Description

INSTANT DOWNLOAD COMPLETE TEST BANK WITH ANSWERS

 

ISBN-13 9780132664158
ISBN-10 0132664151

 

Project Management Achieving Competitive Advantage 3rd Edition by Jeffrey K. Pinto – Test Bank

 

Sample  Questions

 

Project Management: Achieving Competitive Advantage, 3e (Pinto)

Chapter 3   Project Selection and Portfolio Management

 

3.1   True/False Questions

 

1) An effective project selection model must reflect organizational objectives, including a firm’s strategic goals and mission.

Answer:  TRUE

Diff: 2

Section:  3.1 Project Selection

Skill:  Definition

AACSB Tag:  Reflective

 

2) An expert’s opinion on an issue may be subjective but very accurate.

Answer:  TRUE

Diff: 1

Section:  3.1 Project Selection

Skill:  Definition

AACSB Tag:  Reflective

 

3) Numeric project selection models, by their very nature, employ objective values.

Answer:  FALSE

Diff: 2

Section:  3.1 Project Selection

Skill:  Definition

AACSB Tag:  Reflective

 

4) Every decision model contains both objective and subjective factors.

Answer:  TRUE

Diff: 3

Section:  3.1 Project Selection

Skill:  Factual

AACSB Tag:  Reflective

 

5) The simplest method of project screening and selection is developing a list of criteria that pertain to the choice of projects and then applying them to alternatives.

Answer:  TRUE

Diff: 1

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Conceptual

AACSB Tag:  Reflective

 

 

6) The checklist model of project screening has a mechanism to accommodate the differential importance of relevant criteria.

Answer:  FALSE

Diff: 1

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Conceptual

AACSB Tag:  Reflective

7) A simplified scoring model addresses all the weakness of a checklist model for project screening.

Answer:  TRUE

Diff: 1

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Conceptual

AACSB Tag:  Reflective

 

8) A simplified scoring model is used to determine that project Cow has a score of 38 and project GiGi has a score of 30. Project Cow is therefore 26.7% better than project GiGi.

Answer:  FALSE

Diff: 2

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Conceptual

AACSB Tag:  Reflective

 

9) The Analytical Hierarchy Process elegantly addresses scaling issues in criteria and negative utility in alternative scores.

Answer:  FALSE

Diff: 1

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Conceptual

AACSB Tag:  Analytic Skills

 

10) The efficient frontier in a profile model is the set of options that offers a maximum return for a given level of risk or a minimum risk for every level of return.

Answer:  TRUE

Diff: 2

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Factual

AACSB Tag:  Analytic Skills

 

11) The present value of money is lower the further out in the future I expect to spend it.

Answer:  FALSE

Diff: 2

Section:  3.3 Financial Models

Skill:  Analytical

AACSB Tag:  Analytic Skills

 

 

12) The reciprocal of the payback period is used to calculate the average rate of return for a project.

Answer:  TRUE

Diff: 2

Section:  3.3 Financial Models

Skill:  Analytical

AACSB Tag:  Analytic Skills

13) Internal rate of return is preferable to net present value because IRR employs a weighted average cost of capital discount rate that reflects potential reinvestment.

Answer:  FALSE

Diff: 3

Section:  3.3 Financial Models

Skill:  Conceptual

AACSB Tag:  Analytic Skills

 

14) An options model could be used when financial criteria would change significantly over time.

Answer:  TRUE

Diff: 2

Section:  3.3 Financial Models

Skill:  Conceptual

AACSB Tag:  Reflective

 

15) The most important thing to remember when using project selection models is to be consistent and objective.

Answer:  TRUE

Diff: 1

Section:  3.3 Financial Models

Skill:  Conceptual

AACSB Tag:  Reflective

 

16) Because projects managed under a project portfolio management scheme may be independent of each other, it is not necessary to consider resource use when deciding to pursue any single project.

Answer:  FALSE

Diff: 1

Section:  3.4 Project Portfolio Management

Skill:  Conceptual

AACSB Tag:  Reflective

 

17) A balanced project portfolio may be interpreted to mean that a single portfolio contains both high and low risk, low growth and high growth, and risky and safe projects.

Answer:  FALSE

Diff: 2

Section:  3.4 Project Portfolio Management

Skill:  Factual

AACSB Tag:  Reflective

 

 

18) Successful project management firms rely on home runs and narrowly concentrated efforts since specialization creates name recognition and market share.

Answer:  FALSE

Diff: 1

Section:  3.4 Project Portfolio Management

Skill:  Conceptual

AACSB Tag:  Reflective

19) Personnel costs comprise one of the highest sources of project expense.

Answer:  TRUE

Diff: 1

Section:  3.4 Project Portfolio Management

Skill:  Factual

AACSB Tag:  Reflective

 

20) If strategy and portfolio are not in sync, the firm is poised on the cusp of success.

Answer:  FALSE

Diff: 1

Section:  3.4 Project Portfolio Management

Skill:  Conceptual

AACSB Tag:  Reflective

 

3.2   Short Answer Questions

 

1) A project selection model that is broad enough to be applied to multiple projects has the virtue of ________.

Answer:  comparability

Diff: 2

Section:  3.1 Project Selection

Skill:  Definition

AACSB Tag:  Reflective

 

2) A project selection model that is simple to apply has the virtue of ________.

Answer:  ease of use

Diff: 1

Section:  3.1 Project Selection

Skill:  Definition

AACSB Tag:  Reflective

 

3) Project selection models come in two general classes: ________ and ________.

Answer:  numeric, nonnumeric

Diff: 2

Section:  3.1 Project Selection

Skill:  Factual

AACSB Tag:  Reflective

 

 

4) Among the different types of risk that might be considered during project selection are ________, ________ and ________.

Answer:  technical, financial, safety, quality, legal exposure (any three)

Diff: 2

Section:  3.1 Project Selection

Skill:  Factual

AACSB Tag:  Reflective

5) The simplest method of project screening and selection is developing a(n) ________ that contains criteria that pertain to a choice of projects.

Answer:  checklist

Diff: 2

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Conceptual

AACSB Tag:  Reflective

 

6) A simple scoring model assigns ________ to the criteria used to evaluate projects.

Answer:  weights

Diff: 1

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Factual

AACSB Tag:  Reflective

 

7) The ________ method of project screening generates overall project scores that can be compared meaningfully against each other.

Answer:  Analytical Hierarchy Process (AHP)

Diff: 2

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Analytical

AACSB Tag:  Analytic Skills

 

8) One method of assigning weights to the criteria used in AHP is to consider the criteria two at a time and decide which is most important. This ________ to weighting is thought to be accurate because it focuses on a series of relatively simple exchanges.

Answer:  pairwise comparison approach

Diff: 2

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Analytical

AACSB Tag:  Analytic Skills

 

9) In AHP, certain choice options may not contribute positively to the decision goals and are therefore said to have ________.

Answer:  negative utility

Diff: 2

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Analytical

AACSB Tag:  Analytic Skills

 

10) Profile models allow managers to plot ________ options for various alternatives.

Answer:  risk/return

Diff: 2

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Analytical

AACSB Tag:  Analytic Skills

11) In project management, the ________ is the set of project portfolio options that offers either a maximum return for every given level of risk or the minimum risk for every level of return.

Answer:  efficient frontier

Diff: 2

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Analytical

AACSB Tag:  Analytic Skills

 

12) Financial models are all predicated on the ________ principle.

Answer:  time value of money

Diff: 3

Section:  3.3 Financial Models

Skill:  Analytical

AACSB Tag:  Reflective

 

13) The length of time it takes to recoup the investment in a project is the ________.

Answer:  payback period

Diff: 2

Section:  3.3 Financial Models

Skill:  Conceptual

AACSB Tag:  Reflective

 

14) The ________ screening method may arrive at multiple solutions, which is one reason it is used less widely than the net present value technique.

Answer:  internal rate of return (IRR)

Diff: 3

Section:  3.3 Financial Models

Skill:  Conceptual

AACSB Tag:  Reflective

 

15) An organization that has some flexibility in postponing a project and might be able to make a better decision with information that would be available at a later date might make use of a(n) ________ for project screening.

Answer:  options model

Diff: 3

Section:  3.3 Financial Models

Skill:  Conceptual

AACSB Tag:  Reflective

 

 

16) ________ is the systematic process of selecting, supporting, and managing a firm’s collection of projects.

Answer:  Project portfolio management

Diff: 2

Section:  3.4 Project Portfolio Management

Skill:  Definition

AACSB Tag:  Reflective

17) A firm that offsets risky ventures with more secure projects or new development ventures with existing product line cash cows is desirous of ________.

Answer:  (project portfolio) balance

Diff: 3

Section:  3.4 Project Portfolio Management

Skill:  Factual

AACSB Tag:  Reflective

 

18) A principal cause of project portfolio underperformance is lack of ________.

Answer:  (adequate) resources

Diff: 2

Section:  3.4 Project Portfolio Management

Skill:  Conceptual

AACSB Tag:  Reflective

 

3.3   Multiple-Choice Questions

 

1) Souder’s project screening criterion that indicates an effective model must reflect organization objectives, including a firm’s strategic goals and mission is called:

  1. A) realism.
  2. B) capability.
  3. C) comparability.
  4. D) ease of use.

Answer:  A

Diff: 2

Section:  3.1 Project Selection

Skill:  Definition

AACSB Tag:  Reflective

 

2) Souder’s project screening criterion of realism addresses the question:

  1. A) How many workers will the project need?
  2. B) Will the project work as intended?
  3. C) Who are the stakeholders?
  4. D) How often should the project team meet?

Answer:  B

Diff: 2

Section:  3.1 Project Selection

Skill:  Definition

AACSB Tag:  Reflective

 

3) A selection model that is broad enough to be applied to multiple projects has the benefit of:

  1. A) ease of use.
  2. B) comparability.
  3. C) capability.
  4. D) flexibility.

Answer:  B

Diff: 2

Section:  3.1 Project Selection

Skill:  Factual

AACSB Tag:  Reflective

4) A project screening criterion that allows the company to compare long-term versus short-term projects, projects with different technologies, and projects with different commercial objectives is:

  1. A) flexibility.
  2. B) ease of use.
  3. C) capability.
  4. D) realistic.

Answer:  C

Diff: 2

Section:  3.1 Project Selection

Skill:  Conceptual

AACSB Tag:  Reflective

 

5) If a model can be applied successfully by people in all areas and levels of an organization, it is said to possess the trait of:

  1. A) capability.
  2. B) ease of use.
  3. C) flexibility.
  4. D) realism.

Answer:  B

Diff: 2

Section:  3.1 Project Selection

Skill:  Definition

AACSB Tag:  Reflective

 

6) An MBA redesign committee plans to spend a decade traveling the world to benchmark graduate programs at other universities. Regardless of the screening model being used, it will suffer from poor performance in the area of:

  1. A) flexibility.
  2. B) capability.
  3. C) comparability.
  4. D) cost.

Answer:  D

Diff: 1

Section:  3.1 Project Selection

Skill:  Definition

AACSB Tag:  Reflective

 

7) Souder’s model selection criterion that encourages ease of adaptation to changes in tax laws, building codes, among others, is called:

  1. A) ease of use.
  2. B) cost.
  3. C) capability.
  4. D) flexibility.

Answer:  D

Diff: 2

Section:  3.1 Project Selection

Skill:  Definition

AACSB Tag:  Reflective

8) A writer estimates it will take three months to generate spiffy documents to accompany a seminal work in operations management. He grossly underestimates the time required and misses his deadline by two months. This estimate was:

  1. A) objective and accurate.
  2. B) subjective and accurate.
  3. C) objective and inaccurate.
  4. D) subjective and inaccurate.

Answer:  D

Diff: 2

Section:  3.1 Project Selection

Skill:  Definition

AACSB Tag:  Reflective

 

9) A wedding planner allows $10,000 for flowers and three weeks to receive all RSVPs back from the list of 700 guests. Both estimates are correct within a fraction of a percent. We could describe this factoid as:

  1. A) numeric and subjective.
  2. B) numeric and objective.
  3. C) non-numeric and subjective.
  4. D) non-numeric and objective.

