Chapter 1: The World of Project Management

True/False

1. A primary purpose of forming projects is to assign the responsibility for accomplishing some organizational task to a specific person or small group.

Response: See section 1.1

Level: easy

2. One of the few similarities between project management and general management is that both exist in the well-defined organizational structure of superior/subordinates in the overall organization.

Response: See section 1.2

Level: medium

3. Many recent developments in project management are being driven by changes in the nature of the American workforce.

Response: See section 1.1

Level: medium

4. There has been a growing use of projects to achieve an organization’s strategic goals

Response: See section 1.1

Level: medium

5. While general managers have their authority limited to specific areas in the overall organization, project managers have authority over any activity required by the project.

Response: See section 1.2

Level: medium

6. Projects are always carried out under conditions of uncertainty.

Response: See section 1.3

Level: easy

7. One can trade-off time and cost when managing a project, but the project’s technical specifications must be maintained exactly as the client initially specifies.

Response: See section 1.3

Level: medium

8. Nonnumeric project selection methods are only suitable if numeric methods are not available.

Response: See section 1.5

Level: medium

9. When using financial methods for selecting projects, the payback period is the simplest and best method to use.

Response: See section 1.5

Level: medium

10 Rank-ordering a large number of projects can be done with a Q-sort.

Response: See section 1.5

Level: medium

11. A disadvantage of using the payback period method for selecting projects is that it cannot reflect the time-value of money.

Response: See section 1.5

Level: medium

12. A disadvantage of using the discounted cash flow method (or net present value) for selecting projects is that it ignores all non-monetary factors associated with the project except risk.

Response: See section 1.5

Level: medium

13. A disadvantage of using scoring models rather than financial models for selecting projects is that they cannot include the project’s profitability.

Response: See section 1.5

Level: medium

14. A PM does not need to understand why a project is selected for funding because he did not initiate the process.

Response: See section 1.5

Level: medium

15. The main distinction between platform and breakthrough projects is that the former usually depend on existing technology.

Response: See section 1.6

Level: medium

16. The main distinction between platform and derivative projects is that the latter depend on existing technology.

Response: See section 1.6

Level: medium

17. One reason for the emphasis on project management is that tasks fit neatly into business-as-usual.

Response: See section 1.1

Level: easy

18. Programs are subdivisions of projects.

Response: See section 1.1

Level: easy

19. Projects are subdivisions of programs.

Response: See section 1.1

Level: easy

20. A similarity between project management and general management is the tendency to “manage by exception.”

Response: See section 1.2

Level: medium

21. Project budgets are primarily modifications of budgets for the same activity in the previous period.

Response: See section 1.2

Level: medium

22. In project management, superior-subordinate relationships are known and lines of authority are clear.

Response: See section 1.2

Level: medium

23. Having responsibility for the outcome of a project without the authority of rank or position is common in project management.

Response: See section 1.2

Level: medium

24. Negotiating the purchase of a new car would typically be characterized as win-win negotiation.

Response: See section 1.2

Level: medium

25. In project management, it is often necessary to trade-off one objective for another.

Response: See section 1.3

Level: easy

26. A project that is selected because it is necessary for continued operations exemplifies a sacred cow.

Response: See section 1.5

Level: medium

27. The comparative benefits method is considered a nonnumeric project selection method.

Response: See section 1.5

Level: medium

28. When using the weighted scoring model, the categories for each scale must be in equal intervals.

Response: See section 1.5

Level: medium

29. Scoring methods were developed to overcome some of the disadvantages of simple financial profitability methods.

Response: See section 1.5

Level: medium

30. One limitation of scoring methods is that they can only incorporate quantitative data.

Response: See section 1.5

Level: medium

31. As a rule of thumb, the number of factors included in a scoring model should be at least 10.

Response: See section 1.5

Level: medium

32. Projects success is not determined by the portfolio of projects in an organization.

Response: See section 1.6

Level: medium

33. R&D projects are oriented toward using newly developed technologies or existing technologies in a new manner.

Response: See section 1.6

Level: medium

34. Projects with deliverables that are incrementally different from existing offerings are classified as platform projects.

