Mba 6931 Ch 02 Quiz

Question 1:

Which of the many purposes of project portfolio management are most important to a firm with a low project management maturity? Which to a firm with high maturity?

1. Low project management maturity:

1. To make managers aware of the number of projects both proposed and underway.
2. To identify proposed projects that are not really projects and that should be handled using other processes.
3. To have managers achieve consensus on what criteria should be used to select projects.
4. To limit the number of projects so the important projects can get the resources and attention they need for success.
5. To eliminate projects that bypassed a formal selection process and may not provide benefits corresponding to their risks and/or costs.
6. To keep from overloading the organization’s available capacity.
7. To balance short-, medium-, and long-term returns.

1. High project management maturity:

1. To prioritize the list of available projects.
2. To limit the number of projects so the important projects can get the resources and attention they need for success.
3. To identify projects that best fit the organization’s goals and strategy.
4. To identify projects that support multiple organizational goals and cross-reinforce other important projects.
5. To eliminate projects that incur excessive risk and/or cost.
6. To balance short-, medium-, and long-term returns.
7. To balance the resources with the needs of the organization.

Question 3:

On what basis does the real options model select projects?

It attempts to estimate the opportunity cost of implementing the project now versus deferring its execution to sometime in the future. The decisions, once made, are often very expensive to reverse so caution should be exercised when making final decisions. The cost of the project reduced by deferring it.