Chapter 2 True - False

REVIEW QUESTIONS
1. What are the advantages of having and following a project methodology?
2. Describe the five phases of the IT project methodology.
3. Why is it important to have deliverables for each phase of the IT project methodology?
4. How can the experiences of and lessons learned by past project team members be incorporated
into a project methodology?
5. Describe the conceptualize and initialize phase of the IT project methodology.
6. What is a project charter?
7. What are the advantages of developing a detailed project plan after a project has been
approved for funding?
8. Describe the execute and control phase of the IT project methodology.
9. Describe the close project phase of the IT project methodology.
10. Describe the evaluate project success phase of the IT project methodology.
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11. Describe the five project management processes.
12. Why can a project that is developed under budget and before its deadline still not be
considered successful?
13. What kinds of tools would be needed to support an IT project?
14. How does an organizational infrastructure support a project?
15. What is a project infrastructure?
16. Describe a technical infrastructure that would be needed to support a consulting team
working at a client site.
17. Discuss how the project management knowledge areas support the IT project methodology.
18. What is a business case?
19. Why should an organization develop a business case?
20. What is the purpose of selecting a core team to develop a business case?
21. What is a projects measurable organizational value (MOV)?

Chapter 2 True - False

22. Develop a MOV for an organization that is contemplating developing a corporate intranet.
23. Why must a projects MOV be agreed upon?
24. Describe how a projects MOV can support an organizations goals and strategies.
25. Describe how an IT project can bring value to an organization.
26. What is a base case alternative? Why should a business case even consider a base case
alternative?
27. Describe Economic Feasibility.
28. Describe Technical Feasibility.
29. Describe Organizational Feasibility.
30. What other types of feasibility issues should an organization consider?
31. How should the risk of each business case alternative be analyzed?
32. What is Total Cost of Ownership?
33. What is Total Benefits of Ownership?
34. What is the difference between tangible and intangible benefits? Give an example of each.
35. What are some ways of quantifying intangible benefits?
36. Describe the payback method. What are some advantages and disadvantages of this method?
37. Describe the breakeven method. What are some advantages and disadvantages of this
method?
38. Describe the ROI method. What are some advantages and disadvantages of this method?
39. Describe the NPV method. What are some advantages and disadvantages of this method?
40. What effect does increasing the discount rate have on a projects NPV?
41. What are the advantages of using a scoring model when comparing several project
alternatives? Any disadvantages?
42. What is an IT project portfolio?
43. Why shouldnt an organization always take on less challenging projects?
44. Describe the criteria that should be used to make a project selection decision?

Chapter 2 True - False

45. Describe the Balanced Scorecard approach.
46. Describe the financial perspective of the Balanced Scorecard approach.
47. Describe the customer perspective of the Balanced Scorecard approach.
48. Describe the internal process perspective of the Balanced Scorecard approach.
49. Describe the innovation and learning perspective of the Balanced Scorecard approach.
50. How does the concept of MOV support the Balanced Scorecard approach?
True / False
1. A methodology provides a strategic-level plan for managing and controlling IT projects.
True/False ________
2. A business case is a deliverable that documents the projects goal, as well as several
alternatives or options.
True/False ________
3. Project Management processes include Scope, Schedule, Budget, and Quality
True/False ________
4. The SDLC (systems development life cycle) is a deliverable from the project charter.
True/False ________
5. The project charter is a key deliverable for the second phase of the IT project methodology.
True/False ________
6. For the sake of efficiency and unity of purpose and direction, it is usually advisable to have
the project manager take sole responsibility for developing the business case.
True/False ________
7. The focus of the conceptualize and initialize phase is to determine whether a proposed
project should and can be done.
True/False ________
8. The MOV should be adjusted at each phase of a project to align with the realities of project
execution.
True/False ________
9. Feasibility focuses on what can go wrong and what must go right.
True/False ________
10. Feasibility focuses on whether a particular alternative is doable and worth doing.
True/False ________

