Flashcards
Projectmanagement Skript 3 Übung 3
Cards in this deck (18)
- 1What do Screening models do?help managers pick th best projects from a pool
of projects
-they are numeric or nonnumeric - 2Criteria screening models should have:Doable
Capability
Flexibility
easy to use
Cost effectiveness
Comparability - 34 Screening & Selection Issues:• Risk – unpredictability to the firm
• Commercial – market potential
• Internal operating – changes in firm ops
• Additional – image, patent, fit, etc - 4models to decide for Project Screening:• Checklist
• Simple scoring models
• putting proects in an order
• Profile models
• Financial models - 5What is a Checklist Model and why is it important?A checklist is a list of criteria applied to possible projects.
Checklists are important to decide which project fits best to the chosen criteria - 6Simple Scoring ModelsEach project receives a score that is the weighted sum
of its grade on a list of criteria - 74 steps of Analytic Hierarchy Process:1. Construct a hierarchy of criteria and subcriteria
2. Allocate weights to criteria
3. Assign numerical values to evaluation dimensions
4. Scores determined by summing the products of
numeric evaluations and weights
scores are comparable - 8Profile ModelsShow risk/return options for projects. Requires:
• Criteria selection as axes
• Rating each project on criteria - 9Financial ModelsBased on the time value of money principal
All of these models use discounted cash flows - 10Payback PeriodDetermines how long it takes for a project to reach a
breakeven point.
Cash flows should be discounted
Lower numbers are better (faster payback)
- 11A project requires an initial investment of $200,000 and will generate cash savings of $75,000 each year for the next five years. What is the payback period?
- 12Net Present Value projects the change in the firm’s stock value if a project is undertaken.
- 13Portfolio management requires:decision making
prioritization
review
realignment
reprioritization - 143 Keys to Successful Project Portfolio Management:Flexible structure
Low-cost
Time-paced - 15What are the benefits and drawbacks of project checklists for screening alternatives?Project Checklists are easy to use, based on a simplistic visual model
with a basic scoring system. Using a checklist enhances the input and
discussion during the screening process. Unfortunately, the model
also has its shortcomings. The two most significant are the subjectivity
of the rating system and the lack of a weighting system. The weighting
system is important in establishing trade-offs between criterion. - 16What are the benefits and drawbacks of the profile model for project screening? Be specific about the problems that may arise in identifying the efficient frontier.The Profile Model is beneficial because it clearly outlines the
relationship between risk and return of project alternatives. It also
establishes a threshold for eliminating or qualifying projects.
On the other hand, it may not be as effective for selecting alternatives
because it limits discriminating criteria to risk and return only.
Additionally, it can be difficult to accurately quantify risk. . - 17How are financial models superior to other screening models? How are they inferior?Financial models are superior to screening models in that they link
project alternatives to financial performance. The results of financial
models are non-subjective meaning they are not subject to individual
interpretation (10% return means 10% return regardless of who is
looking at it).
Therefore, it becomes easier to compare the benefits of one project
alternative versus another. The models do have some drawbacks.
Due to the required information in determining NPV and IRR, it may be
difficult to make long-term estimates accurately - 18What are some of the key difficulties is successfully implementing portfolio management practices?-The staff can get into conflict with top management
- investment in projects that do
not fall inline with portfolio priorities
- project
portfolio management may fail due to a lack of resource