POM 447 HW-1

Chapter 1 Exercise

4. Check out the Project Management Institutes home page at www.pmi.org.

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

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

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

411 Waverley Oaks RoadSuite 331BWaltham, MA 02452USA

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

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

Chapter 2 Exercise2.Two new software projects are proposed to a young, start-up company. The Alpha project will cost $150,000 to develop and is expected to have annual net cash flow of $40,000. The Beta project will cost $200,000 to develop and is expected to have annual net cash flow of $50,000. The company is very concerned about their cash flow. Using the payback period, which project is better from a cash flow standpoint? Why?

Payback = investment / annual savingProject Alpha: $150,000 / $40,000 = 3.75 yearsProject Beta: $200,000 / $50,000 = 4 yearsProject ALPHA is the better payback.

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

ABCDEFGH

1

2Exercise 2.3

3Net Present Value Example

4

5Project 2.3Year 0Year 1Year 2Year 3Year 4Year 5

6Investment-$50,000

7Cash Flows$15,000$25,000$30,000$20,000$15,000

8Required Rate of Return20%

9

10NPV = $12,895

NPV is POSITIVE, ACCEPT project.

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

Exercise 4a

Net Present Value Example Comparing Two Projects

Project OmegaYear 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7

Required Rate of Return18%

Investment $ (225,000.00)

Cash Inflows $ (190,000.00) $ 150,000.00 $ 190,000.00 $ 215,000.00 $ 175,000.00 $ 197,000.00 $ 70,000.00

NPV= $ 119,689.07

Project AlphaYear 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7

Required Rate of Return18%

Investment $ (300,000.00)

Cash Inflows $ (50,000.00) $ 150,000.00 $ 200,000.00 $ 250,000.00 $ 150,000.00 $ 180,000.00 $ 90,000.00

NPV= $ 176,525.49

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

Exercise 4b

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

Project OmegaYear 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7

Required Rate of Return21%

Investment $ (225,000.00)

Cash Inflows $ (190,000.00) $ 150,000.00 $ 190,000.00 $ 215,000.00 $ 175,000.00 $ 197,000.00 $ 70,000.00

NPV= $ 76,649.89

Project AlphaYear 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7

Required Rate of Return21%

Investment $ (300,000.00)

Cash Inflows $ (50,000.00) $ 150,000.00 $ 200,000.00 $ 250,000.00 $ 150,000.00 $ 180,000.00 $ 90,000.00

NPV= $ 129,536.19

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

Chapter 3 Exercise

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

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

Chapter 4 Exercise

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

TaskDateFatherMotherSonDaughter

Getting money 8/09R

Getting food8/10RR

Survival kit8/09RR

Fill gas tank 8/11R

Pack tent8/10R

Find camp site8/05RR

Agree on camp spot8/07RRRR

7. Develop a communication plan for an airport security project. The project entails installing the hardware and software system that (1) scans a passengers eyes, (2) fingerprints the passenger, and (3) transmits the information to a central location for evaluation.INFORMATIONOCCURRENCEMETHODALLOCATEDRECEIVING

TRAININGmonthlymeetingHRAirport authority

CHANGESweeklyemailProject managerdesigners

DESIGNER PROGRESS REPORTweeklymeetingProject managerProjects office

STATUS REPORTDailyemailTeam coordinatorStaff members

9. Your roommate is about to submit a scope statement for a spring concert sponsored by the entertainment council at Western Evergreen State University (WESU). WESU is a residential university with over 22,000 students. This will be the first time in six years since WESU sponsored a spring concert. The entertainment council has budgeted $40,000 for the project. The event is to occur on June 5th. Since your roommate knows you are taking a class on project management she has asked you to review her scope statement and make suggestions for improvement. She considers the concert a resume-building experience and wants to be as professional as possible. Below is a draft of her scope statement. What suggestions would you make and why?(Hint: use the track change function in the Word file to edit this scope statement. Briefly explain the reasons by inserting comments or notes.WESU Spring Music Concert Project ObjectiveTo organize and deliver a 6-hour music concertDeliverablesConcert securityContact local newspapers and radio stations Local advertisingSeparate beer gardenSix h ours of musical entertainmentComment by Lee Charlton: Delete space from to fix grammar.Design a commemorative concert t-shirtLocal sponsorsFood venuesEvent insuranceSafe environmentComment by Lee Charlton: Give more detail on safe environment to vague Milestones1.Secure all permissions and approvals2.Sign big-name artist3.Contact secondary artistsComment by Lee Charlton: Give a completed by time4.Secure vendor contractsComment by Lee Charlton: Also add a complete by date5.Advertising campaign6.Plan set-up7.Concert8.Clean-upTechnical Requirements1.Professional sound stage and system2.At least five performing acts3.Restroom facilitiesComment by Lee Charlton: How many facilities would be needed for 8000 student?4.ParkingComment by Lee Charlton: Need to know how much parking will be needed5.Compliance with WESU and city requirements/ordinancesLimits and ExclusionsSeating capacity for 8,000 students.Performers are responsible for travel arrangement to and from WESU.Performers must provide own liability insurance.Performers and security personnel will be provided lunch and dinner on the day of the concert.Vendors contribute 25 percent of sales to concert fundConcert must be over at 12:15 A.M.Customer Review: WESU