PM-UNIT-2

1 Briefly explain the differences between functional, matrix, and project

organizations. Describe how each structure affects the management of a
project.

2 Explain & describe a well planned and executed project. Describe a failed
project. What elements of project integration might have contributed to the
success or failure of each?
Well-Planned and Executed Project:
- Clear project objectives aligned with organizational goals.
- Comprehensive project planning with detailed tasks and timelines.
- Effective project communication among stakeholders.
- Efficient resource management and allocation.
- Proactive risk management and contingency planning.
Failed Project:
- Undefined or shifting project objectives.
- Inadequate planning and scope management.
- Poor communication and stakeholder engagement.
- Inadequate resource allocation and management.
- Ineffective risk management and lack of contingency plans.
Project Integration in Success:
- Alignment of project objectives with organizational strategy.
- Collaboration and effective communication among stakeholders.
- Coordinated planning and execution of project activities.
- Integration of stakeholder inputs and feedback.
- Proactive monitoring, control, and quality assurance.
Project Integration in Failure:
- Lack of alignment with organizational strategy.
- Insufficient collaboration and communication.
- Inconsistent planning and execution.
- Inadequate stakeholder engagement and support.
- Neglected monitoring, control, and quality assurance.

3 Why is good project scope management so important on IT projects?

Importance of good project scope management on IT projects:

• Alignment with stakeholder expectations and prevention of scope creep.

• Clear definition of project deliverables for accurate estimation and
planning.
• Effective change management to control scope changes and minimize
disruptions.
• Optimization of resource allocation and time management.
• Mitigation of project risks and adherence to defined boundaries.
• Enhanced communication and collaboration among project stakeholders.
• Improved project performance and adherence to timelines.
 • Increased customer satisfaction by delivering expected outcomes.
• Facilitation of project monitoring, control, and successful project
completion.

4 Explain process groups and mapping of process groups to knowledge

areas.
Process Groups:
- Initiating: Defines the project's purpose, objectives, and stakeholders, and
obtains authorization to start the project.
- Planning: Develops a comprehensive project management plan, defines project
scope, creates a work breakdown structure (WBS), and identifies project risks.
- Executing: Implements the project plan, coordinates resources, and performs
project activities to deliver the project's outcomes.
- Monitoring and Controlling: Tracks project progress, monitors performance,
manages changes, and takes corrective actions to ensure project objectives are
met.
- Closing: Formalizes project completion, conducts project reviews, archives
project documentation, and captures lessons learned.

Mapping of Process Groups to Knowledge Areas:

- Initiating: Integration Management, Stakeholder Management.
- Planning: Scope Management, Time Management, Cost Management, Quality
Management, Human Resource Management, Communications Management,
Risk Management.
- Executing: Integration Management, Quality Management, Resource
Management, Communications Management, Procurement Management.
- Monitoring and Controlling: Integration Management, Scope Management,
Time Management, Cost Management, Quality Management, Communications
Management, Risk Management.
- Closing: Integration Management, Procurement Management.
5 Write a short note on Weighted Scoring Model
- A weighted scoring model is a systematic tool for project selection based on
multiple criteria.
- It helps evaluate projects based on factors such as organizational needs,
problem-solving capability, time requirements, priority, and financial
performance.
- The model assigns weights to each criterion and numerical scores to each
project.
- The weighted score for each project is calculated by multiplying the weight by
the score for each criterion and summing the results.
- The project with the highest weighted score is typically chosen for selection.
- It allows for the analysis of different scenarios by adjusting weights and
updating scores and charts automatically.
- The model facilitates decision-making by considering stakeholder perspectives
and reaching consensus.
- A point model can be used to assign points based on how well a project meets
specific criteria, simplifying the selection process.
- Minimum scores or thresholds can be established to reject projects that do not
meet minimum standards.
- The model provides a systematic and objective approach to project selection,
ensuring informed decisions based on evaluation of project criteria and
priorities.

