Question 1

Which of these is a potential disadvantage of a real options approach?

Accepted Answer

A)  Requires a project team to stick with a rigid plan that allows no deviation when new information becomes available 
B)  Involves only go-no-go options rather than potential for re-routing plans 
C)  Applies only to financial projects 
D)  Project teams can find it difficult to abandon or shift the direction of a project once they have invested their time and energy. 
E)  Does not allow for the opportunity to begin with a pilot project. 
A)  Requires a project team to stick with a rigid plan that allows no deviation when new information becomes available 
B)  Involves only go-no-go options rather than potential for re-routing plans 
C)  Applies only to financial projects 
D)  Project teams can find it difficult to abandon or shift the direction of a project once they have invested their time and energy. 
E)  Does not allow for the opportunity to begin with a pilot project. D

Question 2

A planning committee is attempting to decide on a venue for an upcoming week-long sales meeting. The locations are similar in price, but each offers different strengths such as on-site entertainment, weather, restaurants within walking distance, and hotel amenities. The best method for project assessment is most likely:

Accepted Answer

A)  Factor rating 
B)  Financial analysis 
C)  Pareto Priority Index 
D)  Real options and decisions trees 
E)  Fishbone diagram 
A)  Factor rating 
B)  Financial analysis 
C)  Pareto Priority Index 
D)  Real options and decisions trees 
E)  Fishbone diagram A

Question 3

Which of the following undesirable outcomes could an organization prevent by creating a portfolio map?

Accepted Answer

A)  A project with costs that are higher than estimated 
B)  Undergoing too many high-risk projects 
C)  Failing to accurately understand the cultural forces that could oppose a project 
D)  The selection of an ineffective project manager 
E)  None of the above 
A)  A project with costs that are higher than estimated 
B)  Undergoing too many high-risk projects 
C)  Failing to accurately understand the cultural forces that could oppose a project 
D)  The selection of an ineffective project manager 
E)  None of the above B

Question 4

Company B is considering implementing a new CRM Customer Relationship Management) system for its 10 UK facilities. The initial cost of the project will be £500,000 and the system is predicted to have a useful life of five years. The annual cost of maintaining the system will be £20,000, but it will increase revenues by £100,000 per year. What can we conclude about this potential project?

Accepted Answer

A)  Payback period will be 6.25 years 
B)  If we consider only the information available, this would not be considered a worthwhile investment. 
C)  Payback period will be 5 years. 
D)  If we consider only the information available, this would be considered a worthwhile investment. 
E)  NPV is positive.
F) A and B only
G) C, D, and E only 
A)  Payback period will be 6.25 years 
B)  If we consider only the information available, this would not be considered a worthwhile investment. 
C)  Payback period will be 5 years. 
D)  If we consider only the information available, this would be considered a worthwhile investment. 
E)  NPV is positive.
F) A and B only
G) C, D, and E only

Question 5

NPV is a measure of:

Accepted Answer

A)  The difference between the estimated costs of a project and the present value associated with future cash flows 
B)  The return on initial investment of the project 
C)  How long it will take to recuperate the cost of a project with future revenue or cost savings 
D)  The expected rate of return required in order for a company to pursue a project 
E)  None of the above 
A)  The difference between the estimated costs of a project and the present value associated with future cash flows 
B)  The return on initial investment of the project 
C)  How long it will take to recuperate the cost of a project with future revenue or cost savings 
D)  The expected rate of return required in order for a company to pursue a project 
E)  None of the above

Question 6

Which of the following problem statements includes all of the critical components required for a complete problem statement?

Accepted Answer

A)  "We need more employees in our Mumbai office." 
B)  "We need to employ social marketing techniques in order to attract the attention of our target market which is growing by 50%." 
C)  "Based on government regulations that went into effect 30 days ago, carbon emissions at our Czech plant are double the allowable limit." 
D)  "Because our biggest competitor went bankrupt last month, we need to increase the number of sales people in our company to handle the anticipated increase in sales of our product." 
E)  "Our sales people are not working hard enough."
F) None of the above 
A)  "We need more employees in our Mumbai office." 
B)  "We need to employ social marketing techniques in order to attract the attention of our target market which is growing by 50%." 
C)  "Based on government regulations that went into effect 30 days ago, carbon emissions at our Czech plant are double the allowable limit." 
D)  "Because our biggest competitor went bankrupt last month, we need to increase the number of sales people in our company to handle the anticipated increase in sales of our product." 
E)  "Our sales people are not working hard enough."
F) None of the above

Question 7

Each of the following is an example of a problem statement component
EXCEPT:

Accepted Answer

A)  Identity 
B)  People 
C)  Market 
D)  Timing 
E)  A and B
F) B and C 
A)  Identity 
B)  People 
C)  Market 
D)  Timing 
E)  A and B
F) B and C

Question 8

An advantage of factor rating for project selection is that it:

Accepted Answer

A)  Is a compensatory model 
B)  Is focused solely on financial outcomes 
C)  Offers objective measures that eliminate human bias 
D)  Involves no arithmetic calculations 
E)  Allows for comparisons on several weighted criteria 
A)  Is a compensatory model 
B)  Is focused solely on financial outcomes 
C)  Offers objective measures that eliminate human bias 
D)  Involves no arithmetic calculations 
E)  Allows for comparisons on several weighted criteria

Question 9

Which of the following factors can influence the selection of a project as it moves through the project selection funnel?

Accepted Answer

A)  Organizational politics 
B)  Resource constraints 
C)  Strategic goals 
D)  All of the above 
E)  None of the above 
A)  Organizational politics 
B)  Resource constraints 
C)  Strategic goals 
D)  All of the above 
E)  None of the above

Question 10

Project Thunderbolt will incur $30,000 in cost during year 0 and will produce $10,000 in net cost savings to the company in years 1 through 6. What would the net present value be for this project for 15% and 20% required rates of return? Use the appropriate table at the end of this exam.)