Answer:  A

Diff: 2

Section:  3.1 Project Selection

Skill:  Definition

AACSB Tag:  Reflective

 

10) An internal operating issue in project screening and selection is:

  1. A) expected return on investment.
  2. B) change in physical environment.
  3. C) patent protection.
  4. D) the chance that the firm’s goodwill will suffer due to the quality of the finished project.

Answer:  B

Diff: 2

Section:  3.1 Project Selection

Skill:  Factual

AACSB Tag:  Reflective

 

11) Quality risk refers to the chance that:

  1. A) the project relies on developing new or untested technologies.
  2. B) the firm’s reputation may suffer when the product becomes available.
  3. C) the well-being of the users or developers may decline dramatically.
  4. D) the firm may face a lawsuit.

Answer:  B

Diff: 1

Section:  3.1 Project Selection

Skill:  Definition

AACSB Tag:  Reflective

12) One facet of risk in project screening is:

  1. A) the change in manufacturing operations resulting from the project.
  2. B) the initial cash outlay.
  3. C) the potential for lawsuits or legal obligation.
  4. D) the strategic fit of the project with the company.

Answer:  C

Diff: 2

Section:  3.1 Project Selection

Skill:  Conceptual

AACSB Tag:  Reflective

 

13) One project factor that directly impacts a firm’s internal operations is the:

  1. A) expected return on investment.
  2. B) financial risk.
  3. C) need to develop employees.
  4. D) impact on company’s image.

Answer:  C

Diff: 2

Section:  3.1 Project Selection

Skill:  Conceptual

AACSB Tag:  Reflective

 

14) A commercial factor in project selection and screening might be:

  1. A) a need to develop employees.
  2. B) the likelihood that users of the project are injured.
  3. C) the long-term market dominance.
  4. D) the impact on the company’s image.

Answer:  C

Diff: 2

Section:  3.1 Project Selection

Skill:  Conceptual

AACSB Tag:  Reflective

 

 

15) Which statement regarding project selection is best?

  1. A) Organizational reality can be perfectly captured by most decision-making models.
  2. B) Before selecting any project, the team should identify all the relevant issues that play a role in project selection.
  3. C) Decision models must contain either objective or subjective factors.
  4. D) Every decision model has both objective and subjective factors.

Answer:  D

Diff: 3

Section:  3.1 Project Selection

Skill:  Conceptual

AACSB Tag:  Reflective

16) Which statement regarding project selection and screening criteria is best?

  1. A) The most complete model in the world is still only a partial reflection of organization reality.
  2. B) It is possible, given enough time and effort, to identify all relevant issues that play a role in project selection.
  3. C) Decision models are either objective or subjective.
  4. D) For many projects, more than 80% of the decision criteria are vital.

Answer:  A

Diff: 1

Section:  3.1 Project Selection

Skill:  Conceptual

AACSB Tag:  Reflective

 

17) A checklist screening model does not consider:

  1. A) whether one criterion is more important than another.
  2. B) governmental or stakeholder interference.
  3. C) product durability and future market potential of the product line.
  4. D) the riskiness of the new venture.

Answer:  A

Diff: 3

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Conceptual

AACSB Tag:  Reflective

 

18) A simple scoring model for project evaluation requires:

  1. A) importance weights from 1 to 10 assigned to each criterion.
  2. B) score values assigned to each criterion in terms of its rating.
  3. C) a division of weights by scores to arrive at a standardized score for each criterion.
  4. D) a summation for each criterion to achieve an overall criterion score.

Answer:  B

Diff: 2

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Conceptual

AACSB Tag:  Reflective

 

 

19) The simple scoring model has this advantage over a checklist model for screening projects.

  1. A) Scaling from 1 to 5 is extremely accurate.
  2. B) Scaling models ensure a reasonable link between the selected and weighted criteria and the business objectives that motivated their selection.
  3. C) Scaling models allow decision makers to treat one criterion as more important than another.
  4. D) Scaling models have been proven to make correct decisions better than 95% of the time while checklists only achieve 80% accuracy.

Answer:  C

Diff: 2

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Conceptual

AACSB Tag:  Reflective

20) A project manager is using a simple scoring model to decide which of four projects is best, given the company’s limited resources. The criteria, importance weights, and scores for each are shown in the table. Which project should be chosen?

 

Project Criteria Importance Weight Score
Greenlight  
  1 1 3
  2 2 1
  3 3 1
Runway  
  1 1 2
  2 2 2
  3 3 1
X  
  1 1 2
  2 2 3
  3 3 2
Ilevomit  
  1 1 2
  2 2 2
  3 3 3

 

  1. A) Project Greenlight
  2. B) Project Runway
  3. C) Project X
  4. D) Project Ilevomit

Answer:  D

Diff: 2

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Analytical

AACSB Tag:  Analytic Skills

 

 

21) A simple scoring model is used to decide among three projects that we’ll call A, B, and C. The total score for project A is 30, for project B is 20, and for project C is 10. Which of the following statements is best?

  1. A) If project A is successfully completed, it will yield three times the benefits that project C would have provided.
  2. B) If project C is chosen, the company would benefit only half as much as if they had chosen project B.
  3. C) Project C is better than project B for this company at this point in time.
  4. D) Project A is better than project B for this company at this point in time.

Answer:  D

Diff: 2

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Conceptual

AACSB Tag:  Reflective

22) The first step in the Analytical Hierarchy Process:

  1. A) requires supporting requirements to be combined into Level II challenges.
  2. B) is analyzing the process you intend to improve before undertaking any improvement project.
  3. C) requires Saatyfication of the team members.
  4. D) consists of constructing a hierarchy of criteria and subcriteria.

Answer:  D

Diff: 1

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Conceptual

AACSB Tag:  Reflective

 

23) The pairwise comparison approach:

  1. A) is a method to split the weights assigned to subcriteria.
  2. B) is a method to compare pairs of hierarchies prior to any further analysis.
  3. C) is a means of achieving all project objectives within the allocated time frame.
  4. D) may be used instead of AHP if time is limited.

Answer:  A

Diff: 1

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Conceptual

AACSB Tag:  Reflective

 

24) Which statement about the Analytical Hierarchy Process is FALSE?

  1. A) AHP scores are significant.
  2. B) AHP can be used to capture choice options that do not yield positive outcomes.
  3. C) AHP can improve the process of developing project proposals.
  4. D) AHP groups subcriteria that share the weight of a common higher-level criterion.

Answer:  B

Diff: 2

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Conceptual

AACSB Tag:  Reflective

 

 

25) The Analytic Hierarchy Process is being employed in a project selection decision. One major criteria, cost, receives a weighting value of 40%, which is split into short term (50%), intermediate term (30%), and long term (20%). Which of these statements is best?

  1. A) Short term, intermediate term, and long term must receive overall weightings that total 100%.
  2. B) There must be at least one other major criteria that has 40% weighting.
  3. C) Intermediate-term cost receives a weighting of 12%.
  4. D) Long-term cost receives an overall weighting of 80%.

Answer:  C

Diff: 2

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Analytical

AACSB Tag:  Analytic Skills

26) The Analytical Hierarchy Process is used to decide among three projects that we’ll call A, B, and C. The total score for project A is .650, for project B is .514, and for project C is .321. Which of the following statements is best?

  1. A) Project A is twice as good as project C.
  2. B) The analysis must be incorrect because the total scores should sum to 1.00.
  3. C) The analysis must be incorrect because there are two total scores that exceed 0.50.
  4. D) The analysis must be incorrect because project C’s total score is odd.

Answer:  A

Diff: 1

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Analytical

AACSB Tag:  Analytic Skills

 

27) The profile model plots a graph on a(n):

  1. A) perception-reality pair of axes.
  2. B) risk-return pair of axes.
  3. C) efficiency-effectiveness pair of axes.
  4. D) Saxon-Norman pair of axes.

Answer:  B

Diff: 1

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Conceptual

AACSB Tag:  Reflective

 

28) The efficient frontier in project management is the set of portfolio options that offer:

  1. A) a minimum return for a minimum risk.
  2. B) a minimum return for a maximum risk.
  3. C) a maximum return for a minimum risk.
  4. D) a maximum return for a maximum risk.

Answer:  C

Diff: 1

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Conceptual

AACSB Tag:  Reflective

 

29) Which statement about the use of the profile model is best?

  1. A) The profile model requires careful calculation of the percentage risk for each possible project.
  2. B) The scale used for the profile model can be any two numerical variables that a company deems important.
  3. C) The efficient frontier in the profile model is where return is 100% (or greater) and risk is 0%.
  4. D) For a given level of risk, a positive move on the return axes would indicate a superior project.

Answer:  D

Diff: 2

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Conceptual

AACSB Tag:  Reflective

30) Between projects A and B, project A will be considered a superior financial undertaking if it has:

  1. A) a shorter payback period than project B.
  2. B) a lower average rate of return than project B.
  3. C) a lower net present value than project B.
  4. D) a longer payback period than project B.

Answer:  A

Diff: 1

Section:  3.3 Financial Models

Skill:  Conceptual

AACSB Tag:  Reflective

 

31) Net present value is being used to break the tie among four otherwise equal projects. If the interest rate is 4%, which of these anticipated four-year flows would yield the greatest net present value?

  1. A) $10,000 in year 1; $11,000 in year 2; $12,000 in year 3; and $13,000 in year 4
  2. B) $13,000 in year 1; $12,000 in year 2; $11,000 in year 3; and $10,000 in year 4
  3. C) $10,000 in year 1; $10,000 in year 2; $13,000 in year 3; and $13,000 in year 4
  4. D) $11,000 in year 1; $11,000 in year 2; $12,000 in year 3; and $12,000 in year 4

Answer:  B

Diff: 3

Section:  3.3 Financial Models

Skill:  Analytical

AACSB Tag:  Analytic Skills

 

32) A company facing an interest rate of 8% must choose among projects offering the following four-year cash flows. If the company is employing the net present value criterion, which project should they choose?

  1. A) $25,000 in year 1; $15,000 in year 2; $10,000 in year 3; and $5,000 in year 4
  2. B) $5,000 in year 1; $5,000 in year 2; $20,000 in year 3; and $30,000 in year 4
  3. C) $15,000 in year 1; $15,000 in year 2; $15,000 in year 3; and $15,000 in year 4
  4. D) $5,000 in year 1; $5,000 in year 2; $25,000 in year 3; and $25,000 in year 4

Answer:  C

Diff: 3

Section:  3.3 Financial Models

Skill:  Analytical

AACSB Tag:  Analytic Skills

 

33) Which of these statements about internal rate of return analysis is best?

  1. A) If the IRR is less than the company’s required rate of return, the project is worth funding.
  2. B) Projects having lower IRR are generally superior to those having higher IRR.
  3. C) IRR and NPV calculations always make the same investment recommendations.
  4. D) If net outflows follow a period of net inflows, IRR may give conflicting results.

Answer:  D

Diff: 3

Section:  3.3 Financial Models

Skill:  Conceptual

AACSB Tag:  Analytic Skills

34) Which of these statements about valuation models is NOT correct?

  1. A) NPV employs a weighted average cost of capital discount rate that reflects potential reinvestment.
  2. B) IRR and NPV calculations typically make the same investment recommendations only when the projects are independent of each other.
  3. C) If cash flows are not normal, IRR may arrive at multiple solutions.
  4. D) IRR is a more robust determinant of project viability than NPV.

Answer:  D

Diff: 3

Section:  3.3 Financial Models

Skill:  Conceptual

AACSB Tag:  Analytic Skills

 

35) A project manager is using the internal rate of return method to make the final decision on which project to undertake. Which of these four projects has the highest internal rate of return?

  1. A) $25,000 initial outlay with $10,000 cash inflows during the following five years
  2. B) $12,500 initial outlay with $10,000 cash inflows during the following five years
  3. C) $25,000 initial outlay with $5,000 cash inflows during the following five years
  4. D) $12,500 initial outlay with $5,000 cash inflows during the following five years

Answer:  B

Diff: 3

Section:  3.3 Financial Models

Skill:  Analytical

AACSB Tag:  Analytic Skills

 

 

36) A project manager is using the internal rate of return method to make the final decision on which project to undertake. Which of these four projects has the highest internal rate of return?