6 Describe processes involve in “Project portfolio Management”.

- Strategic Alignment: Align projects with the organization's strategic goals.
- Investment Analysis: Analyze projects from a financial and strategic
perspective.
- Portfolio Planning: Determine the optimal mix and prioritization of projects.
- Resource Management: Allocate and utilize resources effectively across
projects.
- Performance Monitoring: Track project progress, budget adherence, and
stakeholder satisfaction.
- Risk Management: Assess and mitigate risks at the portfolio level.
- Governance and Decision Making: Establish governance structures and
decision-making processes.
- Continuous Improvement: Evaluate portfolio performance and implement
corrective actions.
Overall, PPM enables organizations to effectively manage their portfolio of
projects and programs, ensuring strategic alignment, optimal resource
utilization, and improved decision-making for successful project delivery.

7 Explain net present value analysis

- Net Present Value (NPV) analysis calculates the expected net monetary gain or
loss from a project.
- The time value of money principle states that a dollar earned today is worth
more than a dollar earned in the future.
- NPV is determined by discounting future cash flows to their present value
using a chosen discount rate.
- Positive NPV indicates that a project's returns exceed the cost of capital,
making it financially favorable.
- The discount rate incorporates the time value of money and risk in the NPV
calculation.
- Projects with higher NPVs are preferred over projects with lower NPVs,
assuming other factors are equal.
- Spreadsheet tools like Microsoft Excel offer built-in functions for NPV
calculations.
- NPV analysis allows for comparison of projects with different cash flows and
durations.
- NPV complements other factors in project selection, such as strategic
alignment and risk assessment.
- NPV analysis helps inform investment decisions by evaluating the financial
viability and profitability of projects.
8 Explain Project management plan content
- The project management plan provides a brief overview of the project's scope,
schedule, and cost baselines.
- It includes specific plans from each knowledge area that offer more detailed
baseline information. For instance, the project management plan may provide a
high-level budget baseline for the entire project, while the cost baseline
prepared in the project cost management knowledge area provides detailed cost
projections by Work Breakdown Structure (WBS) and month.
- The project management plan can also encompass a project life cycle
description and development approach.
- Additionally, the project team can create other project documents as needed for
their specific projects.
- Project management plans should be adaptable and open to change in response
to project or environmental modifications. They assist the project manager in
leading the team and assessing project progress.
- The contents of project management plans can vary based on the project's size
and duration. Small projects with few team members may only require essential
documents like a project charter, scope statement, and Gantt chart. In contrast,
large projects with significant resources and longer durations benefit from
detailed project management plans and separate plans for each knowledge area.
- While project management plans should be tailored to each project's
requirements, they typically include common elements such as an
introduction/overview, project organization, management and technical
processes, scope, schedule and budget information, and references to other
project planning documents.

9 Explain Return on Investment with example

ROI (Return on Investment) is a financial metric used to evaluate the
profitability of an investment. It is calculated by subtracting the investment cost
from the total benefits and dividing it by the cost. Here's a concise explanation
of ROI with an example:

1. Definition: ROI measures the financial gain or loss relative to the investment
cost.
2. Formula: ROI = (Total Benefits - Investment Cost) / Investment Cost
3. Percentage Value: ROI is expressed as a percentage, representing the return
on the investment.
4. Positive vs. Negative ROI: A positive ROI indicates that the returns exceed
the investment cost, while a negative ROI means the investment incurred a loss.
5. Decision-making: ROI helps in comparing and prioritizing investment
options based on their potential returns.
6. Example: Suppose a company invests $100,000 in a marketing campaign and
generates $120,000 in revenue. The ROI is ($120,000 - $100,000) / $100,000 =
20%.
7. Importance of ROI: It enables organizations to evaluate the effectiveness and
efficiency of their investments.
8. Considerations: ROI should be analyzed alongside other factors such as
investment duration, associated risks, and industry benchmarks to make
informed decisions.