Response: See section 1.6

Level: medium

35. The project manager depends on legitimate authority to gain the cooperation of the many departments in the organization that may be asked to supply technology, information, resources and personnel to the project.

Response: See section 1.2

Level: medium

36. In the early years of a project when outflows usually exceed inflows, the NPV of the project for those years will be positive.

Response: See section 1.5

Level: medium

Multiple Choice

37. Which of the following is not a trend in project management?

a) achieving strategic goals

b) improving project effectiveness

c) quasi projects

d) reductive projects

e) achieving routine goals

Response: See section 1.1

Level: medium

38. Which of the following criteria can be included in scoring models for selecting projects?

a) potential profitability of the project

b) potential impact on the firm’s competitive position

c) the organization’s ability to market the output of a project

d) All of the above can be included

e) only a and b above

Response: See section 1.5

Level: medium

39. If the initial investment is a project is $100,000 and the expected annual net profit for the project is $20,000, the payback period is:

a) One fifth of a year

b) 4 years

c) 5 years

d) 10 years

e) insufficient information to determine the payback period

Response: See section 1.5

Level: medium

40. Which of the following is not a characteristic of a project?

a) They are unique

b) They are routine

c) They have specific due date

d) They have a specific deliverable

e) They have a purpose

Response: See section 1.1

Level: medium

41. “Blue Sky” projects are

a) R & D projects

b) Platform projects

c) Breakthrough projects

d) Derivative projects

e) High risk projects

Response: See section 1.6

Level: medium

42. Searching for the third alternative is most closely associated with

a) win-win negotiation

b) project planning

c) project budgeting

d) the three goals of a project

e) the weighted scoring model

Response: See section 1.2

Level: medium

43. Which of the following is not related to the three goals of a project?

a) time

b) data

c) schedule

d) cost

e) performance

Response: See section 1.3

Level: medium

44. Projects that begin with a slow start, have quick momentum in the middle, and have a slow finish are said to follow which type of lifecycle?

a) J-shaped lifecycle

b) L-shaped lifecycle

c) an exponential growth lifecycle

d) an S-shaped lifecycle

e) an X-shaped lifecycle

Response: See section 1.4

Level: medium

45. Which of the following is a numeric project selection method?

a) comparative benefits

b) payback period

c) Q-sort method

d) operating/competitive necessity

e) sacred cow

Response: See section 1.5

Level: medium

46. A matrix that illustrates the magnitude of both product and process changes resulting from a project is called

a) the aggregate project plan

b) the product-process matrix

c) the aggregate master production schedule

d) the balanced scorecard

e) the R&D project portfolio

Response: See section 1.6

Level: medium

47. The ________________________ attempts to link the organization’s projects directly to the goals and strategy of the organization.

a) the product-process matrix

b) the balanced scorecard

c) the action plan

d) project portfolio process

e) the work breakdown structure

Response: See section 1.6

Level: medium

48. Rebus Inc., a game development company, had gained critical success with its video game Authority Online a year ago. The game's publisher wanted Rebus to undertake a project to revitalize the game's sales by updating the graphics and releasing it for a new platform. This type of project is an example of a(n) _____.

a) derivative project

b) R&D project

c) platform project

d) breakthrough project

e) sacred cow project

Response: See section 1.6

Level: difficult

49. Ultor is a media company that specializes in creating print advertisements for local businesses. Lately, it has been undertaking requests for multimedia projects that are new to it. In this scenario, Ultor is most likely accepting _____.

a) derivative projects

b) R&D projects

c) platform projects

d) breakthrough projects

e) sacred cow projects

Response: See section 1.6

Level: difficult

50. Restrum Corp. is a company that delivers lunch to working professionals through delivery drivers. It has recently undertaken a project that will allow it to use drones to deliver meals to its customers. Restrum's new project can be categorized as a(n) _____.