  1. A) $100,000 initial outlay with $10,000 cash inflows during the first two years, $20,000 during the third and fourth years, and $30,000 during the fifth year
  2. B) $100,000 initial outlay with a $5,000 cash inflow during the first year, $15,000 cash inflow during the second year, and $25,000 cash inflows during years three through five
  3. C) $75,000 initial outlay with a $5,000 cash inflow during the first year, increasing by $5,000 per year through the fifth year
  4. D) $50,000 initial outlay with $5,000 cash inflows during the first two years, $15,000 during the third and fourth years, and $20,000 during the fifth year

Answer:  D

Diff: 3

Section:  3.3 Financial Models

Skill:  Analytical

AACSB Tag:  Analytic Skills

37) A project manager is using the net present value method to make the final decision on which project to undertake. The company has a 10% required rate of return and expects a 4% rate of inflation for the following five years. What is the NPV of a project that has cash flows as shown in the table?

 

Year Cash Flow
0 -$100,000
1 $20,000
2 $50,000
3 $50,000
4 $25,000
5 $500,000

 

  1. A) $264,252
  2. B) $324,606
  3. C) $442,242
  4. D) $398,780

Answer:  A

Diff: 3

Section:  3.3 Financial Models

Skill:  Analytical

AACSB Tag:  Analytic Skills

 

 

38) A project manager is using the payback method to make the final decision on which project to undertake. The company has a 10% required rate of return and expects a 4% rate of inflation for the following five years. What is the non-discounted payback of a project that has cash flows as shown in the table?

 

Year Cash Flow
0 -$100,000
1 $20,000
2 $50,000
3 $50,000
4 $25,000
5 $500,000

 

  1. A) 3.4 years
  2. B) 2.6 years
  3. C) 5.0 years
  4. D) 4.2 years

Answer:  B

Diff: 3

Section:  3.3 Financial Models

Skill:  Analytical

AACSB Tag:  Analytic Skills

39) A project manager is using the payback method to make the final decision on which project to undertake. The company has a 10% required rate of return and expects a 4% rate of inflation for the following five years. What is the discounted payback of a project that has cash flows as shown in the table?

 

Year Cash Flow
0 -$100,000
1 $20,000
2 $50,000
3 $50,000
4 $25,000
5 $500,000

 

  1. A) 3.4 years
  2. B) 2.6 years
  3. C) 5.0 years
  4. D) 4.2 years

Answer:  C

Diff: 3

Section:  3.3 Financial Models

Skill:  Analytical

AACSB Tag:  Analytic Skills

 

 

40) A project manager is using the net present value method to make the final decision on which project to undertake. The company has a 10% required rate of return and expects a 4% rate of inflation for the following five years. What is the NPV of a project that has cash flows as shown in the table?

 

Year Cash Flow
0 -$400,000
1 $75,000
2 $100,000
3 $150,000
4 $150,000
5 $750,000

 

  1. A) $564.955
  2. B) $642,586
  3. C) $431,667
  4. D) $322,320

Answer:  D

Diff: 3

Section:  3.3 Financial Models

Skill:  Analytical

AACSB Tag:  Analytic Skills

41) A project manager is using the payback method to make the final decision on which project to undertake. The company has a 10% required rate of return and expects a 4% rate of inflation for the following five years. What is the non-discounted payback of a project that has cash flows as shown in the table?

 

Year Cash Flow
0 -$400,000
1 $75,000
2 $100,000
3 $150,000
4 $150,000
5 $750,000

 

  1. A) 3.5 years
  2. B) 2.6 years
  3. C) 5.0 years
  4. D) 4.2 years

Answer:  A

Diff: 3

Section:  3.3 Financial Models

Skill:  Analytical

AACSB Tag:  Analytic Skills

 

 

42) A project manager is using the payback method to make the final decision on which project to undertake. The company has a 10% required rate of return and expects a 4% rate of inflation for the following five years. What is the discounted payback of a project that has cash flows as shown in the table?

 

Year Cash Flow
0 -$400,000
1 $75,000
2 $100,000
3 $150,000
4 $150,000
5 $750,000

 

  1. A) 3.5 years
  2. B) 5.3 years
  3. C) 4.6 years
  4. D) 4.2 years

Answer:  B

Diff: 3

Section:  3.3 Financial Models

Skill:  Analytical

AACSB Tag:  Analytic Skills

43) Options models are used to assist in project selection decisions:

  1. A) when IRR calculations are favorable but NPV calculations are unfavorable.
  2. B) when a company may not recover the money it invests in a project.
  3. C) when NPV calculations are favorable but IRR calculations are unfavorable.
  4. D) when a company is guaranteed to recover the money it invests in a project.

Answer:  B

Diff: 2

Section:  3.3 Financial Models

Skill:  Conceptual

AACSB Tag:  Reflective

 

44) Regardless of which selection method a firm uses, it should always:

  1. A) be able to predict how much revenue will be returned to the firm each year.
  2. B) know which project will ultimately succeed and which ones will fail.
  3. C) be objective in their selection method.
  4. D) use a weighted scoring technique.

Answer:  C

Diff: 2

Section:  3.3 Financial Models

Skill:  Conceptual

AACSB Tag:  Reflective

 

 

45) The systematic process of selecting, supporting, and managing a firm’s collection of projects is called:

  1. A) heavyweight project management.
  2. B) matrix project organization.
  3. C) profile management.
  4. D) project portfolio management.

Answer:  D

Diff: 2

Section:  3.4 Project Portfolio Management

Skill:  Conceptual

AACSB Tag:  Reflective

 

46) The concept of project portfolio management holds that firms should:

  1. A) regard all projects as unified assets.
  2. B) manage projects as independent entities.
  3. C) focus on short-term strategic goals.
  4. D) focus on long-term constraints.

Answer:  A

Diff: 2

Section:  3.4 Project Portfolio Management

Skill:  Conceptual

AACSB Tag:  Reflective

47) A project with the chance for a big payout may be funded if an important criterion is:

  1. A) cost.
  2. B) opportunity.
  3. C) top management pressure.
  4. D) risk.

Answer:  B

Diff: 2

Section:  3.4 Project Portfolio Management

Skill:  Conceptual

AACSB Tag:  Reflective

 

48) A project that is exceptionally risky might still be undertaken by a firm if they have several other projects underway that are considered more of a sure thing. This approach to project selection is best described by the criterion called:

  1. A) strategic “fit.”
  2. B) risk.
  3. C) desire for portfolio balance.
  4. D) top management pressure.

Answer:  C

Diff: 2

Section:  3.4 Project Portfolio Management

Skill:  Conceptual

AACSB Tag:  Reflective

 

 

49) Evaluating projects in terms of their strategic fit with existing project lines or their ability to augment the current product family is known as:

  1. A) balance.
  2. B) an open criterion
  3. C) weighted criterion.
  4. D) complementarity.

Answer:  D

Diff: 2

Section:  3.4 Project Portfolio Management

Skill:  Conceptual

AACSB Tag:  Reflective

 

50) Realignment describes:

  1. A) the change in a project portfolio with an addition of a new project.
  2. B) the shifting of project resources from one to another.
  3. C) the change in strategy for a firm.
  4. D) the annual recasting of all project managers.

Answer:  A

Diff: 2

Section:  3.4 Project Portfolio Management

Skill:  Conceptual

AACSB Tag:  Reflective

51) A proactive project portfolio:

  1. A) is as simple as moving from one project opportunity to another project opportunity.
  2. B) is an integrated family of projects with a common strategic goal.
  3. C) is a collection of projects under the umbrella of single project manager carrying the title of portfolio manager.
  4. D) is developed with respect to short-term operational concerns.

Answer:  B

Diff: 2

Section:  3.4 Project Portfolio Management

Skill:  Conceptual

AACSB Tag:  Reflective

 

52) Which of these is NOT a factor in successful project portfolio management?

  1. A) flexible structure and freedom of communication
  2. B) low-cost environmental setting
  3. C) emphasis on quality
  4. D) time-paced transition

Answer:  C

Diff: 2

Section:  3.4 Project Portfolio Management

Skill:  Conceptual

AACSB Tag:  Reflective

 

 

53) Multiple project environments thrive on:

  1. A) multi-layered bureaucracy.
  2. B) rigid development processes.
  3. C) narrow communication channels.
  4. D) improvisation by project teams.

Answer:  D

Diff: 2

Section:  3.4 Project Portfolio Management

Skill:  Conceptual

AACSB Tag:  Reflective

 

54) A firm is best served if its project portfolio:

  1. A) has a number of low-cost experimental prototypes.
  2. B) devotes significant resources to hit product “home runs.”
  3. C) aims to take the marketplace by storm regardless of future trends.
  4. D) represents narrowly concentrated efforts.

Answer:  A

Diff: 1

Section:  3.4 Project Portfolio Management

Skill:  Conceptual

AACSB Tag:  Reflective

55) Successful firms use project portfolio planning routinely to:

  1. A) make quantum jumps from one product to another.
  2. B) develop products with long lead times and plan ahead.
  3. C) move as quickly as possible into new territory.
  4. D) move at glacial pace always within the same product line.

Answer:  B

Diff: 2

Section:  3.4 Project Portfolio Management

Skill:  Conceptual

AACSB Tag:  Reflective

 

56) If an organization that currently is managing a vast and well-balanced portfolio of projects decides on a new strategic direction, it will initially face the problem of:

  1. A) scarce resources.
  2. B) a conservative technical community.
  3. C) out-of-sync projects and portfolios.
  4. D) unpromising projects.

Answer:  C

Diff: 1

Section:  3.4 Project Portfolio Management

Skill:  Conceptual

AACSB Tag:  Reflective

 

 

57) A principal cause of portfolio underperformance is:

  1. A) conservative technical communities.
  2. B) government intervention.
  3. C) out-of-sync projects.
  4. D) scarce resources.

Answer:  D

Diff: 2

Section:  3.4 Project Portfolio Management

Skill:  Conceptual

AACSB Tag:  Reflective

 

58) Project portfolio management is typically NOT used to balance:

  1. A) human and technical resources.
  2. B) risk and return.
  3. C) efficiently run projects and nonperformers.
  4. D) various families of projects.

Answer:  A

Diff: 2

Section:  3.4 Project Portfolio Management

Skill:  Conceptual

AACSB Tag:  Reflective

3.4   Essay Questions

 

1) Describe or define any four important attributes for screening models used to evaluate projects.

Answer:  Souder identifies five important issues that managers should consider when evaluating screening models: realism, capability, flexibility, ease of use, and cost, and the text offers up comparability. Taking these in reverse order, comparability refers to the ability of the criterion to be applied to multiple projects without bias. Cost can be defined as the expense in either time or money (or both) that is required to use the model. Ease of use calls for the model to be simple enough to be used by people in all areas of the organization, both in specific project roles and in those related to functional positions. Flexibility is the quality of ease of modification if trial applications require changes. Capability is the ability of the model to respond to changes in the conditions under which projects are carried out. Finally, realism is the ability of the model to reflect organizational objectives, including a firm’s strategic goals and mission.

Diff: 2

Section:  3.1 Project Selection

Skill:  Definition

AACSB Tag:  Reflective

 

 

2) Provide an example of a numeric and non-numeric project selection model and indicate what advantage each might hold over the other.

Answer:  Project selection models come in two general classes: numeric and non-numeric. Numeric models seek to use numbers for the decision process involved in selecting projects. These values can either be derived objectively or subjectively. Non-numeric models do not employ numbers at decision inputs, relying instead on other data. Each technique has its own merits and may be employed successfully, and a choice between the two should be tempered by the adage GIGO. If a numeric model uses objective, external values that are “correct,” then a decision maker can have a high degree of confidence that the values under study will lead to a reasonable decision. A non-numeric model might appeal to decision makers that have less of a quantitative bent or those that operate in a less quantifiable decision arena.

