, $20,000, and $15,000 in the next five years. It will cost $50,000 to implement the project. If the required rate of return is 20 percent, conduct a discounted cash flow calculation to determine the NPV.

ABCDEFGH

1

2Exercise 2.3

3Net Present Value Example

4

5 Project 2.3Year 0Year 1Year 2Year 3Year 4Year 5

6 Investment-$50,000

7 Cash Inflows$15,000$25,000$30,000$20,000$15,000

8 Required Rate of Return20%

9Present Values12,50017,36117,3619,6456,028

10NPV =$12,895Formula: =C6+NPV(B8,D7:H7)

Since the NPV is positive, accept project.4.You work for the 3T company, which expects to earn at least 18 percent on its investments. You have to choose between two similar projects. Your analysts predict that inflation rate will be a stable 3 percent over the next 7 years. Below is the cash flow information for each project. Which of the two projects would you fund if the decision is based only on financial information? Why?OmegaAlpha

YearInflowOutflowNetflowYearInflowOutflowNetflow

Y00$225,000-225,000Y00$300,000-300,000

Y10190,000-190,000Y1$50,000100,000-50,000

Y2$150,0000150,000Y2150,0000150,000

Y3220,00030,000 190,000Y3250,00050,000200,000

Y4215,0000215,000Y4250,0000250,000

Y5205,00030,000175,000Y5200,00050,000150,000

Y6197,0000197,000Y6180,0000180,000

Y7100,00030,00070,000Y7120,00030,00090,000

Total1,087,000505,000582,000Total1,200,000530,000670,000

ABCDEFGHIJ

1

2Exercise 4a

3Net Present Value Example Comparing Two Projects

4

5 Project OmegaYear 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7

6 Required Rate of Return18%

7 Investment-$225,000

8 Cash Inflows-$190,000$150,000$190,000$215,000$175,000$197,000$70,000

9 NPV =$119,689 Formula Project Omega: =C7+NPV(B6,D8:J8)

10

11 Project AlphaYear 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7

12 Required Rate of Return18%

13 Investment-$300,000

14 Cash Inflows-$50,000$150,000$200,000$250,000$150,000$180,000$90,000

15 NPV =$176,525 Formula Project Alpha: =C13+NPV(B12,D14:J14)

16

17 NPV comparison: Accept both Omega and Alpha; or select Alpha that has the highest NPV of $176,525

18

19Exercise 4b

20Net Present Value Example Comparing Two Projects (with inflation)

21

22 Project OmegaYear 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7

23 Required Rate of Return21%

24 Investment-$225,000

25 Cash Inflows-$190,000$150,000$190,000$215,000$175,000$197,000$70,000

26 NPV =$76,650 Formula Project Omega: =C24+NPV(B23,D25:J25)

27

28 Project AlphaYear 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7

29 Required Rate of Return21%

30 Investment-$300,000

31 Cash Inflows-$50,000$150,000$200,000$250,000$150,000$180,000$90,000

32 NPV =$129,536 Formula Project Alpha: =C30+NPV(B29,D31:J31)

33

34 NPV comparison: Accept both Omega and Alpha; or select Alpha that has the highest NPV of $129,536

5.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 rate of return of 20 percent. Your financial advisors predict inflation to remain at 3 percent into the foreseeable future. Given the following information for each project, which one should be SIMSOX first priority? Should SIMSOX fund any of the other projects? If so, what should be the order of priority based on return on investment?The only project SIMSOX should consider is Voyagers. Each of the other two projects would not satisfy the high rate of return SIMSOX expects from its projects.Project: Dust DevilsYearInflowsOutflowsNet flowNPV

0500,000(500,000)(500,000)

150,00050,00040,650

2250,000250,000165,246

3350,000350,000188,084

Total: $(106,020)

Project: Ospry

YearInflowsOutflowsNet flowNPV

0250,000(250,000)(250,000)

175,00075,00060,976

275,00075,00049,574

375,00075,00040,304

450,00050,00021,845

Total: $(77,301)

Project: Voyagers

YearInflowsOutflowsNet flowNPV

075,000(75,000)(75,000)

115,00015,00012,195

225,00025,00016,525

350,00050,00026,869

450,00050,00021,845

5150,000150,00053,280

Total: $55,714

Additional Q & A1. Describe Project Selection/Screening Methods & Project Portfolio process.

