Deck 3: Measurable Organizational Value and the Business Case

Question 1

The net present value method of project valuation takes into account all relevant cash flows as well as the company's required rate of return.

Answer 1

True

Question 2

All of the following are steps in developing the project MOV except:

A) Identify the available organizational resources.
B) Identify the desired value of the IT project.
C) Develop an appropriate metric.
D) Set a time frame for achieving MOV.
E) Verify and get agreement from project stakeholders.

Answer 2

A

Question 3

The MOV should explicitly state the technology that will support the IT project.

Answer 3

False

Question 4

For the sake of efficiency and unity of purpose and direction, it is usually advisable to have the project manager take sole responsibility for developing the business case.

Question 5

Which of the following is the best MOV statement?

A) Our project should make Dayton customers flock to the stores in droves to buy our products.
B) Our project should be completed in no more than 180 days and should cost no more than $150,000 and be completed 100% in-house.
C) Our project should increase sales in the Dayton market by 15% next year to complete our company's Ohio expansion strategy.
D) Our project should utilize the Spiral Development approach to eliminate 95% of the major risks to our Dayton sales program.
E) Our project should produce an advertising campaign in Dayton that wins the Ohio Advertising Guild's Award for most creative campaign.

Question 6

Development of the project charter is the responsibility of the project sponsor.

Question 7

In general, riskier project alternatives will have a lower breakeven point than less risky project alternatives.

Question 8

The total benefits of ownership (TBO) should address the benefits of an alternative over the course of its useful life.

Question 9

The total cost of ownership (TCO) includes only the direct or up-front costs and ongoing expenditures.

Question 10

The MOV should be adjusted at each phase of a project to align with the realities of project execution.

Question 11

A scoring model can combine both qualitative items reflected in the weights and scores that are based on people's judgments.

Question 12

Scope and schedule are examples of:

A) Project Management processes.
B) Project Management tools.
C) PMBOK areas of knowledge
D) Project Management objectives
E) Project Management infrastructure.

Question 13

A significant deficiency of the payback method of analyzing alternatives is the failure to account for the time value of money.

Question 14

All cash flows over the useful life of a project alternative must be included in the payback method of analysis.

Question 15

Which of the following statements is the best indicator that the new software project was successful.

A) The project's product, a software system, was enthusiastically accepted by 100% of the end users who were able to begin using it after completing only a one-day training session.
B) The project's product, a software system, was a week late and 2% over budget, but six months later was found to have met the company's goal of reducing service callbacks by 15%.
C) The project's product, a software system, was completed two weeks ahead of time freeing up the entire development team to begin work on other projects.
D) The project's product, a software system, was completed right on schedule and was delivered $10,000 under the $100,000 budget allocation.
E) The project's product, a software system, was completed on time and on budget and was tested and shown to be 100% bug-free.

Question 16

The overall goal and measure of project success is:

A) the project's MOV.
B) the project's NPV.
C) the project's technical competency.
D) the project's adherence to budget and schedule.
E) the project's end-user acceptance.

Question 17

Scoring models are useful because they allow for the inclusion of qualitative factors.

Question 18

A project that provided customers better products and services would impact the _____area of an organization.

A) strategic
B) customer
C) financial
D) operational
E) social

Question 19

A business case is a deliverable that documents the project's goal, as well as several alternatives or options.

Question 20

A project that increased market share would impact the _____area of an organization.

A) strategic
B) customer
C) financial
D) operational
E) social

Question 21

Which of the following statements about the business case is NOT true:

A) A business case provides an analysis of feasibility
B) A business case provides senior management with sufficient information to fund a project.
C) A business case provides details of possible impacts, costs and benefits.
D) A business case provides a project budget.
E) A business case may be a large, formal document.

Question 22

Trying to decide between three alternatives, a company employed a scoring model.Three criteria were chosen.Criteria A was believed to be the most important and so was given a weight of 50%.The other two were deemed to be equal to each other in importance.A relative scoring range of 0 to 10 was used.The table below shows each alternative and their scores.Which alternative should the company choose?

A) Choose alternative A
B) Choose alternative B
C) Choose alternative C
D) Choose either alternative A or B
E) Choose either alternative A or C

Question 23

A project that provided cleaner air would impact the _____area of an organization.