Diff: 2

Section:  3.1 Project Selection

Skill:  Conceptual

AACSB Tag:  Analytic Skills

 

3) Describe any four types of risk that projects may hold.

Answer:  Risk factors reflect elements of unpredictability for the firm. Technical risks occur due to the development of new or untested technologies. Financial risks arise from the financial exposure caused by investing in the project. Safety risk may arise as the well-being of users or developers of the project is compromised. Any risks to the firm’s goodwill or reputation due to the quality of the completed project are termed quality risks. Finally, the potential for lawsuits or legal obligation is legal exposure.

Diff: 2

Section:  3.1 Project Selection

Skill:  Factual

AACSB Tag:  Reflective

4) How does a checklist project screening model work?

Answer:  The simplest method of project screening and selection is developing a checklist of criteria that pertain to a choice of projects and then applying them to the projects. Each potential project is scored against the list of criteria and is rated as performing high, medium, or low with the project scoring highest overall being selected as the project to undertake.

Diff: 2

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Factual

AACSB Tag:  Reflective

 

 

5) Your university is considering two projects to increase enrollment: offering traditional classes from midnight to 6 a.m. or offering house call classes where the professor would visit your home to provide instruction. Use a simple scoring model with at least three criteria to evaluate these two potential projects and indicate which project should be chosen.

Answer:  Answers may vary widely. A simplified scoring model ranks criteria according to their relative importance. Each project is evaluated for performance on each criterion and an overall score for each project is computed by summing the products of each score times its weight. A simple scoring model might be as follows with House Calls narrowly edging out Midnight Classes.

 

Project Criteria & Weight Score Weighted Score Total Score
Midnight Classes Time   2 2 4
Cost   1 1 1
Market Potential   3 2 6 11
House Calls Time   2 3 6
Cost   1 3 3
Market Potential   3 1 3 12

 

Diff: 2

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Analytical

AACSB Tag:  Analytic Skills

 

6) What are the advantages and limitations of simple scoring models?

Answer:  The simple scoring model has some useful advantages as a project selection device. First, it is easy to tie to critical strategic goals for the company and second, it is easy to comprehend and use. The major limitation of simple scoring models is that the scaling is not very accurate and is often treated as if ratios and difference in scoring levels have real meaning. Another drawback of these models is that they depend on the relevance of the selected criteria and the accuracy of weight given them.

Diff: 1

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Factual

AACSB Tag:  Reflective

 

7) How does the Analytical Hierarchy Process differ from a simple scoring model? Is it worth the extra effort?

Answer:  The Analytical Hierarchy Process (AHP) is a four-step process that consists of structuring the hierarchy of criteria, allocating weights to criteria, assigning numerical values to evaluation dimensions, and evaluating project proposals. Primary differences between the two approaches are that AHP takes a more rigorous view of the assignment of criteria weights and values to the evaluation dimensions. Differences among evaluation scale items are not necessarily equal and can be adjusted as managers and decision makers see fit. The resulting product sums have meaning, unlike the values computed in a simple scoring model. AHP methodology can dramatically improve the project selection process over use of the simple scoring model. AHP is not without limitations and does require more effort to configure and use. The authors caution against using a project screening tool that has a poor cost/benefit ratio, so determination of the value derived from use of AHP versus a simple scoring model can best be made on a case-by-case basis.

Diff: 3

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Conceptual

AACSB Tag:  Reflective

 

8) Describe the use of a profile model and sketch an example, clearly labeling every component and the best alternative in your example.

Answer:  Profile models allow managers to plot risk/return options for various alternatives and then select the project that maximizes return while staying within a certain range of minimum acceptable risk. The profile model makes use of a concept known as the efficient frontier — the set of project portfolio options that offers either a maximum return for every given level of risk or the minimum risk for every level of return. A profile model appears below.

 

Diff: 3

Section:  3.2 Approaches to Project Screening and Selection

Skill:  Definition

AACSB Tag:  Reflective

 

9) What is the time value of money principle and how does it apply to project selection?

Answer:  The time value of money principle suggests that money earned today is worth more than money expected in the future. Future money is expected to be worth less for two reasons: 1) the impact of inflation, and 2) the inability to invest the money. The time value of money principle may be applied to project selection as one criterion to ascertain which project will generate the greatest return on a company’s investment. Projects that have a relatively certain return of greater sums of money would be preferred over projects that stand a chance of returning less money in today’s dollars.

Diff: 1

Section:  3.3 Financial Models

Skill:  Conceptual

AACSB Tag:  Analytic Skills

 

10) How can a payback period approach be used to evaluate potential projects?

Answer:  The project payback period approach estimates the amount of time that will be necessary to recoup the investment in a project; that is, how long will it take the project to pay back its initial budget and begin to generate positive cash flow for the company. The discounted cash flow method is used to estimate cash outlays and inflows resulting from investment in a project, and these positive and negative flows are compared using the ratio:

 

Payback Period =

 

Shorter paybacks are preferable to longer paybacks.

Diff: 2

Section:  3.3 Financial Models

Skill:  Analytical

AACSB Tag:  Analytic Skills

 

11) What is an internal rate of return and what advantages and disadvantages are accrued by using it to evaluate projects?

Answer:  Internal rate of return (IRR) is a method of evaluating the expected outlays and income associated with a new project investment opportunity. IRR is the discount rate that equates the present values of a project’s revenue and expense streams. If IRR is greater than or equal to the company’s required rate of return, the project is worth funding. The advantage of using IRR analysis is its ability to compare alternative projects from the perspective of expected return on investment. IRR suffers from difficulty in conflicting solutions if cash flows are not normal, e.g., if net outflows follow a period of net cash inflows. IRR is not the rate of return for a project.

Diff: 2

Section:  3.3 Financial Models

Skill:  Conceptual

AACSB Tag:  Analytic Skills

 

12) Inatech is contemplating two different projects and decides to perform a financial analysis to determine which is more financially lucrative. Project A and B have the cash flows as shown and Inatech uses a required rate of return of 10% and an inflation rate of 4%. Compute the payback in years and the net present value for both projects and offer advice as to the best course of action.

 

Year A B
0 -$100,000 -$400,000
1 $20,000 $75,000
2 $50,000 $100,000
3 $50,000 $150,000
4 $25,000 $150,000
5 $500,000 $750,000

 

Answer:

Year A Cumulative A Discount NPV A B Cumulative B NPV B
0 -$100,000 -$100,000 1.000 -$100,000 -$400,000 -$400,000 -$400,000
1 $20,000 -$80,000 0.877 $17,544 $75,000 -$325,000 $65,789
2 $50,000 -$30,000 0.769 $38,473 $100,000 -$225,000 $76,947
3 $50,000 $20,000 0.675 $33,749 $150,000 -$75,000 $101,246
4 $25,000 $45,000 0.592 $14,802 $150,000 $75,000 $88,812
5 $500,000 $545,000 0.519 $259,684 $750,000 $825,000 $389,526

 

The NPV for project A is $264,252 and the NPV for project B is higher at $322,320. Project A has a much shorter payback, 2.6 years, compared to project B’s payback of 3.5 years. The best course of action based solely on financial considerations depends on which financial criterion holds greater sway with Inatech decision makers.

Diff: 2

Section:  3.3 Financial Models

Skill:  Conceptual

AACSB Tag:  Analytic Skills

 

 

13) Inatech is contemplating two different projects and decides to perform a financial analysis to determine which is more financially lucrative. Project A and B have the cash flows as shown and Inatech uses a required rate of return of 10%. Compute the internal rate of return for both projects to determine which is worth of funding.

 

Year A B
0 -$100,000 -$400,000
1 $20,000 $75,000
2 $50,000 $100,000
3 $50,000 $150,000
4 $25,000 $150,000
5 $500,000 $750,000

 

Answer:  Project A has an IRR of 58%. The net present value table based on this percentage is as follows:

 

Year A Discount NPV
0 -$100,000 1 -$100,000
1 $20,000 0.632641 $12,653
2 $50,000 0.400234 $20,012
3 $50,000 0.253205 $12,660
4 $25,000 0.160187 $4,005
5 $500,000 0.101341 $50,671

 

Project B has an IRR of 33%. The net present value table based on this percentage is:

 

Year B Discount NPV
0 -$400,000 1 -$400,000
1 $75,000 0.749363 $56,202
2 $100,000 0.561544 $56,154
3 $150,000 0.4208 $63,120
4 $150,000 0.315332 $47,300
5 $750,000 0.236298 $177,223.52

 

Both projects exceed the hurdle rate of 10%, so if Inatech can afford both, they should pursue both. If Inatech can afford only one project, then they should pursue A solely on the basis of IRR value.

Diff: 2

Section:  3.3 Financial Models

Skill:  Conceptual

AACSB Tag:  Analytic Skills

 

 

14) What are options models and when should they be used to evaluate projects? Provide an example.

Answer:  Options models open financial analysis to consider a greater range of alternatives to immediate investment. Organizations can factor the benefit of postponing decisions (and projects) until financial models indicate projects are worth pursuing. Examples may vary, but suppose firm A can wait until more market research is performed or until a supplier solves quality and logistics issues. The cash flows may be superior to those that would come from immediate investment if company A had to suffer through those issues with their supplier. Because company A can wait a year, the project scores better on the NPV calculations, clearing the company’s predetermined financial hurdle and will just have to wait to begin rather than being counted as too great a financial risk.

Diff: 2

Section:  3.3 Financial Models

Skill:  Definition

AACSB Tag:  Reflective

 

15) What two simple rules should be followed when choosing a project selection approach?

Answer:  First and foremost, objectivity and consistency in selection method is paramount. Achieving both objectivity and consistency allows a firm to avoid the pitfall of tweaking results and starting projects that are personal favorites but don’t merit pursuit. Second, a wide variety of selection methods may be appropriate for specific companies and project circumstances. As with most things, over-reliance on one end of a scale, whether it is financial, quantitative, or any other, is not the best approach. A broad algorithm that embraces both financial and non-financial considerations is often best.

Diff: 2

Section:  3.3 Financial Models

Skill:  Factual

AACSB Tag:  Reflective

16) What is project portfolio management and what are its objectives and initiatives?

Answer:  Project portfolio management is the systematic process of selecting, supporting and managing a firm’s collection of projects. Projects are managed concurrently under a single umbrella and may be either related or independent of each other. Portfolio management entails decision making, prioritization, review, realignment, and reprioritization of a firm’s project.

Diff: 2

Section:  3.4 Project Portfolio Management

Skill:  Definition

AACSB Tag:  Reflective

 

17) What criteria might be employed to prioritize projects in a project portfolio? Choose any example project from recent business news and deduce which criteria were most important to the company in question.

Answer:  The criteria that are commonly used to prioritize projects include cost, opportunity, top management pressure, risk, strategic fit, and desire for portfolio balance. Choice of criteria will vary with example selected.

Diff: 2

Section:  3.4 Project Portfolio Management

Skill:  Definition

AACSB Tag:  Reflective

 

 

18) What are three keys to success for project portfolio management? Which is most important?

Answer:  The author indicates that the keys to successful project portfolio management are: flexible structure and freedom of communication; low-cost environmental scanning; and time-paced transition. Answers may vary on the importance ranking. Some may argue that unfettered experimentation is most important in achieving new project or product breakthroughs. Others may tout continuous environmental scanning as a vehicle for quickly adapting a firm’s project portfolio and strategy to the changing market conditions. Finally, others may suggest that in both project portfolio management and comedy, timing is everything. Having a stable of projects that are time-phased to launch when others are nearing the end of their useful cycle and still others are bearing maximum fruit will assure a firm of continued success.

Diff: 1

Section:  3.4 Project Portfolio Management

Skill:  Factual

AACSB Tag:  Reflective

 

19) Choose any example from recent news media and explain why their project failed.

Answer:  Examples will vary and may include product launches, public programs, building projects, or any number of other projects.

Diff: 2

Section:  3.4 Project Portfolio Management

Skill:  Conceptual

AACSB Tag:  Reflective

20) Rank the problems in implementing portfolio management from largest to smallest and justify your rankings.