Chapter 2 True - False

11. The MOV should explicitly state the technology that will support the IT project.
True/False ________
12. The total cost of ownership (TCO) includes only the direct or up-front costs and ongoing
expenditures.
True/False ________
13. The total benefits of ownership (TBO) should address the benefits of an alternative over its
useful life.
True/False ________
14. A significant deficiency of the payback method of analyzing alternatives is the failure to
account for the time value of money.
True/False ________
15. All cash flows over the useful life of a project alternative must be included in the payback
method of analysis.
True/False ________
16. The net present value method of project valuation takes into account all relevant cash flows
as well as the companys required rate of return.
True/False ________
17. The answer to a breakeven analysis is almost always expressed in a currency metric.
True/False ________
18. Scoring models are useful because they allow for the inclusion of qualitative factors.
True/False ________
19. Selecting multiple risky projects that have low correlation to each other can result in a
portfolio of projects whose overall risk is lower than the individual projects risk.
True/False ________
20. The Balance Scorecard approach employs four perspectives for analyzing project benefits:
Financial Perspective, Customer Perspective, Competitor Perspective, and Internal Processes
Perspective.
True/False ________
Multiple Choice
02-01 An Information Technology Project Methodology ( ITPM )
a) is an alternative metric for deciding between competing projects.
b) is a six-phase program described by PMBOK and offered as a generally accepted
industry practice.
c) is specified by parameters of the business case.
d) is a set of deliverables derived from the various PLC phases.
e) is a strategic-level plan for managing and controlling IT projects.

Chapter 2 True - False

Answer: _________
02-02 Scope and schedule are examples of:
a)
b)
c)
d)
e)

Project Management processes.

Project Management tools.
PMBOK areas of knowledge
Project Management objectives
Project Management infrastructure.

Answer: _________
02-03 The first stage of the IT project methodology focuses on:
a)
b)
c)
d)
e)

choosing the project team members.

defining the overall goal of the project.
conceptualizing alternative approaches to project development.
identifying the project's scope.
identifying project managers and sponsors.

Answer: _________
02-04 The project charter is a key deliverable from ________ and addresses, along with other
questions, ________:
a)
b)
c)
d)
e)

phase 1, How long will this project take

phase 1, Who is the project sponsor?
phase 2, What scope controls will be used?
phase 2, How much will the project cost?
phase 3, A detailed risk plan.

Answer: _________

Chapter 2 True - False

02-05 The _________ gives authority to the project manager to begin carrying out the processes
and tasks associated with the systems development life cycle .
a)
b)
c)
d)
e)

business case
project sponsor
initiating process
implementation plan
project charter

Answer: _________
02-06 The IT project management foundation includes all of the following except:
a)
b)
c)
d)
e)

PM processes
PM objectives
PM methodologies
PM tools
PMBOK knowledge areas

Answer: _________
02-07 Which of the following statements about the business case is NOT true:
a) A business case provides an analysis of feasibility
b) A business case provides senior management with sufficient information to fund a
project.
c) A business case provides details of possible impacts, costs and benefits.
d) A business case provides a project budget.
e) A business case may be a large, formal document.
Answer: _________
02-08 The Business case is the key deliverable for:
a)
b)
c)
d)
e)

phase 1.
phase 2.
phase 3.
phase 4.
phase 5.

Answer: _________

Chapter 2 True - False

02-09 Which of the following was NOT given as a reason for recruiting a core team to develop
the business case?
a)
b)
c)
d)
e)

enhanced credibility
alignment with organizational goals
access to real costs
early identification of project team.
shared sense of ownership

Answer: _________
02-10 The overall goal and measure of project success is:
a)
b)
c)
d)
e)

the project's MOV.

the project's NPV.
the project's technical competency.
the project's adherence to budget and schedule.
the project's end-user acceptance.

Answer: _________
02-11 All of the following are steps in developing the project MOV except:
a)
b)
c)
d)
e)

Identify the available organizational resources.

Identify the desired value of the IT project.
Develop an appropriate metric.
Set a time frame for achieving MOV.
Verify and get agreement from project stakeholders.

Answer: _________
02-12 Which of the following statements is the best indicator that the new software project was
successful.
a) The project's product, a software system, was enthusiastically accepted by 100% of
the end users who were able to begin using it after completing only a one-day
training session.
b) The project's product, a software system, was a week late and 2% over budget, but six
months later was found to have met the company's goal of reducing service callbacks
by 15%.
c) The project's product, a software system, was completed two weeks ahead of time
freeing up the entire development team to begin work on other projects.
d) The project's product, a software system, was completed right on schedule and was
delivered $10,000 under the $100,000 budget allocation.
e) The project's product, a software system, was completed on time and on budget and
was tested and shown to be 100% bug-free.
Answer: _________

