POM 447 HW-1 Chapter 1 Exercise
www.pmi.org.. 4. Check out the Project Management Institute’s home p age 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 i nformation 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 ti me 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 their company's performance could improve improve if their employees gained certain key skills*. 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 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 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
1 2 3 4 5 6 7 8
C
D
E
F
G
H
Exercise 2.3 Net Present Value Example Project 2.3
Year 0
Investment Cash Flows Required Rate of Return
-$50,000
Year 1
Year 2
Year 3
Year 4
Year 5
$15,000
$25,000
$30,000
$20,000
$15,000
20%
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 i s based only on financial information? Why?
Exercise 4a Net Present Value Example Comparing Two Projects
Project Omega Required Rate of Return
Investment Cash Inflows
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
$ (190,00 0.00)
$ 150,00 0.00
$ 190,00 0.00
$ 215,00 0.00
$ 175,00 0.00
$ 197,00 0.00
$ 70,00 0.00
18% $ (225,0 00.00)
$ 119,68 9.07
NPV= Project Alpha Required Rate of Return
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
$ (50,000 .00)
$ 150,00 0.00
$ 200,00 0.00
$ 250,00 0.00
$ 150,00 0.00
$ 180,00 0.00
$ 90,00 0.00
18% $ (300,0 00.00)
Investment Cash Inflows $ 176,52 5.49
NPV=
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 Required Rate of Return
Year 0
Investment
Year 3
Year 4
Year 5
Year 6
Year 7
$ (190,00 0.00)
$ 150,00 0.00
$ 190,00 0.00
$ 215,00 0.00
$ 175,00 0.00
$ 197,00 0.00
$ 70,00 0.00
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
$ (225,0 00.00)
Cash Inflows
Project Alpha Required Rate of Return
Year 2
21%
Investment
NPV=
Year 1
$ 76,649 .89
Year 0
21% $ (300,0 00.00)
$ (50,000 .00)
Cash Inflows
NPV=
$ 150,00 0.00
$ 200,00 0.00
$ 250,00 0.00
$ 150,00 0.00
$ 180,00 0.00
$ 90,00 0.00
$ 129,53 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 i s 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 Getting money Getting food Survival kit Fill gas tank Pack tent Find camp site Agree on camp spot
Date 8/09 8/10 8/09 8/11 8/10 8/05 8/07
Father
Mother R R
Son
Daughter
R
R R
R R R R
R R
R
R
7. Develop a communication plan for an airport security project. T he 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. T he entertainment council has budgeted $40,000 for the project. The event is to occur on J une 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 • Design a commemorative concert t-shirt • • Local sponsors Food venues • • Event insurance Safe environment • Milestones 1. Secure all permissions and approvals 2. Sign big-name artist 3. Contact secondary artists 4. Secure vendor contracts 5. Advertising campaign 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 4. Parking 5. Compliance with WESU and city requirements/ordinances Limits and Exclusions 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 • • Concert must be over at 12:15 A.M. Customer Review: WESU
Comment [LC1]: Delete space from to fix
grammar.
Comment [LC2]: Give more detail on safe
environment to vague
Comment [LC3]: Give a completed by time Comment [LC4]: Also add a complete by
date
Comment [LC5]: How many facilities would be needed for 8000 student? Comment [LC6]: Need to know how much parking will be needed
Comment [LC7]: Got rid of the spacing between the two points