Answer:  Recent research seems to suggest that the following are among the most common problems in effective portfolio management: conservative technical committees that are beholden to favorite projects, methods or technologies that no longer fit the market or company’s strategic thrust; out-of-sync projects and portfolios that may contain worthwhile projects but these projects won’t take the company in the direction it is currently targeted; unpromising projects that won’t improve a company’s operations or revenues; and scarce resources such as human labor, cash, and raw materials. Of these, the text suggests that scarce resources may be the most pernicious problem, although answers will vary in students’ rankings.

Diff: 3

Section:  3.4 Project Portfolio Management

Skill:  Conceptual

AACSB Tag:  Reflective

Project Management: Achieving Competitive Advantage, 3e (Pinto)

Chapter 4   Leadership and the Project Manager

 

4.1   True/False Questions

 

1) Leadership may be part of a manager’s job but other managerial roles are not necessarily part of a leader’s job.

Answer:  TRUE

Diff: 1

Section:  4.1 Leaders vs. Managers

Skill:  Factual

AACSB Tag:  Reflective

 

2) Leadership is an innate characteristic that some people have and some don’t.

Answer:  FALSE

Diff: 1

Section:  4.1 Leaders vs. Managers

Skill:  Definition

AACSB Tag:  Reflective

 

3) One way to distinguish the two roles is to realize that leaders aim for efficiency while managers aim for effectiveness.

Answer:  FALSE

Diff: 1

Section:  4.1 Leaders vs. Managers

Skill:  Definition

AACSB Tag:  Reflective

 

4) One reason projects are initially underfunded is because their requirements are sometimes deliberately understated.

Answer:  TRUE

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Definition

AACSB Tag:  Reflective

 

5) Summarizing and consensus testing are two group maintenance behaviors that a project manager uses to show support for project team members.

Answer:  FALSE

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Definition

AACSB Tag:  Reflective

 

 

6) The number one flaw that makes a project manager a poor leader is setting a bad example.

Answer:  TRUE

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Factual

AACSB Tag:  Reflective

7) The organizational factor that is most vital in preventing a project manager from being recognized as a leader is lack of resources.

Answer:  FALSE

Diff: 3

Section:  4.2 How the Project Manager Leads

Skill:  Factual

AACSB Tag:  Reflective

 

8) Emotional intelligence is a more important measure of leadership effectiveness than technical skill, analytical ability, and intelligence.

Answer:  TRUE

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Factual

AACSB Tag:  Reflective

 

9) The most important characteristic of a project leader is ability to inspire.

Answer:  FALSE

Diff: 3

Section:  4.3 Traits of Effective Project Leaders

Skill:  Factual

AACSB Tag:  Reflective

 

10) In a survey of thousands of managers within U.S. corporations, a significant majority felt that the most important characteristic of superior leaders is honesty.

Answer:  TRUE

Diff: 1

Section:  4.3 Traits of Effective Project Leaders

Skill:  Factual

AACSB Tag:  Reflective

 

11) A project manager must be able to shift temporal orientation from past, to present, to future.

Answer:  TRUE

Diff: 2

Section:  4.3 Traits of Effective Project Leaders

Skill:  Factual

AACSB Tag:  Reflective

 

 

12) Someone with a polychronic preference functions in two different temporal orientations, such as past and present.

Answer:  FALSE

Diff: 2

Section:  4.3 Traits of Effective Project Leaders

Skill:  Factual

AACSB Tag:  Reflective

13) Project leader duties include present-oriented and future-oriented tasks, but do not include past-oriented tasks.

Answer:  FALSE

Diff: 2

Section:  4.3 Traits of Effective Project Leaders

Skill:  Factual

AACSB Tag:  Reflective

 

14) A project manager may also be the project champion.

Answer:  TRUE

Diff: 1

Section:  4.4 Project Champions

Skill:  Factual

AACSB Tag:  Reflective

 

15) An entrepreneur type of project champion is the source of the idea and also the main sponsor.

Answer:  FALSE

Diff: 1

Section:  4.4 Project Champions

Skill:  Definition

AACSB Tag:  Reflective

 

16) Providing the needed motivation for the project team is a nontraditional duty of a project champion.

Answer:  TRUE

Diff: 3

Section:  4.4 Project Champions

Skill:  Definition

AACSB Tag:  Reflective

 

17) The majority of a champion’s time is spent performing the traditional project management duties of leadership, administration, obtaining resources, and coordination and control.

Answer:  FALSE

Diff: 3

Section:  4.4 Project Champions

Skill:  Definition

AACSB Tag:  Reflective

 

 

18) The new leader must make a conscious effort to distance himself from the people being led.

Answer:  FALSE

Diff: 3

Section:  4.5 The New Project Leadership

Skill:  Definition

AACSB Tag:  Reflective

19) One of the most important contributions of a project manager is to continually remind the team what is most important.

Answer:  TRUE

Diff: 2

Section:  4.5 The New Project Leadership

Skill:  Definition

AACSB Tag:  Reflective

 

20) One way an organization can develop a core of project management professionals is to administer personality tests and match people attuned to project work to projects.

Answer:  FALSE

Diff: 3

Section:  4.6 Project Management Professionalism

Skill:  Definition

AACSB Tag:  Reflective

 

21) Outgoing, people-oriented individuals have a better likelihood of performing well on project work than quieter, more introverted people.

Answer:  TRUE

Diff: 3

Section:  4.6 Project Management Professionalism

Skill:  Definition

AACSB Tag:  Reflective

 

4.2   Short Answer Questions

 

1) A(n) ________ is interested in efficiency of operations, but a(n) ________ is interested in effectiveness of outcomes.

Answer:  manager, leader

Diff: 3

Section:  4.1 Leaders vs. Managers

Skill:  Factual

AACSB Tag:  Reflective

 

2) ________ behavior seeks to get the job done.

Answer:  Task-oriented

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Definition

AACSB Tag:  Reflective

 

3) ________ is a group maintenance behavior that serves to increase and equalize participation.

Answer:  Gatekeeping

Diff: 3

Section:  4.2 How the Project Manager Leads

Skill:  Definition

AACSB Tag:  Reflective

4) ________ is the element of emotional intelligence that describes a person’s ability to keep themselves under control.

Answer:  Self-regulation

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Definition

AACSB Tag:  Reflective

 

5) ________ is the element of emotional intelligence that implies having a deep understanding of one’s own strengths and weaknesses, ego needs, drives, and motives.

Answer:  Self-awareness

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Definition

AACSB Tag:  Reflective

 

6) ________ refers to a leader’s ability to recognize that effective leadership is part of the relational transaction between subordinates and themselves.

Answer:  Emotional intelligence

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Definition

AACSB Tag:  Reflective

 

7) ________ is the element of emotional intelligence that describes a person’s ability to manage relationships with others.

Answer:  Social skill

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Definition

AACSB Tag:  Reflective

 

8) A survey of managers in U.S. corporations revealed that ________ is the most important characteristic of a leader.

Answer:  honesty

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Definition

AACSB Tag:  Reflective

 

 

9) An effective project manager must have ________ so that she is not adversely affected by complex or uncertain situations.

Answer:  tolerance for ambiguity

Diff: 2

Section:  4.3 Traits of Effective Project Leaders

Skill:  Factual

AACSB Tag:  Reflective

10) The temporal context or space to which an individual is naturally drawn is known as ________.

Answer:  time orientation

Diff: 1

Section:  4.3 Traits of Effective Project Leaders

Skill:  Factual

AACSB Tag:  Reflective

 

11) The ability to cognitively bring the past and future closer together is ________.

Answer:  time warping

Diff: 3

Section:  4.3 Traits of Effective Project Leaders

Skill:  Definition

AACSB Tag:  Reflective

 

12) A(n) ________ is in individual who identifies with a new development, using all weapons at his command, against the funded resistance of the organization.

Answer:  champion

Diff: 2

Section:  4.4 Project Champions

Skill:  Definition

AACSB Tag:  Reflective

 

13) The ________ is usually a scientist, engineer, or similar person who is the source of and driving force behind the idea.

Answer:  creative originator

Diff: 2

Section:  4.4 Project Champions

Skill:  Definition

AACSB Tag:  Reflective

 

14) The ________ is a project champion that is a senior-level manager who does everything possible to promote the project, including obtaining resources, coaching the team, and protecting the project when necessary.

Answer:  godfather

Diff: 2

Section:  4.4 Project Champions

Skill:  Definition

AACSB Tag:  Reflective

 

 

15) Some ________ duties of project champions include leadership, coordination, and technical understanding.

Answer:  traditional

Diff: 2

Section:  4.4 Project Champions

Skill:  Factual

AACSB Tag:  Reflective

16) The new project management professionalism calls for the creation of ________ so that gifted project managers can move from project to project and advance in the organization just as their functional counterparts do.

Answer:  (clear) career paths

Diff: 3

Section:  4.6 Project Management Professionalism

Skill:  Factual

AACSB Tag:  Reflective

 

4.3   Multiple-Choice Questions

 

1) For the project manager, leadership is:

  1. A) the process by which she influences the project team.
  2. B) the process of assembling a group of individuals.
  3. C) the process of building skills among all team members.
  4. D) the process of maintaining control of the budget.

Answer:  A

Diff: 2

Section:  4.0 Introduction

Skill:  Definition

AACSB Tag:  Reflective

 

2) The facet of partnership that describes the requirement that every worker be responsible for defining the project’s vision and goals is called:

  1. A) exchange of purpose.
  2. B) a right to say no.
  3. C) joint accountability.
  4. D) absolute honesty.

Answer:  A

Diff: 2

Section:  4.1 Leaders vs. Managers

Skill:  Definition

AACSB Tag:  Reflective

 

 

3) The idea that all members of a project team have the ability to offer a contrary position in order to achieve true partnership between the project manager and the team is called:

  1. A) exchange of purpose.
  2. B) a right to say no.
  3. C) joint accountability.
  4. D) absolute honesty.

Answer:  B

Diff: 1

Section:  4.1 Leaders vs. Managers

Skill:  Definition

AACSB Tag:  Reflective

4) In a partnership, each member of the project team is responsible for the project’s outcomes and the current situation, whether it is positive or shows evidence of project problems. The term that best describes this responsibility is:

  1. A) exchange of purpose.
  2. B) a right to say no.
  3. C) joint accountability.
  4. D) absolute honesty.

Answer:  C

Diff: 1

Section:  4.1 Leaders vs. Managers

Skill:  Definition

AACSB Tag:  Reflective

 

5) The authentic atmosphere of straightforwardness that is vital for project manager and team to function in can be described as:

  1. A) exchange of purpose.
  2. B) a right to say no.
  3. C) joint accountability.
  4. D) absolute honesty.

Answer:  D

Diff: 1

Section:  4.1 Leaders vs. Managers

Skill:  Definition

AACSB Tag:  Reflective

 

6) Which statement regarding the duties of leaders and managers is best?

  1. A) Leaders embrace the status quo while managers support change.
  2. B) A manager’s title is bestowed by the organization.
  3. C) Leaders aim for efficiency.
  4. D) Managers aim for effectiveness.

Answer:  B

Diff: 1

Section:  4.1 Leaders vs. Managers

Skill:  Factual

AACSB Tag:  Reflective

 

 

7) Which statement regarding the duties of leaders and managers is best?

  1. A) Leaders embrace change while managers support the status quo.
  2. B) Management is more about interpersonal relationships than leadership is.
  3. C) Leaders aim for efficiency.
  4. D) Managers aim for effectiveness.

Answer:  A

Diff: 1

Section:  4.1 Leaders vs. Managers

Skill:  Factual

AACSB Tag:  Reflective

8) Which of these lists of duties is more reflective of managerial tasks?

  1. A) creating vision and strategies
  2. B) problem solving
  3. C) long-term risk taking
  4. D) communication by word and deed

Answer:  B

Diff: 2

Section:  4.1 Leaders vs. Managers

Skill:  Factual

AACSB Tag:  Reflective

 

9) Which of these duties is more reflective of a leader’s tasks?

