Lee Charlton

POM 447 HW-1

Chapter 1 Exercise

4. Check out the Project Management Institute’s home page at www.pmi.org.

A. Review general information about PMI as well as membership information.

B. See if there is a PMI chapter in your state. If not, where is the closest one?

a) There are two locations in MA, the one closest to my residence is located
at:

411 Waverley Oaks Road

Suite 331B
Waltham, MA 02452
USA

C. Use the search function at the PMI home page to find information on Project
Management Body of Knowledge (PMBOK). What are the major knowledge
areas of PMBOK?
a) There are ten major knowledge areas which are project integration
management, Project scope management, project time management,
Project cost management, Project quality management, Project human
resource management, Project communications management, Project rick
management, project procurement management, and project steakholders
management.

D. Explore other links that PMI provides. What do these links tell you about the
nature and future of project management?
a) The site states “Nearly 75% of executives believe their company's
performance could improve if their employees gained certain key skills*.
One of these critical skills—project management…” This shows us that
the field will continue to grow more and more since executives see the
benefits of having a project management expert.

Chapter 2 Exercise
2. Two new software projects are proposed to a young, start-up company. The Alpha
project will cost $150,000 to develop and is expected to have annual net cash flow of
$40,000. The Beta project will cost $200,000 to develop and is expected to have annual
net cash flow of $50,000. The company is very concerned about their cash flow. Using
the payback period, which project is better from a cash flow standpoint? Why?

Payback = investment / annual saving

 Project Alpha: $150,000 / $40,000 = 3.75 years
Project Beta: $200,000 / $50,000 = 4 years
Project ALPHA is the better payback.

3. A five-year project has a projected net cash flow of $15,000, $25,000, $30,000,
$20,000, and $15,000 in the next five years. It will cost $50,000 to implement the project.
If the required rate of return is 20 percent, conduct a discounted cash flow calculation to
determine the NPV.

A B C D E F G H
1
2 Exercise 2.3
3 Net Present Value Example
4
Project 2.3 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
5
6 Investment -$50,000
7 Cash Flows $15,000 $25,000 $30,000 $20,000 $15,000
Required Rate of 20%
8 Return
9
10 NPV = $12,895

NPV is POSITIVE, ACCEPT project.

4. You work for the 3T company, which expects to earn at least 18 percent on its
investments. You have to choose between two similar projects. Your analysts predict that
inflation rate will be a stable 3 percent over the next 7 years. Below is the cash flow
information for each project. Which of the two projects would you fund if the decision is
based only on financial information? Why?

Exercise 4a
Net Present Value Example Comparing Two Projects

Project
Omega Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Required
Rate of
Return 18%
$
(225,0
Investment 00.00)
$ $ $ $ $ $ $
Cash (190,00 150,00 190,00 215,00 175,00 197,00 70,00
Inflows 0.00) 0.00 0.00 0.00 0.00 0.00 0.00
 $
119,68
NPV= 9.07

Project
Alpha Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Required
Rate of
Return 18%
$
(300,0
Investment 00.00)
$ $ $ $ $ $ $
Cash (50,000 150,00 200,00 250,00 150,00 180,00 90,00
Inflows .00) 0.00 0.00 0.00 0.00 0.00 0.00
$
176,52
NPV= 5.49

Accept both Omega and Alpha; or choose Alpha because it has highest NPV

Exercise 4b
Net Present Value Example Comparing Two Projects (w/ Inflation)

Project
Omega Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Required
Rate of
Return 21%
$
(225,0
Investment 00.00)
$ $ $ $ $ $ $
Cash (190,00 150,00 190,00 215,00 175,00 197,00 70,00
Inflows 0.00) 0.00 0.00 0.00 0.00 0.00 0.00
$
76,649
NPV= .89

Project
Alpha Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Required
Rate of
Return 21%
$
(300,0
Investment 00.00)
 $ $ $ $ $ $ $
Cash (50,000 150,00 200,00 250,00 150,00 180,00 90,00
Inflows .00) 0.00 0.00 0.00 0.00 0.00 0.00
$
129,53
NPV= 6.19