Term Portfolio is applied to a collection of projects and programs that are grouped together for pursuing objectives focused on some specific business strategy.

Design of a project portfolio system:A. Project Classification

Deciding how well a strategic or operations project fits the organizations strategy. Classification of a project in terms of Compliance (must do), Operational & Strategic projectB. Selecting a Model

Selection criteria depending upon classification Financial models: payback, net present value (NPV) Non-financial models: projects of strategic importance to the firm. Applying Multi-Weighted Scoring Models to evaluate and align projects closer with the organizations strategic goals.

Reduces the number of wasteful projects

Helps identify proper goals for projects Helps everyone involved how and why a project is selected

C. Sources and Solicitation of Project Proposals Within the organization Request for proposal (RFP) from external sources (contractors and vendors)D. Ranking Proposals and Selection of Projects Prioritizing requires discipline, accountability, responsibility, constraints, reduced flexibility, and loss of power.E. Managing the Portfolio Senior management input The priority team (project office) responsibilitiesProject Screening matrix:

Project Screening Process:

2. What are the benefits of Project Portfolio Management?

a) Builds discipline into the project selection process.b) Links project selection to strategic metrics.c) Prioritizes project proposals across a common set of criteria, rather than on politics or emotion.d) Allocates resources to projects that align with strategic direction.e) Balances risk across all projects.f) Justifies killing projects that do not support strategy.g) Improves communication and supports agreement on project goals3. What is project formulation? What are the various steps involved in project formulation?Project Formulation is a concise, exact statement of a project to set the boundaries or limits of work to be performed by the project. It is a formal document that gives a distinctive identity of the project and precise meaning of project work to prevent conflict, confusion, or overlap.Project formulation can be also defined as one of the stages in the lifecycle of a project. The formulation stage is also called Initiation, Conceptualization, Definition, Pre-Project. This stage aims to:

Carefully identify and weight various components of project work

Analyze project feasibility and cost-effectiveness

Examine and approve project inputs and outputs

Identify stakeholders and their involvement and contribution

Define benefits and expectations

Estimate resources needed

Perform a preliminary analysis of risks

Make an outline of project scheduleChapter -10

End of Chapter Review Questions1.What is the difference between leading and managing a project?Leading involves recognizing and communicating the need to change course and direction of the project, aligning people to this new direction, and motivating the team to overcome obstacles to achieve the new objectives. Managing is about formulating plans and objectives, designing procedures to achieve those objectives, monitoring progress, and taking corrective action. Managing is about putting out fires and maintaining the course. Leading is about change, and altering the course of a project.2.Why is a conductor of an orchestra an appropriate metaphor for being a project manager? What aspects of project managing are not reflected by this metaphor? Can you think of other metaphors that would be appropriate?There are many parallels between conducting an orchestra and managing a project. Conductors and project managers integrate the contributions of others. Each is dependent upon the expertise and talents of others. They facilitate performance rather than actually perform. Project managers orchestrate the completion of the project by inducing participants to make the right decision at the right time. Both control the pace and intensity of work by coordinating the involvement of players. Finally each has a vision of performance that transcends the music score or project plan.

The conductor metaphor works best in describing how a project manager interacts with project members to complete the project. The metaphor fails to capture the intricacies of dealing with all of the project stakeholders (government officials, contractors, top management, customers) that impact the project.Other metaphors that emerge from class discussions include: quarterback, steering wheel, and ships captain.

3.What does the exchange model of influence suggest you do to build cooperative relationships to complete a project?

According to the exchange model of influence, the primary way to gain cooperation is to provide services and resources to others in exchange for future resources and services (quid pro quo). The key is to find out what you can offer others that is of value to them so that they will feel obligated to reciprocate. Here the notion of influence currencies is useful in identifying different ways to gain cooperation from others. A second key is building a positive bank account with those whom you are dependent upon so that they are inclined to cooperate with you.