  1. A) efficiency of operations
  2. B) delegation and maintaining
  3. C) motivation and inspiration
  4. D) marshalling resources

Answer:  C

Diff: 2

Section:  4.1 Leaders vs. Managers

Skill:  Factual

AACSB Tag:  Reflective

 

10) Which of these is more characteristic of a manager?

  1. A) develop new processes
  2. B) originate
  3. C) state their position
  4. D) focus on people

Answer:  C

Diff: 2

Section:  4.1 Leaders vs. Managers

Skill:  Factual

AACSB Tag:  Reflective

 

 

11) Which of these is more characteristic of a leader?

  1. A) strive for control
  2. B) do things right
  3. C) demand respect
  4. D) inspire trust

Answer:  D

Diff: 2

Section:  4.1 Leaders vs. Managers

Skill:  Factual

AACSB Tag:  Reflective

12) A more apt title for a project manager is:

  1. A) controller.
  2. B) comptroller.
  3. C) project director.
  4. D) project leader.

Answer:  D

Diff: 2

Section:  4.1 Leaders vs. Managers

Skill:  Conceptual

AACSB Tag:  Reflective

 

13) Which of these tasks is NOT presented as a responsibility of a project manager?

  1. A) to control the “soft” people issues.
  2. B) to manage the hard technical details.
  3. C) to holistically manage the entire project.
  4. D) to apply a laissez faire approach and let the work progress unimpeded.

Answer:  D

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Factual

AACSB Tag:  Reflective

 

14) Projects are often underfunded in the concept stage because:

  1. A) the project requirements were deliberately understated.
  2. B) there is complete trust in project managers by top management so more resources can be asked for at any time.
  3. C) the project’s goals are too clearly defined.
  4. D) the project’s top management sponsor is too influential.

Answer:  A

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Factual

AACSB Tag:  Reflective

 

 

15) A project champion is:

  1. A) a project manager that always completes projects within the allotted time frame.
  2. B) a sponsor in top management that is keenly interested in the project’s success.
  3. C) a project manager that always completes projects within the allotted budget.
  4. D) a project manager that always completes projects within the allotted time frame and under budget.

Answer:  B

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Definition

AACSB Tag:  Reflective

16) Project team motivation comes primarily from:

  1. A) the project manager.
  2. B) the project champion.
  3. C) within each team member.
  4. D) the project client’s acceptance.

Answer:  C

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Factual

AACSB Tag:  Reflective

 

17) It is most important that a project manager:

  1. A) focuses on meeting daily challenges head on.
  2. B) focuses on meetings.
  3. C) remembers the overall picture, or goals, that define the project.
  4. D) operates on the boundary between strategy and tactics.

Answer:  D

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Factual

AACSB Tag:  Reflective

 

18) The project management pearl of wisdom that declares, “If they know nothing of what you are doing, they assume you are doing nothing,” means that:

  1. A) stakeholders must be communicated with on a continual basis throughout the project’s development.
  2. B) the duration of most projects is sufficiently long as to contain many days when no actual progress is being made.
  3. C) the more complex a project is, the more likely that the client who will ultimately receive the project has no idea how it is being executed.
  4. D) a project manager that holds lengthy progress meetings with his team will generally complete projects more successfully.

Answer:  A

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Conceptual

AACSB Tag:  Reflective

 

19) Project meetings do not generally serve this purpose for the project team:

  1. A) help all stakeholders increase their commitment to the project.
  2. B) provide a forum for airing grievances with stakeholders and team members.
  3. C) provide visibility for the project manager’s role in managing the project.
  4. D) define the project and all the major team players.

Answer:  B

Diff: 1

Section:  4.2 How the Project Manager Leads

Skill:  Factual

AACSB Tag:  Reflective

20) Task-oriented leadership behavior is characterized by:

  1. A) showing trust in project team members.
  2. B) acting friendly and supportive towards project team members.
  3. C) contributing to the completion of project assignments.
  4. D) recognizing the accomplishments of team members.

Answer:  C

Diff: 1

Section:  4.2 How the Project Manager Leads

Skill:  Definition

AACSB Tag:  Reflective

 

21) Which of these behaviors is task-oriented?

  1. A) Every Friday is ice-cream day at the job site; everyone gets a double dip of their favorite flavor.
  2. B) The employee of the month plaque is updated monthly and placed in a prominent position near the checkout stand.
  3. C) The dean reached into his pocket, extracted his money clip and peeled off $3,000, saying, “Why don’t you pick out some window treatments for the office? Something nice.”
  4. D) When my computer broke, the project manager had it replaced immediately.

Answer:  D

Diff: 1

Section:  4.2 How the Project Manager Leads

Skill:  Definition

AACSB Tag:  Reflective

 

22) Group maintenance behavior would be exhibited by a project manager who:

  1. A) provides the necessary support and technical assistance.
  2. B) plans and schedules activities and resources appropriately.
  3. C) contributes to the completion of project assignments.
  4. D) works with subordinates to understand their problems.

Answer:  D

Diff: 1

Section:  4.2 How the Project Manager Leads

Skill:  Definition

AACSB Tag:  Reflective

 

 

23) The group maintenance behavior of gatekeeping helps to:

  1. A) increase and equalize participation.
  2. B) reduce tension and hostility.
  3. C) regulate behavior.
  4. D) increase comprehension.

Answer:  A

Diff: 3

Section:  4.2 How the Project Manager Leads

Skill:  Factual

AACSB Tag:  Reflective

24) The task-oriented behavior of summarizing accomplishes which specific outcome?

  1. A) Check on understanding and assess progress.
  2. B) Guide and sequence discussion.
  3. C) Check on agreement.
  4. D) Increase comprehension.

Answer:  A

Diff: 3

Section:  4.2 How the Project Manager Leads

Skill:  Factual

AACSB Tag:  Reflective

 

25) Which of these behaviors is task-oriented?

  1. A) harmonizing
  2. B) consensus testing
  3. C) standard setting
  4. D) process analyzing

Answer:  B

Diff: 3

Section:  4.2 How the Project Manager Leads

Skill:  Definition

AACSB Tag:  Reflective

 

26) Which of these behaviors is indicative of group maintenance?

  1. A) stimulating communication
  2. B) clarifying communication
  3. C) process analyzing
  4. D) process structuring

Answer:  C

Diff: 3

Section:  4.2 How the Project Manager Leads

Skill:  Definition

AACSB Tag:  Reflective

 

 

27) Based on a study of successful American project managers as perceived by project team members, the most important characteristic of a project manager is:

  1. A) visionary.
  2. B) good communicator.
  3. C) good motivator.
  4. D) leadership by example.

Answer:  D

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Factual

AACSB Tag:  Reflective

28) Which of these is NOT an element of emotional intelligence?

  1. A) intelligence
  2. B) self-awareness
  3. C) motivation
  4. D) empathy

Answer:  A

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Factual

AACSB Tag:  Reflective

 

29) Which of these is the more meaningful measure of leadership effectiveness?

  1. A) subject matter knowledge
  2. B) emotional intelligence
  3. C) technical skill
  4. D) analytical ability

Answer:  B

Diff: 1

Section:  4.2 How the Project Manager Leads

Skill:  Factual

AACSB Tag:  Reflective

 

30) The emotional intelligence element that implies having a deep understanding of one’s own strengths and weaknesses, ego needs, drives, and motives is called:

  1. A) motivation.
  2. B) self-regulation.
  3. C) self-awareness.
  4. D) social skill.

Answer:  C

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Definition

AACSB Tag:  Reflective

 

 

31) Friendliness with a purpose describes:

  1. A) empathy.
  2. B) self-regulation.
  3. C) obsequiousness.
  4. D) social skill.

Answer:  D

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Definition

AACSB Tag:  Reflective

32) Project management is first and foremost:

  1. A) a people management challenge.
  2. B) a customer service challenge.
  3. C) a perception management challenge.
  4. D) a budget management challenge.

Answer:  A

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Factual

AACSB Tag:  Reflective

 

33) A large sample survey was used to ask a total of 2,615 managers within U.S. corporations what they considered to be the most important characteristic of effective leaders. The item that ranked #1 was:

  1. A) inspiring.
  2. B) honest.
  3. C) imaginative.
  4. D) dependable.

Answer:  B

Diff: 2

Section:  4.3 Traits of Effective Project Leaders

Skill:  Factual

AACSB Tag:  Reflective

 

34) A survey of 58 firms on their project management practices and skills identified which of the following as an essential skill?

  1. A) complex simplicity
  2. B) enthusiastic apathy
  3. C) productive creativity
  4. D) honest duplicity

Answer:  C

Diff: 2

Section:  4.3 Traits of Effective Project Leaders

Skill:  Factual

AACSB Tag:  Reflective

 

 

35) Among the essential abilities for effective project managers identified by a survey of 58 firms on their project management practices and skills was:

  1. A) obfuscation.
  2. B) humor.
  3. C) speed.
  4. D) experience.

Answer:  D

Diff: 2

Section:  4.3 Traits of Effective Project Leaders

Skill:  Factual

AACSB Tag:  Reflective

36) Pettersen’s study of project managers found that most do not have the capacity to exercise power that derives from formal positional authority and therefore they must develop:

  1. A) project champions.
  2. B) cadres of trained professionals.
  3. C) effective influencing skills.
  4. D) efficient communications networks.

Answer:  C

Diff: 2

Section:  4.3 Traits of Effective Project Leaders

Skill:  Factual

AACSB Tag:  Reflective

 

37) If all the project management studies discussed in the text are synthesized, it quickly becomes apparent that the key to understanding leadership behavior is to focus on:

  1. A) where in the organizational hierarchy the project leaders are located.
  2. B) where in the organizational hierarchy the project team members are located.
  3. C) who the leaders are.
  4. D) what the leaders do.

Answer:  D

Diff: 2

Section:  4.3 Traits of Effective Project Leaders

Skill:  Factual

AACSB Tag:  Reflective

 

38) The temporal context or space to which an individual is oriented is their:

  1. A) time orientation.
  2. B) chronometer.
  3. C) chronological clock.
  4. D) biological clock.

Answer:  A

Diff: 1

Section:  4.3 Traits of Effective Project Leaders

Skill:  Definition

AACSB Tag:  Reflective

 

 

39) Geoff sits at his desk and daydreams about what life will be like in 2030 when he retires. He can clearly picture events throughout the almost two decades that must elapse between now and then and what elements must come together to fulfill his lifelong dream of traveling the country in his RV. The temporal skill that Geoff is blessed (some would say cursed) with is:

  1. A) future time perspective.
  2. B) time span.
  3. C) time conception.
  4. D) timeline orientation.

Answer:  B

Diff: 3

Section:  4.3 Traits of Effective Project Leaders

Skill:  Factual

AACSB Tag:  Reflective

40) George believes that time is cyclical while Brad has a linear view. This is a significant difference in their:

  1. A) timeline orientation.
  2. B) future time perspective.
  3. C) time conception.
  4. D) polychronic preference.

Answer:  C

Diff: 3

Section:  4.3 Traits of Effective Project Leaders

Skill:  Conceptual

AACSB Tag:  Reflective

 

41) Bill runs his life like he runs Windows, always working on six or seven things at once. He exhibits:

  1. A) multitasking skills.
  2. B) simultaneity.
  3. C) co-processing ability.
  4. D) polychronic preference.

Answer:  D

Diff: 3

Section:  4.3 Traits of Effective Project Leaders

Skill:  Definition

AACSB Tag:  Reflective

 

42) Uncle Rico spends every waking hour selling Tupperware and reminiscing about his glory years in high school, mostly the latter. The past is his:

  1. A) timeline orientation.
  2. B) time span.
  3. C) time conception.
  4. D) temporal preference.

Answer:  A

Diff: 3

Section:  4.3 Traits of Effective Project Leaders

Skill:  Conceptual

AACSB Tag:  Reflective

 

43) The ability to cognitively bring the past and future closer together is:

