Exam 19: Project Selection and Portfolio Management

The role of the PMO in portfolio management (check all that apply):

The project portfolio (check all that apply)

Statement: Individual project managers are responsible for project portfolio management.

Project Screening corresponds with:

Lack of portfolio management can lead to (check all that apply):

Often, the value of projects in a portfolio is (check one)

Statement: The practice of project portfolio management, considering the tools and methods available and the issues involved, is straightforward and fairly simple to implement.

Statement: Portfolio management is assisted by a project gating methodology wherein projects are assessed and reevaluated at specific stages.

A bridge is to be constructed as part of a 2-lane highway renovation project. There are two alternatives, one is to construct a 4-lane bridge for $2 M , the other to construct a 2-lane bridge now for $1.5 M and a second 2-lane bridge next to it 10 years for a present value expense of $1.2. A two-lane bridge is considered adequate to handle current traffic volume, although in 10 years volume is expected to increase and require 4 lanes. Looking at a 25 year time horizon, the NPV of maintenance for the 4-lane bridge is $1.8 M; the NPV of maintenance for the initial 2-lane bridge and the later-built 2-lane bridge combined is $1.4 M. Use a B/C analysis to determine which alternative should be adopted. Assume that the "benefit" is the same for both alternatives.

T/F Portfolio management is assisted by a project gating methodology wherein projects are assessed and reevaluated at specific stages.

Often, the value of projects in a portfolio is (check one)

Two approaches are being considered for a new system to track and manage a company's project portfolio: one is for the company's own IT department to develop and install the system, the other is to hire an IT contractor to install one of its existing products. The IT department estimates it can complete the project in 2 years with existing personnel. The department operates as a profit center and, hence, charges for its work. The estimated development and upkeep cost of the system is $ 8 M. The contractor has proposed to install its system in only 6 months for a cost of $10 M, and to maintain it thereafter for an additional cost $20,000 per year, starting after the system has been operational for 6 months. The annual benefit of either system in terms of better-selected and -managed projects is estimated to be at least $20 M. In terms of benefit-cost ratio, which is better? Note: it is expected that the chosen system, whichever, will have to be replaced by something else in 6 years.

Statement: Project portfolio management is somewhat analogous to investment portfolio management.

T/F The presence or absence of portfolio management in an organization has little impact on the selection/approval of projects.

T/F An important element in portfolio management is knowing the organization's resource capacity for projects.

T/F Quantitative methods for project evaluation are better than subjective methods simply because they provide results that are objective and unbiased

T/F A "balanced" project portfolio refers to a portfolio where the sum of the value of "big" project is equal to the sum of the value of "small" projects

The Project Portfolio Manager is typically not:

The goal of portfolio management is to (select one)

T/F The practice of project portfolio management, considering the tools and methods available and the issues involved, is straightforward and fairly simple to implement.