10 What is Payback Analysis with example?

Payback analysis is a financial tool used to determine the time required to
recover the total investment in a project through net cash inflows. Here's an
explanation of payback analysis with an example using the provided
information:

1. Definition: Payback analysis calculates the time taken to recoup the initial
investment in terms of net cash inflows.
2. Payback Period: It represents the time when the cumulative benefits equal or
surpass the cumulative costs.
3. Calculation: The payback period is determined by comparing the cumulative
discounted benefits and costs each year until the point where the cumulative
benefits minus costs equals zero.
4. Chart Representation: Creating a chart of cumulative discounted costs and
benefits helps visualize the payback period, which is indicated by the point
where the lines intersect.
5. Example: In Figure 4-6, the payback period occurs in Year 1 as the
cumulative discounted benefits minus costs turns positive.

6. Importance: Payback period is considered significant by organizations, and

they may have specific requirements for project payback periods, often aiming
for shorter payback periods.
7. Decision-making: Organizations, particularly smaller firms, often prioritize
projects with shorter payback periods, indicating quicker cost recovery and
higher benefits.
8. Limitations: While payback period is useful for project selection, it should be
balanced with long-term goals and consider other financial factors such as NPV
and ROI. Estimating costs and benefits for IT projects can be challenging.

11 Perform a financial analysis for a project. Assume that the projected

costs and benefits for this project are spread over four years as follows:
Estimated costs are $200,000 in Year 1 and $30,000 each year in Years 2, 3,
and 4. Estimated benefits are $0 in Year 1 and $100,000 each year in Years
2, 3, and 4. Use a 9 percent discount rate, and round the discount factors to
two decimal places. Create a spreadsheet or use the business case financials
template on the companion Web site to calculate and clearly display the
NPV, ROI, and year in which payback occurs. In addition, write a
paragraph explaining whether you would recommend investing in this
project, based on your financial analysis
Based on the provided information, let's perform a financial analysis for the
project with the given projected costs and benefits:
Year 1:
Cost: $200,000
Benefit: $0

Years 2, 3, and 4:
Cost: $30,000 per year
Benefit: $100,000 per year

Discount Rate: 9%
To calculate the Net Present Value (NPV), Return on Investment (ROI), and
payback period, we need to discount the projected costs and benefits to their
present values.
Discount Factors (rounded to two decimal places):
Year 1: 1.00
Year 2: 0.92
Year 3: 0.85
Year 4: 0.78

Calculating the Present Values (PV) for costs and benefits:

Year 1:
Cost PV: $200,000 * 1.00 = $200,000
Benefit PV: $0

Years 2, 3, and 4:
Cost PV: $30,000 * 0.92 + $30,000 * 0.85 + $30,000 * 0.78 = $80,400
Benefit PV: $100,000 * 0.92 + $100,000 * 0.85 + $100,000 * 0.78 = $346,800
Calculating the Net Present Value (NPV):
NPV = Total Benefit PV - Total Cost PV
NPV = $346,800 - ($200,000 + $80,400)
NPV = $66,400

Calculating the Return on Investment (ROI):

ROI = (Total Benefit PV - Total Cost PV) / Total Cost PV
ROI = ($346,800 - $280,400) / $280,400
ROI = $66,400 / $280,400
ROI ≈ 23.68%

Determining the Payback Period:

The payback period is the time it takes for the cumulative benefits to equal or
surpass the cumulative costs.
Year 1: Cumulative cost = $200,000, Cumulative benefit = $0
Year 2: Cumulative cost = $230,000, Cumulative benefit = $100,000
Year 3: Cumulative cost = $260,000, Cumulative benefit = $200,000
Year 4: Cumulative cost = $290,000, Cumulative benefit = $300,000

The payback period occurs in Year 3 when cumulative benefits ($200,000)

equal cumulative costs ($260,000).

Based on the financial analysis, the project has a positive NPV of $66,400 and
an ROI of approximately 23.68%. Additionally, the payback period occurs in
Year 3. These results suggest that the project is financially viable. Therefore, I
would recommend investing in this project based on the positive NPV, favorable
ROI, and relatively quick payback period.