  1. A) creating future vision.
  2. B) time warping.
  3. C) time compressing.
  4. D) tesseracting.

Answer:  B

Diff: 3

Section:  4.3 Traits of Effective Project Leaders

Skill:  Definition

AACSB Tag:  Reflective

44) A project manager should have an ability to generate estimates of what will occur in the future, which is termed:

  1. A) time warping.
  2. B) creating future vision.
  3. C) predicting.
  4. D) chunking time.

Answer:  C

Diff: 3

Section:  4.3 Traits of Effective Project Leaders

Skill:  Definition

AACSB Tag:  Reflective

 

45) Pete has worked in maintenance at the hospital for 30 years and knows all of the things about the pipes and circuits that don’t show up on the blueprints. He also knows which outside contractors and suppliers have been bargains, how long every remodeling job has taken, and which major power brokers in the hospital still have scores to settle. When a new project is in the conceptualization stage the hospital architect always calls on Pete to regale him with tales drawn deep from his memory banks so his knowledge can be leveraged to its fullest. In the language of project management, Pete is:

  1. A) time warping.
  2. B) chunking time.
  3. C) positioning.
  4. D) recapturing the past.

Answer:  D

Diff: 1

Section:  4.3 Traits of Effective Project Leaders

Skill:  Definition

AACSB Tag:  Reflective

 

 

46) The project leader duties of project problem solving, team member evaluation, and lessons-learned meetings are best served by the temporal skill of:

  1. A) recapturing the past.
  2. B) chunking time.
  3. C) time warping.
  4. D) creating future vision.

Answer:  A

Diff: 2

Section:  4.3 Traits of Effective Project Leaders

Skill:  Definition

AACSB Tag:  Reflective

47) The salty project manager instinctively knew that this was to be no easy task. As she surveyed the project objectives and the resources she had at her disposal, she did some quick mental arithmetic and parsed the next two years into pieces that were easier to manage and easier to explain to the team that sat in stunned silence all around her. The only way that this project would get off the ground and ultimately be delivered was thanks to her ability to:

  1. A) create future vision.
  2. B) chunk time.
  3. C) time warp.
  4. D) recapture the past.

Answer:  B

Diff: 2

Section:  4.3 Traits of Effective Project Leaders

Skill:  Conceptual

AACSB Tag:  Reflective

 

48) Present-oriented tasks make use of the temporal skills of:

  1. A) time conception and chunking time.
  2. B) recapturing the past and predicting.
  3. C) time warping and polychronicity.
  4. D) creating future vision and monochronicity.

Answer:  C

Diff: 2

Section:  4.3 Traits of Effective Project Leaders

Skill:  Factual

AACSB Tag:  Reflective

 

 

49) Your professor (yes, that person that has been informing and entertaining you for the past few weeks) has tirelessly advocated for a project management class. When the Dean and most of the rest of the faculty said “no,” your professor took the case for project management to the streets, ultimately securing it on the schedule this semester. The project management term that best describes your professor’s role is:

  1. A) director.
  2. B) advocate.
  3. C) instigator.
  4. D) champion.

Answer:  D

Diff: 1

Section:  4.4 Project Champions

Skill:  Factual

AACSB Tag:  Reflective

50) A champion that is an engineer, scientist, or similar person who is the driving force behind an idea is termed a(n):

  1. A) creative originator.
  2. B) entrepreneur.
  3. C) godfather.
  4. D) sponsor.

Answer:  A

Diff: 2

Section:  4.4 Project Champions

Skill:  Definition

AACSB Tag:  Reflective

 

51) Tim slapped together his first web page and proudly showed it to all his colleagues, pointing out what he thought were obvious and overwhelming advantages in simplicity and portability. His championing of web pages that he had read about in a trade journal ultimately shamed everyone else into adopting a web-based approach for all communication and cemented his status as a true:

  1. A) creative originator.
  2. B) entrepreneur.
  3. C) godfather.
  4. D) project manager.

Answer:  B

Diff: 2

Section:  4.4 Project Champions

Skill:  Conceptual

AACSB Tag:  Reflective

 

 

52) Michael wants to carry out his mentor’s long-range strategic vision of expanding the company’s customer base by entering the casino business in Las Vegas. He issues a series of memos that explain the importance of these projects and makes sure that all necessary resources are at the disposal of the project management team, which is fortunate to have such a(n):

  1. A) creative originator at the helm.
  2. B) entrepreneur.
  3. C) godfather.
  4. D) project manager.

Answer:  C

Diff: 2

Section:  4.4 Project Champions

Skill:  Conceptual

AACSB Tag:  Reflective

53) Which of the following is a traditional duty of a project champion?

  1. A) cheerleader
  2. B) visionary
  3. C) politician
  4. D) technical understanding

Answer:  D

Diff: 2

Section:  4.4 Project Champions

Skill:  Factual

AACSB Tag:  Reflective

 

54) Which of the following is a non-traditional role of a project champion?

  1. A) cheerleader
  2. B) leadership
  3. C) administrative
  4. D) control

Answer:  A

Diff: 2

Section:  4.4 Project Champions

Skill:  Factual

AACSB Tag:  Reflective

 

55) A project manager puts on his “nontraditional hat” and smoothly works the room, networking among functional managers and attempting to secure their cooperation with the project. This nontraditional role is best described as that of a(n):

  1. A) ambassador.
  2. B) politician.
  3. C) cheerleader.
  4. D) visionary.

Answer:  B

Diff: 2

Section:  4.4 Project Champions

Skill:  Factual

AACSB Tag:  Reflective

 

56) There is a significant chance that the project can be executed successfully but if it can’t, the project manager and team may be updating their resumes. This champion can best be described as a(n):

  1. A) administrator.
  2. B) ambassador.
  3. C) risk taker.
  4. D) visionary.

Answer:  C

Diff: 1

Section:  4.4 Project Champions

Skill:  Definition

AACSB Tag:  Reflective

57) A(n) ________ maintains a clear sense of purpose and a firm idea of what is involved in creating the project.

  1. A) politician
  2. B) ambassador
  3. C) cheerleader
  4. D) visionary

Answer:  D

Diff: 2

Section:  4.4 Project Champions

Skill:  Factual

AACSB Tag:  Reflective

 

58) The administrative duty is best described by:

  1. A) managing and controlling the activities of the team.
  2. B) gaining access to the necessary resources to ensure a smooth development process.
  3. C) the ability to provide leadership for the project team.
  4. D) handling the important executive side of the project.

Answer:  D

Diff: 2

Section:  4.4 Project Champions

Skill:  Definition

AACSB Tag:  Reflective

 

59) The traditional project champion duties of coordination and control are on display when the project champion:

  1. A) manages and runs the activities of the team.
  2. B) handles the important administrative side of the project.
  3. C) maintains a clear sense of purpose and a firm idea of what is involved in creating the project.
  4. D) provides the needed motivation for the team.

Answer:  A

Diff: 2

Section:  4.4 Project Champions

Skill:  Definition

AACSB Tag:  Reflective

 

60) Which project champion role is least likely to be emphasized in the next project management article you read?

  1. A) leadership
  2. B) ambassador
  3. C) administrative
  4. D) technical

Answer:  B

Diff: 2

Section:  4.4 Project Champions

Skill:  Conceptual

AACSB Tag:  Reflective

61) A recent study of new product development projects at a variety of organizations revealed that:

  1. A) almost 50% of the successful projects had a clearly identifiable champion.
  2. B) almost 25% of the successful projects had a clearly identifiable champion.
  3. C) almost 100% of the successful projects had a clearly identifiable champion.
  4. D) almost 75% of the successful projects had a clearly identifiable champion.

Answer:  C

Diff: 1

Section:  4.4 Project Champions

Skill:  Factual

AACSB Tag:  Reflective

 

62) A recent study of new product development projects at a variety of organizations revealed that:

  1. A) about 5% of the unsuccessful projects had a clearly identifiable champion.
  2. B) about 25% of the unsuccessful projects had a clearly identifiable champion.
  3. C) about 45% of the unsuccessful projects had a clearly identifiable champion.
  4. D) about 65% of the unsuccessful projects had a clearly identifiable champion.

Answer:  A

Diff: 1

Section:  4.4 Project Champions

Skill:  Factual

AACSB Tag:  Reflective

 

63) Risk taking can be encouraged in an organization by:

  1. A) seeking out projects that stand little chance of success.
  2. B) avoiding the inclination to punish failure.
  3. C) promotion of workers that are ill-equipped to lead projects.
  4. D) demoting project managers that are too conservative.

Answer:  B

Diff: 1

Section:  4.4 Project Champions

Skill:  Factual

AACSB Tag:  Reflective

 

 

64) Champions bring a great deal of energy and emotional commitment to their project ideas, but:

  1. A) most organizations have an oversupply of this.
  2. B) cannot effectively be the manager of a project.
  3. C) often refuse to give up on a project that has completely failed.
  4. D) must spend an equal amount of time and effort discouraging other projects that compete for the same resources.

Answer:  C

Diff: 2

Section:  4.4 Project Champions

Skill:  Factual

AACSB Tag:  Reflective

65) Classic project champions are often more comfortable:

  1. A) performing traditional project activities.
  2. B) avoiding their projects during the early stages.
  3. C) avoiding their projects through the final stages.
  4. D) performing nontraditional project activities.

Answer:  D

Diff: 2

Section:  4.4 Project Champions

Skill:  Factual

AACSB Tag:  Reflective

 

66) Recent research in organizational leadership declares that the new project leader generates and sustains:

  1. A) trust.
  2. B) revolution.
  3. C) innovation.
  4. D) joy.

Answer:  A

Diff: 2

Section:  4.5 The New Project Leadership

Skill:  Factual

AACSB Tag:  Reflective

 

67) The Bennis article on competencies that determine a project leader’s success indicates that it is crucial to continually remind the team:

  1. A) what the deadline is.
  2. B) what is important.
  3. C) who their leader is.
  4. D) who the customer is.

Answer:  B

Diff: 2

Section:  4.5 The New Project Leadership

Skill:  Factual

AACSB Tag:  Reflective

 

 

68) The new leader and the led are:

  1. A) separate but equal.
  2. B) strange bedfellows.
  3. C) intimate allies.
  4. D) separated by a common language.

Answer:  C

Diff: 1

Section:  4.5 The New Project Leadership

Skill:  Factual

AACSB Tag:  Reflective

69) In the new project management professionalism model:

  1. A) personnel should be in a state of flux with regard to job assignment.
  2. B) process skills will not be important.
  3. C) traditional project champion activities will supplant the currently emphasized nontraditional skills.
  4. D) project management should be a dedicated career path.

Answer:  A

Diff: 2

Section:  4.6 Project Management Professionalism

Skill:  Conceptual

AACSB Tag:  Reflective

 

70) Which personality trait is a poor match for project work?

  1. A) introverted
  2. B) outgoing
  3. C) gregarious
  4. D) people-oriented

Answer:  A

Diff: 1

Section:  4.6 Project Management Professionalism

Skill:  Factual

AACSB Tag:  Reflective

 

71) A good starting point for matching employees to project work would be:

  1. A) finding out who has the most spare time.
  2. B) conducting basic personality assessment.
  3. C) making sure that every department in the organization has at least one representative on the project team.
  4. D) observing what clusters of employees develop during informal situations.

Answer:  B

Diff: 1

Section:  4.6 Project Management Professionalism

Skill:  Factual

AACSB Tag:  Reflective

 

 

72) One practical step that should be taken in order for an organization to begin developing a core of project management professionals is to:

  1. A) fire the unprofessional project managers.
  2. B) hire professional project managers.
  3. C) formalize the organization’s commitment with training programs.
  4. D) review instances where projects were poorly managed.

Answer:  C

Diff: 1

Section:  4.6 Project Management Professionalism

Skill:  Factual

AACSB Tag:  Reflective

73) A reward system for project management should be:

  1. A) greater than rewards for process management.
  2. B) based on the money saved managing the project.
  3. C) based on the money generated by the project.
  4. D) differentiated from normal functional rewards.