a) derivative project

b) R&D project

c) blue-sky project

d) breakthrough project

e) sacred cow project

Response: See section 1.6

Level: difficult

51. Alchemax Inc. is looking to undertake a project that requires an initial fixed investment of $200,000 and is expected to return a net cash inflow of $50,000 each year. The payback period for this project will be _____ years.

a) 2

b) 7

c) 4

d) 9

e) 5

Response: See section 1.5

Level: difficult

52. Ouroboros Construction started the construction of a house for a client. The initial planning of the project took longer than expected. Once plans were finalized, it did not take long to erect the structure, and it was done much before schedule. However, it took a lot of time to give the finishing touches to the house, and it was a long time before the house was completed. The project in this scenario has a(n) _____.

a) J-shaped life cycle

b) X-shaped life cycle

c) S-shaped life cycle

d) L-shaped life cycle

e) O-shaped life cycle

Response: See section 1.5

Level: difficult

53. Omicore Softworks, a software development firm, undertook a project that involved developing a bespoke accounting software for a firm. The project initiated with the project manager spending some time to identify the correct resources. Once this was done, the process of writing the program began. Most of the time was spent on debugging and ensuring that the software worked to the client's specification. The project in this scenario has a(n) _____.

a) J-shaped life cycle

b) X-shaped life cycle

c) S-shaped life cycle

d) L-shaped life cycle

e) O-shaped life cycle

Response: See section 1.5

Level: difficult

54 Baketolife, a small bakery that specializes in wedding cakes, undertook a project that required the creation of a large five-tier cake. While the mixture for the cake was easy to make and took less than half a day to prepare, the size of the cake meant that a lot of time was spent ensuring that each cake was cooked all the way through. The project in this scenario has a(n) _____.

a) L-shaped life cycle

b) X-shaped life cycle

c) S-shaped life cycle

d) J-shaped life cycle

e) O-shaped life cycle

Response: See section 1.5

Level: difficult

55. Which of the following is an example of win-lose negotiation?

a) Buying a car from a second-hand car dealership at the asking price.

b) Discussing a problem with all parties concerned and finding a middle ground

c) Carrying on an argument over a petty issue that can be easily resolved

d) Agreeing to share resources for the benefit of all involved in different projects

e) Disagreeing with a project idea while not providing an alternative

Response: See section 1.2

Level: difficult

56. Which of the following is an example of win-win negotiation?

a) Buying a car from a second-hand car dealership at the asking price

b) Forcibly using resources allocated to another department

c) Keeping resources that could be used by another team busy in unnecessary tasks

d) Agreeing to share resources for the benefit of all involved in different projects

e) Carrying on an argument over a petty issue that can be easily resolved

Response: See section 1.2

Level: difficult

57. Which of the following is an example of lose-lose negotiation?

a) Buying a car from a second-hand car dealership at the asking price

b) Taking time off from a project to help another team

c) Disagreeing with a project idea while not providing an alternative

d) Agreeing to share resources for the benefit of all involved in a project

e) Discussing a problem with all parties concerned and finding a middle ground

Response: See section 1.2

Level: difficult

Short Answer

58. Briefly explain what a project is.

Response: See section 1.1

Level: medium

59. What are the major trends in project management?

60. To what extent can the three goals of a project be traded-off for one another?

Response: See section 1.3

Level: medium

61. Briefly highlight the difference between win-win and win-lose negotiation strategies.

62. Why is having a negotiation skill in win-win negotiation necessary for a project manager?

Response: See section 1.2

Level: medium

63. Briefly describe each of the three fundamental goals of a project.

Response: See section 1.3

Level: medium

64. Briefly describe the two different life cycles of projects.

Response: See section 1.4

Level: medium

65. Explain what the third alternative is in negotiation.

Response: See section 1.2

Level: medium

66. Briefly explain the advantages of using scoring models to evaluate and select projects rather than using financial models.

Level: medium

67. Briefly explain the project portfolio process.

Response: See section 1.6

Level: medium