Chapter 2 True - False

02-13 Which of the following is the best MOV statement?
a) Our project should make Dayton customers flock to the stores in droves to buy our
products.
b) Our project should be completed in no more than 180 days and should cost no more
than $150,000 and be completed 100% in-house.
c) Our project should increase sales in the Dayton market by 15% next year to complete
our company's Ohio expansion strategy.
d) Our project should utilize the Spiral Development approach to eliminate 95% of the
major risks to our Dayton sales program.
e) Our project should produce an advertising campaign in Dayton that wins the Ohio
Advertising Guild's Award for most creative campaign.
Answer: _________
02-14 A company utilizes the payback method exclusively to select projects. Which of the
following mutually exclusive (they can only do one of them) projects will they choose? (Assume
cash flows occur in equal monthly installments)
a) Initial Investment: $10,000 Net Cash Flows: year 1:$0 year 2:$120,000 year
3:$60,000 each year thereafter:$60,000
b) Initial Investment:$100,000 Net Cash Flows: year 1:$50,000 year 2:$50,000 year
3:$100,000 each year thereafter:$1,000,000
c) Initial Investment:$10,000 Net Cash Flows: year 1:0 year 2:$100,000 year
3:$100,000 each year thereafter:$100,000
d) Initial Investment:$100,000 Net Cash Flows: year 1:$1,000,000 year 2:$2,000,000
year 3:$2,000,000 each year thereafter:0
e) Initial Investment:$10,000 Net Cash Flows: year 1:$8,000 year 2:$12,000 year
3:$120,000 each year thereafter:$120,000
Answer: _________
02-15 How many widgets would a company have to sell if their initial investment was $60,000
and widgets sold for $25? Materials to produce 100 widgets cost $1000. Direct labor costs $2.50
per widget. Total indirect costs & overhead is 10% of the selling price.
a)
b)
c)
d)
e)

4,800
6,000
8,000
8,142
Not enough information to calculate.

Answer: _________

Chapter 2 True - False

02-16 Calculate the ROI for a project with total expected costs of $40,000 and total expected
benefits of 35,000.
a)
b)
c)
d)
e)

-12.5%
12.5%
1.875%
187.5%
-18.75%

Answer: _________
02-17 Calculate the Net Present Value for a project with the following cash flows: Year 0:
($5,000) Year 1: $10,000 Year 2: $10,000 Year3: ($2,000). The discount rate is 5%
a)
b)
c)
d)
e)

$19,209.75
$14,209.75
$18,840.25
$23,840.25
$12,350.00

Answer: _________
02-18 Trying to decide between three alternatives, a company employed a scoring model. Three
criteria were chosen. Criteria A was believed to be the most important and so was given a
weight of 50%. The other two were deemed to be equal to each other in importance. A
relative scoring range of 0 to 10 was used. The table below shows each alternative and
their scores. Which alternative should the company choose?
Criteria
Alternative A
Alternative B
Alternative C
A
5
6
7
B
8
7
7
C
8
8
5
a)
b)
c)
d)
e)

Choose alternative A
Choose alternative B
Choose alternative C
Choose either alternative A or B
Choose either alternative A or C

Answer: _________
02-19 Which of the following is NOT a perspective from the Balanced Scorecard Approach?:
a)
b)
c)
d)
e)

Financial Perspective
Internal Processes Perspective
Innovation & Learning Perspective
Customer Perspective
Organizational Value Perspective

Answer: _________

Chapter 2 True - False

02-20 The text cites all of the following as reasons supporting the selection of an IT project
except:
a) The project's covariance with other projects leads to a reduction in the overall project
portfolio risk.
b) The project maps directly to the organization's strategies and goals
c) The project provides measurable organizational value.
d) The project represents a cutting edge technology that fits the team skill set.
e) The project ranks favorably based on the companies adaptation of the Balanced
Scorecard Approach.
Answer: _________
Short Question
1. Define an IT project methodology and describe its phases.
Page ______
2. What is the purpose of a project charter?
Page ______
3. Define, compare, and contrast project management processes and project-oriented
processes.
Page ______
4. Describe at least four reasons that the text gives for undertaking an IT project.
Page ______
5. What is the purpose of a Business Case and what are the characteristics of a good
Business Case?
Page ______
6. What is Measurable Organizational Value (MOV) and what are the four major
characteristics of a good MOV?
Page ______
7. The text discusses numerous aspects of feasibility; name and define three of them.
Page ______
8. There are numerous financial models for analyzing the benefits from a project. Among
those models discussed in the chapter are: payback, breakeven, return on investment
(ROI), net present value (NPV), and scoring models. What are the strengths and
weaknesses of each approach to analyzing value?
Page ______
9. Described the Balanced Scorecard Approach and list at least three significant reasons
why it can fail as an analysis tool.
Page ______

Chapter 2 True - False

10. What are the three infrastructures that are needed to support the IT project? Describe the
components of each of the infrastructures.
Page ______