A) strategic
B) customer
C) financial
D) operational
E) social

Question 24

A company utilizes the payback method exclusively to select projects.Which of the following mutually exclusive (they can only do one of them) projects will they choose? (Assume cash flows occur in equal monthly installments)

A) Initial Investment: $10,000 Net Cash Flows: year 1:$0 year 2:$120,000 year 3:$60,000 each year thereafter:$60,000
B) Initial Investment:$100,000 Net Cash Flows: year 1:$50,000 year 2:$50,000 year 3:$100,000 each year thereafter:$1,000,000
C) Initial Investment:$10,000 Net Cash Flows: year 1:0 year 2:$100,000 year 3:$100,000 each year thereafter:$100,000
D) Initial Investment:$100,000 Net Cash Flows: year 1:$1,000,000 year 2:$2,000,000 year 3:$2,000,000 each year thereafter:0
E) Initial Investment:$10,000 Net Cash Flows: year 1:$8,000 year 2:$12,000 year 3:$120,000 each year thereafter:$120,000

Question 25

Why is it important that the MOV provide value to the organization?

Question 26

What is a business case?

Question 27

What is economic feasibility?

Question 28

Evaluating the feasibility of an alternative in terms of the funds and resources available to support a project for the organization is a measure of _____.

A) organizational feasibility
B) technical feasibility
C) economic feasibility
D) legal feasibility
E) ethical feasibility

Question 29

Describe how a project's MOV can support an organization's goals and strategies.

Question 30

How many widgets would a company have to sell if their initial investment was $60,000 and widgets sold for $25? Materials to produce 100 widgets cost $1000.Direct labor costs $2.50 per widget.Total indirect costs & overhead is 10% of the selling price.

A) 4,800
B) 6,000
C) 8,000
D) 8,142
E) Not enough information to calculate.

Question 31

A project that improved operational effectiveness would impact the _____area of an organization.

A) strategic
B) customer
C) financial
D) operational
E) social

Question 32

Why must the MOV be measurable?

Question 33

A project that increased profits would impact the _____area of an organization.

A) strategic
B) customer
C) financial
D) operational
E) social

Question 34

Determining whether the proposed solution will work within the software architecture is a measure of _____.

A) organizational feasibility
B) technical feasibility
C) economic feasibility
D) legal feasibility
E) ethical feasibility

Question 35

Calculate the ROI for a project with total expected costs of $40,000 and total expected benefits of 35,000.

A) -12.5%
B) 12.5%
C) 1.875%
D) 187.5%
E) -18.75%

Question 36

Which of the following was NOT given as a reason for recruiting a core team to develop the business case?

A) enhanced credibility
B) alignment with organizational goals
C) access to real costs
D) early identification of project team.
E) shared sense of ownership

Question 37

Determining whether employees will be able to adapt to the planned change is _____.

A) organizational feasibility
B) technical feasibility
C) economic feasibility
D) legal feasibility
E) ethical feasibility

Question 38

Calculate the Net Present Value for a project with the following cash flows: Year 0: ($5,000) Year 1: $10,000 Year 2: $10,000 Year3: ($2,000).The discount rate is 5%.

A) $19,209.75
B) $14,209.75
C) $18,840.25
D) $23,840.25
E) $12,350.00

Question 39

Why must stakeholders agree on the project's MOV?

Question 40

Evaluating the feasibility of an alternative in terms of the funds and resources available to support a project for the organization is a measure of _____.

A) organizational feasibility
B) technical feasibility
C) economic feasibility
D) legal feasibility
E) ethical feasibility

Question 41

What is organizational feasibility?

Question 42

What is Total Cost of Ownership?

Question 43

Describe the criteria that should be used to make a project selection decision.

Question 44

There are numerous financial models for analyzing the benefits from a project.Among those models discussed in the chapter are: payback, breakeven, return on investment (ROI), net present value (NPV), and scoring models. What are the strengths and weaknesses of each approach to analyzing value?

Question 45

What is technical feasibility?

Question 46

What is the purpose of a Business Case and what are the characteristics of a good Business Case?

Question 47

What is Measurable Organizational Value (MOV) and what are the four major characteristics of a good MOV?

Question 48

Describe the Balanced Scorecard Approach and list at least three significant reasons why it can fail as an analysis tool.

Question 49

The text discusses numerous aspects of feasibility; name and define three of them.

Question 50

What is Total Benefits of Ownership?