4.What differences would you expect to see between the kinds of influence currencies that a project manager in a functional matrix would use and the influence a project manager of a dedicated project team would use?

This question is designed to explore the impact that the project management structure has on the ability of project managers to exercise influence over team members. The key point is that the project manager of a dedicated team has more formal authority over the participants and the project and, therefore, greater access to influence currencies than the project manager in a functional matrix. For example, the dedicated project manager is responsible for assigning project work, while functional managers do so in a functional matrix. A dedicated project manager will have greater access to position-related currencies. Since dedicated projects are used for high priority projects, the dedicated project manager is likely to develop inspiration-related currencies. Project managers in a functional matrix compensate for their lack of formal authority by exercising informal influence through the use of relationships and personal currencies.

5.Why is it important to build a relationship before you need it?

People are likely to be more cooperative if they know you, and you have developed a personal relationship with them. When people view you as pleasant, credible, and helpful based on past contact, they are more likely to be responsive to your requests for help and less confrontational when problems arise. The key is building a positive credit in the relationship that you can tap into when you need help.

6.Why is it critical to keep the project sponsor informed?

The project sponsor is a powerful ally who uses his/her influence to protect the project when it comes under attack in higher circles of management. Project sponsors need to be kept informed so that they can defend the project to the best of their abilities.

7.Why is trust a function of both character and competence?

Character alone is not likely to engender trust. People must have confidence in the other persons abilities and competence. For example, you are unlikely to follow someone who has the best of intentions if he/she has a track record of failing to get things done correctly. Conversely, one will not trust someone who is very competent but has a doubtful character. For example, you are unlikely to follow someone who is quite competent if you believe he/she is only looking out for what is best for him/her.8. Which of the eight traits/skills associated with being an effective project manager is the most important? The least important? Why?This question is designed to generate discussion rather than a definitive answer. The eight traits/skills for an effective project manager are as listed below:1. Systems thinker2. Personal integrity3. Proactive4. High emotional intelligence (EQ).5. General business perspective6. Effective time management7. Skillful politician8. OptimistMost will pick either emotional intelligence, systems thinker, skillful politician, or personal integrity. It is best to debate the choices, especially between skillful politician and personal integrity. The key is to think about how these traits relate to being an effective project manager. For example, personal integrity is important because it leads to trust which facilitates more effective interaction. Alternatively, being a skilled politician is necessary to deal with different stakeholders with conflicting agendas. It is fair to conclude that while some traits may be more important than others, all are important to being an effective project manager.Additional Q & A1. Explain the process of selection of Project team members.

Factors affecting recruiting/selecting team members Importance of the project For high-priority projects that are critical to the future of the organisation, the project manager can choose whoever he/she deems necessary

For less significant projects, the project manager will have to persuade personnel from other areas within the organisation to join the team Management structure used to complete the project In many matrix structures, the functional manager controls who is assigned to the project; the project manager will have to work with the functional manager to obtain necessary personnel. How to recruit? Ask for volunteers: Experienced project managers stress the importance of asking for volunteers. Agreeing to work on the project is the first step towards building personal commitment to the project. Who to recruit?1. Problem-solving ability: If the project is complex and fuzzy, then a manager wants people who are good at working under uncertainty and have strong problem identification and solving skills. 2. Availability: Sometimes, the most available people are not the ones wanted by the team. Conversely, if members are already overcommitted, they may not be able to offer much. 3. Technological expertise: To be wary of people who know too much about a specific technology; hard time settling down and doing the work4. Credibility: The credibility of the project is enhanced by the reputation of the people involved in the project. Selecting a sufficient number of winners lends confidence to the project. 5. Political connections: Managers are wise to select individuals who already have a good working relationship with key stakeholders. 6. Ambition, initiative, and energy: These qualities make up for a lot of shortcomings in other areas; not to be underestimated7. Lesser Familiarity: On challenging, breakthrough projects, it is wise to interject the team with experts who have little previous working experience with others.