Accepted Answer

A)  +$37,850, +$33,325 
B)  +$41,610, +$36,040 
C)  -$4,080, -$9,900 
D)  +$7,850, +$3,250 
E)  -$25,680, -$26,650
F) None of these; the answer is: _____________________ 
A)  +$37,850, +$33,325 
B)  +$41,610, +$36,040 
C)  -$4,080, -$9,900 
D)  +$7,850, +$3,250 
E)  -$25,680, -$26,650
F) None of these; the answer is: _____________________

Question 11

Which of the following tools for causal analysis would be the most appropriate to apply to the following situation:
"We experienced low attendance and dismal sales during the grand opening of our newest retail store in Cairo last week. Let's gather a small team to engage in a structured discussion about the interacting set of factors that worked systematically to create this situation."

Accepted Answer

A)  Influence diagram 
B)  Fishbone diagram 
C)  Mind map 
D)  Affinity exercise 
E)  None of the above 
A)  Influence diagram 
B)  Fishbone diagram 
C)  Mind map 
D)  Affinity exercise 
E)  None of the above

Question 12

If a team wishes to use brainstorming to evaluate an option for achieving a project's goal, which of the following methods would be most appropriate?

Accepted Answer

A)  A list of advantages and disadvantages for each option 
B)  A multi-stage decision tree built on real options concepts 
C)  A financial analysis measuring the projected net present value of each project 
D)  Pareto priority 
E)  Payback period
F) None of the above
G) All of the above 
A)  A list of advantages and disadvantages for each option 
B)  A multi-stage decision tree built on real options concepts 
C)  A financial analysis measuring the projected net present value of each project 
D)  Pareto priority 
E)  Payback period
F) None of the above
G) All of the above

Question 13

Project Bird-in-Hand will require an initial investment of $1.5 million and will result in a payment of $2 million from the client at the end of three years. If the required rate of return is 8%, what is the NPV for this project?

Accepted Answer

A)  +$1,588,000 
B)  +$88,000 
C)  +$3,654,000 
D)  +$28,000 
E)  +$500,000 
A)  +$1,588,000 
B)  +$88,000 
C)  +$3,654,000 
D)  +$28,000 
E)  +$500,000

Question 14

Fredrika has been asked to develop a Pareto Priority Index for a process improvement project. She and her team have researched the situation and developed the following parameters:
Estimated lifetime cost savings: $200,000
Total estimated cost: $50,000
Forecasted project success probability: 70%
Estimated project duration: 2 years
Given this information, what is the Pareto Priority Index?

Accepted Answer

A)  1.4 
B)  11.43 
C)  .25 
D)  2.8 
E)  4.0 
A)  1.4 
B)  11.43 
C)  .25 
D)  2.8 
E)  4.0

Which of these is a potential disadvantage of a real options approach?

Which of the following undesirable outcomes could an organization prevent by creating a portfolio map?

NPV is a measure of:

Which of the following problem statements includes all of the critical components required for a complete problem statement?

Each of the following is an example of a problem statement component EXCEPT:

An advantage of factor rating for project selection is that it:

Which of the following factors can influence the selection of a project as it moves through the project selection funnel?

Project Thunderbolt will incur $30,000 in cost during year 0 and will produce $10,000 in net cost savings to the company in years 1 through 6. What would the net present value be for this project for 15% and 20% required rates of return? Use the appropriate table at the end of this exam.)

If a team wishes to use brainstorming to evaluate an option for achieving a project's goal, which of the following methods would be most appropriate?

Project Bird-in-Hand will require an initial investment of $1.5 million and will result in a payment of $2 million from the client at the end of three years. If the required rate of return is 8%, what is the NPV for this project?

Managing Projects: What and Why

The Effective Project Manager

Project Initiation: Setting the Stage for Action

Project Definition: Creating the Using the Work Breakdown Structure

Assessing and Preparing for Project Uncertainties

Project Scheduling: Adding the Time Dimension

Modifying Project Schedules to Accommodate Time and Resource Constraints

Monitoring and Controlling Project Performance

Finishing Well: Project Closure and Learning

Filters

Exam 3: Project Selection: Doing the Right Thing

Which of these is a potential disadvantage of a real options approach?

Which of the following undesirable outcomes could an organization prevent by creating a portfolio map?

NPV is a measure of:

Which of the following problem statements includes all of the critical components required for a complete problem statement?

Each of the following is an example of a problem statement component EXCEPT:

An advantage of factor rating for project selection is that it:

Which of the following factors can influence the selection of a project as it moves through the project selection funnel?

Project Thunderbolt will incur $30,000 in cost during year 0 and will produce $10,000 in net cost savings to the company in years 1 through 6. What would the net present value be for this project for 15% and 20% required rates of return? Use the appropriate table at the end of this exam.)

If a team wishes to use brainstorming to evaluate an option for achieving a project's goal, which of the following methods would be most appropriate?

Project Bird-in-Hand will require an initial investment of $1.5 million and will result in a payment of $2 million from the client at the end of three years. If the required rate of return is 8%, what is the NPV for this project?

Managing Projects: What and Why

The Effective Project Manager

Project Initiation: Setting the Stage for Action

Project Definition: Creating the Using the Work Breakdown Structure

Assessing and Preparing for Project Uncertainties

Project Scheduling: Adding the Time Dimension

Modifying Project Schedules to Accommodate Time and Resource Constraints

Monitoring and Controlling Project Performance

Finishing Well: Project Closure and Learning

Filters