Accept both Omega and Alpha; or choose Alpha it has highest NPV

Chapter 3 Exercise

2. You work for LL Company, which manufactures high-end optical scopes for
hunting rifles. LL Company has been the market leader for the past 20 years and has
decided to diversify by applying its technology to develop a top-quality binocular. What
kind of project management structure would you recommend they use for this project?
What information would you like to have to make this recommendation, and why?
a) Knowing how important the project is to the firm’s success is huge, it’ll show
how much focus to put on this project. Seeing that they already are a huge hunting
rifle scope company and that is their biggest thing so there doesn’t seem to be the
need for much more development there, also binoculars are not that different in
comparison to the scopes they make, so they will not need to bring in any other
inputs. I would use a project-based organizational structure

3. You work for Barbata Electronics. Your R&D people believe they have come up
with an affordable technology that will double the capacity of existing MP3 players and
uses audio format that is superior to MP3. The project is code named KYSO (Knock
Your Socks Off). What kind of project management structure would you recommend
they use for the KYSO project? What information would you like to have to make this
recommendation and why?
a) Competition with other electronic companies that deal with mp3 players would be
a very big factor I’d go with a project organization so we can clearly identify roles
and responsibilities. I’d want to about the type of teamwork Barbata Electronics
has and the culture they have built. Since it is an idea that is superior to mp3
formatting and there is nothing yet like it they will likely need support from other
members, so I’d make sure they have a dedicated projects team to assist them.
Chapter 4 Exercise

4. You are the father or mother of a family of four (kids ages 13 and 15) planning a
weekend camping trip. Develop a responsibility matrix for the work that needs to be done
prior to starting your trip.

Task Date Father Mother Son Daughter

Getting money 8/09 R
Getting food 8/10 R R
Survival kit 8/09 R R
Fill gas tank 8/11 R
Pack tent 8/10 R
Find camp site 8/05 R R
Agree on camp spot 8/07 R R R R

7. Develop a communication plan for an airport security project. The project entails
installing the hardware and software system that (1) scans a passenger’s eyes, (2)
fingerprints the passenger, and (3) transmits the information to a central location for
evaluation.
INFORMATION OCCURRENCE METHOD ALLOCATED RECEIVING
TRAINING monthly meeting HR Airport authority
CHANGES weekly email Project designers
manager
DESIGNER weekly meeting Project Projects office
PROGRESS manager
REPORT
STATUS REPORT Daily email Team Staff members
coordinator

9. Your roommate is about to submit a scope statement for a spring concert sponsored by
the entertainment council at Western Evergreen State University (WESU). WESU is a
residential university with over 22,000 students. This will be the first time in six years
since WESU sponsored a spring concert. The entertainment council has budgeted
$40,000 for the project. The event is to occur on June 5th. Since your roommate knows
you are taking a class on project management she has asked you to review her scope
statement and make suggestions for improvement. She considers the concert a resume-
building experience and wants to be as professional as possible. Below is a draft of her
scope statement. What suggestions would you make and why?
(Hint: use the track change function in the Word file to edit this scope statement. Briefly
explain the reasons by inserting comments or notes.
WESU Spring Music Concert Project Objective
To organize and deliver a 6-hour music concert
Deliverables
• Concert security
• Contact local newspapers and radio stations Local advertising
• Separate beer garden
• Six h ours of musical entertainment Comment [LC1]: Delete space from to fix
• Design a commemorative concert t-shirt grammar.
• Local sponsors
• Food venues
• Event insurance
• Safe environment Comment [LC2]: Give more detail on safe
Milestones environment to vague
1. Secure all permissions and approvals
2. Sign big-name artist
3. Contact secondary artists Comment [LC3]: Give a completed by time
4. Secure vendor contracts Comment [LC4]: Also add a complete by
5. Advertising campaign date
6. Plan set-up
7. Concert
8. Clean-up
Technical Requirements
1. Professional sound stage and system
2. At least five performing acts
3. Restroom facilities Comment [LC5]: How many facilities would
4. Parking be needed for 8000 student?
5. Compliance with WESU and city requirements/ordinances Comment [LC6]: Need to know how much
Limits and Exclusions parking will be needed
• Seating capacity for 8,000 students.
• Performers are responsible for travel arrangement to and from WESU.
• Performers must provide own liability insurance.
• Performers and security personnel will be provided lunch and dinner on the day of
the concert.
• Vendors contribute 25 percent of sales to concert fund Comment [LC7]: Got rid of the spacing
• Concert must be over at 12:15 A.M. between the two points
Customer Review: WESU