Ch 4 Asn_RobStevens

Ch 4 Asn_RobStevens - Rob Stevens BISM 4800 Ch. 4 Project...

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Rob Stevens BISM 4800 Ch. 4 Project Initiation February 18, 2011 Questions 1-21 1. There is no real advantage of using mandates other than it is rigid and goal directed, and authoritative, which could be a limiting factor for the project and it’s guidelines. The disadvantage is that communication is hindered − being so strict and no wiggle room. The advantage of sacred cow decisions is that it is a swift decision from upper management and potential to be on the job or task driven is straightforward. The disadvantage however is that some other projects may be dropped because of the necessity “sacredness” of the project by using this decision (approach). Using NPV and IRR measurements to evaluate projects often results in the same findings. However, there are a number of projects for which using IRR is not as effective as using NPV to discount cash flows. IRR's major limitation is also its greatest strength: it uses one single discount rate to evaluate every investment. Without modification, IRR does not account for changing discount rates, so it's just not adequate for longer-term projects with discount rates that are expected to vary. Another situation that causes problems for users of the IRR method is when the discount rate of a project is not known. In order for the IRR to be considered a valid way to evaluate a project, it must be compared to a discount rate. If the IRR is above the discount rate, the project is feasible; if it is below, the project is considered infeasible. If a discount rate is not known, or cannot be applied to a specific project for whatever reason, the IRR is of limited value. IRR is simpler in some respects and is more widely used in budgeting; however, with IT projects managers must use the balance scorecard, ROI, payback period to determine feasibility. 2. The importance of strategic plan in selection process of projects is the need to make sure that managers integrate projects within the strategic plan. This integration requires a process for prioritizing projects by their contribution to the plan. The need of project selection and a priority system ensures strong linkages/bonds between projects and the strategic plan to deliver business value; higher market share, better customer support, lowering costs, etc. 3.
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Ch 4 Asn_RobStevens - Rob Stevens BISM 4800 Ch. 4 Project...

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