Answer:  D

Diff: 2

Section:  4.6 Project Management Professionalism

Skill:  Factual

AACSB Tag:  Reflective

 

74) A recent development in many companies is to:

  1. A) reassign functional managers to functions outside their area of expertise in order to build well-rounded employees.
  2. B) reassign project managers back to functional duties as soon as a project ends; then assign them to the next project within their functional area.
  3. C) keep skilled project managers in project work; when one project ends they are immediately assigned to another project.
  4. D) hire talent from outside the organization, effectively outsourcing project management talent to professional project management organizations.

Answer:  C

Diff: 2

Section:  4.6 Project Management Professionalism

Skill:  Factual

AACSB Tag:  Reflective

 

 

4.4   Essay Questions

 

1) Comment on the project profiles Aziza Chaouni and Her Project to Save a River and Dr. Elattuvalapil Sreedharan, India’s Project Management Rock Star. What evidence is offered of project leadership skills in these vignettes?

Answer:  The Aziza Chaouni profile speaks to the leadership skills of creating vision, taking a long-term (20 years for this project) view, and working with a diverse group of stakeholders. The success of Dr. Elattuvalapil Sreedharan is attributed in large part to his ability to create and articulate a clear vision, to hold team members accountable for both financial and temporal resources. He demonstrates transparency with all stakeholders, holds frequent communication meetings, and stresses punctuality, integrity, and professional competence as basic qualities for success.

Diff: 2

Section:  4.1 Leaders vs. Managers

Skill:  Factual

AACSB Tag:  Reflective

2) Describe the four things that are necessary to promote the partnership idea between the project manager and the team.

Answer:  The four things that are necessary to promote the partnership idea between the project manager and the team are exchange of purpose, a right to say no, joint accountability, and absolute honesty. Exchange of purpose means that partnerships require that every worker be responsible for defining the project’s vision and goals with steady dialogue between manager and team members. A right to say no is important so that team members can offer contrary positions and debate these positions. Joint accountability exists if each member of the project team is responsible for the project’s outcomes and the current situation, positive or otherwise. Finally, absolute honesty is vital as a vehicle for promoting straightforwardness and open communication.

Diff: 2

Section:  4.1 Leaders vs. Managers

Skill:  Factual

AACSB Tag:  Reflective

 

 

3) What are any four key differences between managers and leaders?

Answer:  The text offers these differences between managers and leaders in Table 4.1. Answers will vary as only four are needed for the question.

 

Concerns Managers Leaders
Creation of purpose Focuses on plans and budgets; creates steps, timetables for achieving results and looks for resources to support goals. Establishes direction; creates a vision and the strategies needed to achieve it.
Developing a network for achieving the agenda Organizes and staffs; creates structure for achieving the plans; delegates responsibility and authority; develops procedures to guide behavior; creates monitoring systems. Aligns people with the target; communicates direction by word and deed to those whose cooperation is needed; creates teams that understand and share the project’s vision.
Execution Controls and solves problems; monitors results and applies corrective action. Motivates and inspires; energizes people to overcome obstacles and show personal initiative.
Outcomes Produces a degree of predictability and order; seeks to maintain the status quo. Produces change; challenges the status quo.
Focus Efficiency of operations. Effectiveness of outcomes.
Time-Frame Short term, avoiding risks, maintain and imitating. Long term; taking risks, innovating and originating.

 

Diff: 2

Section:  4.1 Leaders vs. Managers

Skill:  Conceptual

AACSB Tag:  Reflective

4) Why are projects often underfunded in the concept stage?

Answer:  Projects lack resource support in the concept stage for a number of reasons including:

The project’s goals are deliberately vague.

The project lacks a top management sponsor.

The project requirements were deliberately understated.

There are other projects under development competing for the same scarce resources.

An attitude of distrust exists between top management and project managers.

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Factual

AACSB Tag:  Reflective

 

 

5) What are some ways project managers can acquire additional resources if they feel their project lacks sufficient support?

Answer:  If the resource problem is a personnel issue, project managers may seek alternative avenues to solve the difficulty. Project managers might seek to hire temporary contract employees if labor skills are in short supply. The key point to remember is that recognizing and responding to resource needs is a critical function of project leadership. Another common tactic project managers use in the face of resource shortfalls is to rely on negotiation or political tactics to influence top management to provide additional support. Because resources must often be negotiated with top management, clearly the ability to successfully negotiate and apply influence where the project manager has no direct authority is a critical skill. Again, leadership is best demonstrated by the skills a project manager uses to maintain the viability of the project, whether dealing with top management, clients, the project team, or other significant stakeholders.

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Factual

AACSB Tag:  Reflective

 

6) Your author makes the statement that “Successful project managers must operate on the boundaries.” Explain what is meant by this statement and provide an example.

Answer:  Project managers must be able to work in sometimes ill-defined situations that require a sense of both technical and behavioral issues; when the focus should be on long-term strategic issues or on more day-to-day operational concerns. Project managers must be comfortable working with people at all levels of an organization, speaking their language, understanding their motivations, and inspiring them to perform at their best. It is not enough for a manager to be technically competent in one area if he is to be successful. Examples will vary.

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Conceptual

AACSB Tag:  Reflective

7) What can a project manager do to motivate project team members?

Answer:  Motivation comes from within each individual, so it cannot be created solely by the project manager. A skillful project manager recognizes this and is knowledgeable about his project team members, enabling him to recruit talent, mold the team, and apply motivational techniques as necessary.

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Conceptual

AACSB Tag:  Reflective

 

 

8) Communicating is an important aspect of a project leader’s job and what better way to do so than through project meetings! What purposes do project team meetings serve?

Answer:  Meetings serve a number of purposes for the project team, including:

They define the project and major team players.

They provide an opportunity to revise , update, and add to all participants’ knowledge base on the subject.

They assist team members to understand how their individual efforts fit into the overall whole of the project.

They help all stakeholders increase their commitment to the project.

They provide a collective opportunity to discuss the project and decide on individual work assignments.

They provide visibility for the project manager’s role in managing the project.

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Factual

AACSB Tag:  Communication

 

9) What are the differences between task-oriented behavior and group maintenance behavior? Give three examples of each type of behavior.

Answer:  The two leadership behaviors that are critical for effectively running project meetings are task-oriented; that is, behavior that emphasizes the importance of completing project assignments, and group maintenance that involves supportive, touchy-feely activities that make sure everyone is happy and wants to continue working for you on the project. Task-oriented behavior includes process structuring, stimulating and clarifying communication, summarizing, and consensus testing. Group maintenance behavior includes gatekeeping, harmonizing, supporting, standard setting, and process analyzing.

Diff: 2

Section:  4.2 How the Project Manager Leads

Skill:  Conceptual

AACSB Tag:  Reflective

10) What is emotional intelligence and why is it important for a project leader to possess?

Answer:  Emotional intelligence refers to the leader’s ability to understand that effective leadership is part of the emotional and relational transaction between subordinates and themselves. With the five elements of emotional intelligence (self-awareness, self-regulation, motivation, empathy, and social skill), a project manager can develop the kind of direct, supportive relationships with the project team members that are critical to creating and guiding an effective team.

Diff: 1

Section:  4.2 How the Project Manager Leads

Skill:  Definition

AACSB Tag:  Reflective

 

 

11) Much research has been published regarding the important characteristics of effective leaders. What are five traits that surveys have found to be important and which of your five is most important?

Answer:  Table 4.3 in the text lists the results of a survey on characteristics of effective leaders. The list contains these traits, listed in order of percentage of respondents: honest, competent, forward-looking, inspiring, intelligent, fair-minded, broad-minded, straightforward, imaginative, and dependable. Answers may vary as to personal importance.

Diff: 2

Section:  4.3 Traits of Effective Project Leaders

Skill:  Conceptual

AACSB Tag:  Reflective

 

12) Define the concept of time orientation. What are its implications for project leadership behavior?

Answer:  Time orientation refers to the temporal context or space to which an individual is oriented. Each of us has a natural tendency to focus on one of three time orientations: past, present, or future. Time orientation is a useful concept to consider when developing project management skills because while we each have an orientation, each of these orientations has its own advantages and drawbacks for project management. Further, as part of a project management team, we must work with others that may have a different orientation.

Diff: 2

Section:  4.3 Traits of Effective Project Leaders

Skill:  Conceptual

AACSB Tag:  Reflective

 

13) What are the temporal skills discussed in the text and what impact would they have on a project manager’s success?

Answer:  The temporal skills discussed in the text are time warping, creating future vision, chunking time, predicting, and recapturing the past. A project manager must draw on these skills at various stages during the project management cycle. Some, such as recapturing the past, which is useful at the end of a project during a lessons-learned session, are past-oriented. Other tasks, such as creating future vision, have a future orientation and are vital at the beginning of a project. Project managers must be able to switch hats and orient their thinking in the required temporal mode.

Diff: 2

Section:  4.3 Traits of Effective Project Leaders

Skill:  Conceptual

AACSB Tag:  Reflective

14) What is a project champion and why is it important to have one?

Answer:  A project champion is an individual who identifies with a new development, using all weapons at his command, against the funded resistance of the organization. Project champions are important because worthwhile projects and ideas must have someone that advances their cause when the rest of the organization is not as enthusiastic. Without champions, the project could not be carried forward to fruition.

Diff: 2

Section:  4.4 Project Champions

Skill:  Conceptual

AACSB Tag:  Reflective

 

 

15) What are any three types of project champions and how are they different?

Answer:  The project champion types presented in the text are the creative originator, the entrepreneur, the godfather or sponsor, and the project manager. The creative originator is the source and driving force behind the idea and is the de facto resident expert. The entrepreneur does not have the initial idea but is the person who adopts the idea or technology and actively works to sell the system throughout the organization, eventually pushing it to success. The godfather or sponsor is a senior level manager who does everything in his power to promote the project, including obtaining the needed resources, coaching the team, protecting the project, and running political interference. The project manager at times may play the role of champion as long as he or she has sufficient authority in the organization (not just over the project) to effectively advocate for it.

Diff: 2

Section:  4.4 Project Champions

Skill:  Conceptual

AACSB Tag:  Reflective

 

16) Give two examples each of traditional and nontraditional project champion duties. Which set of duties is more important? Why?

Answer:  Examples may vary, but the traditional duties of a project champion are technical understanding, leadership, coordination and control, obtaining resources, and administrative. The nontraditional duties of a project champion are cheerleader, visionary, politician risk taker, and ambassador. Both sets of duties are essential; the author points out that the traditional duties have been the focus of much of the project management literature and are classically teachable. The nontraditional skills have experience as the best teacher and seem to require the greatest amount of the project manager’s time.

Diff: 2

Section:  4.4 Project Champions

Skill:  Conceptual

AACSB Tag:  Reflective

17) What four competencies determine success as project leaders?

Answer:  The four competencies that determine success as project leaders (as developed by Dr. Warren Bennis) are:

The new leader understands and practices the power of appreciation. They are connoisseurs of talent, more curators than creators.

The new leader keeps reminding people what’s important.

The new leader generates and sustains trust.

The new leader and the led are intimate allies.

Diff: 2

Section:  4.5 The New Project Leadership

Skill:  Conceptual

AACSB Tag:  Reflective

 

 

18) What factors dictate an increased need to develop project management professionalism within an organization?

Answer:  The three factors cited in the text are a) for many organizations, project work is becoming the standard, b) there is a critical need to upgrade the skills of those doing project work, and c) there is a need to create a career path for those serving as project managers.

Diff: 1

Section:  4.6 Project Management Professionalism

Skill:  Conceptual

AACSB Tag:  Reflective

 

19) What are the practical steps that organizations can take to begin developing a core of project management professionals?

Answer:  Some of the suggested strategies that organizations can take to begin developing a core of project management professionals include:

– Begin to match personalities to project work since certain personality types may be more accepting of project work than others.

– Formalize an organization’s commitment to project work with training programs to help personnel develop project management skills.

– Develop a reward system for project management that differentiates it from normal functional reward schedules.

– Identify a distinct career path for project professionals that allows successful project managers the same opportunities to move upwards as other functional managers.

Diff: 2

Section:  4.6 Project Management Professionalism

Skill:  Conceptual

AACSB Tag:  Reflective