Arab Academy

Project Management

Name:

True/ False (Correct False statement) (10 Marks)(Each point 0.5 mark)

1) Projects, rather than repetitive tasks, are now the basis for most value-added in business.
(True)

2) The initial goal and technical specifications of the project are developed during the planning
stage. (False)

3) Client interest in a project is highest during the termination and conceptual phases. (True)
1) Projects, rather than repetitive tasks, are now the basis for most value-added in business.

2) The initial goal and technical specifications of the project are developed during the planning
stage.

3) Client interest in a project is highest during the termination and conceptual phases.

4) The classic triple constraint standard for project performance is composed of time, cost, and
client acceptance. (False)

5) The statement of work is a detailed narrative description of the work required for a project.
(True)

6) A work package may be composed of one or more subdeliverables. (False)

7) A work package may consist of more than one milestone. (True)

8) Risks can be quantified by multiplying the likelihood a failure will occur by the severity of the
failure. (True)

9) The probability that the investments made to fund the front-end activities will be lost due to
project abandonment is financing risk. (False)

10) Direct costs are those clearly assigned to the aspect of the project that generated the cost.
(True)

11) Material is an example of a cost that is recurring, variable and direct. (True)

12) An expedited cost is one that does not vary with respect to their usage. (False)

13) An order of magnitude estimate is usually more accurate than a ballpark estimate. (False)

14) Comparative estimates are more accurate than definitive estimates when applied to the same
project. (True)
15) One approach to risk mitigation is simply to accept it. (True)

16) Risk cannot be transferred because ultimately your own project will suffer the consequences
if the event occurs. (False)

17) Contingency reserves require a construction company to hold back some funds in an account
just in case something happens that increases the overall project cost. (True)

18) The first step in assembling a project team is to talk to potential team members. (False)

19) If preferred project team members are not available, the project manager should notify top
management of the consequences. (True)

20) Project managers are best able to promote a sense of enthusiasm within the project team
when they create an environment that is challenging, supportive, and personally rewarding.
(True)

Multiple Choices (15 Marks)(Each point 0.5 mark)

1) Keith Monroe nails hundreds of pieces of culled lumber in the blazing July sun to form a
parquet deck for his barn roof. He and his assistant are clearly in:
A) the termination stage of the project life cycle.
B) the planning stage of the project life cycle.
C) the execution stage of the project life cycle.
D) way over their heads.

2) The statement of work should contain:

A) information on the key objectives for the project.
B) a brief and general description of the work to be performed.
C) expected project outcomes.
D) All of these are elements of a statement of work.

3) The degree of risk associated with the project is typically at its highest during the:
A) conceptualization phase.
B) planning phase.
C) execution phase.
D) termination phase.
4) The commitment of financial, human, and technical resources is highest during the:
A) conceptualization phase.
B) planning phase.
C) execution phase.
D) termination phase.

5) The new Magic Pan coming soon to your area usually serves 20,000 customers in the first
year of operation. Construction plans include site selection, foundation, framing, finishing, egg-
laying, and chicken acquisition. The scope statement step that determines relationships among
these steps, e.g. does the chicken acquisition come before the egg laying, etc., is the:
A) project goal criteria.
B) management plan.
C) work breakdown structure.
D) scope baseline

6) A design project is completed on time, under budget, to the customer's satisfaction, and in
adherence to the technical specifications agreed. The new product takes the market by storm and
everyone associated with the project receives a coveted gold star. Under the four dimensions of
project success model, the project still needs to show:
A) future potential.
B) business success.
C) impact on the customer.
D) efficiency.

7) The second level in work breakdown structure contains the:

A) projects.
B) deliverables.
C) subdeliverables.
D) work packages.

8) A project manager can identify personnel who will be directly responsible for each task in the
project's development by using a(n):
A) responsibility assignment matrix.
B) milestone designation chart.
C) Merrill report.
D) work package report.
9) The step that reflects the formal "go ahead" given to the project to commence once the scope
definition, planning documents, and other contractual documents have been prepared and
approved is the:
A) go ahead.
B) send off.
C) work authorization.
D) work release.

10) A project management firm that promises to do everything for a major project and hand over
a fully functional, ready-to-use deliverable is performing under a(n):
A) umbrella contract.
B) all-inclusive contract.
C) cost-plus contract.
D) turnkey contract.

11) Your professor moonlights to make ends meet during the summer months and has a knack
for painting houses. You agree to pay $500 over whatever the materials and equipment rental
cost for the job and delight in sipping lemonade in the shade watching your poor professor
perform under a(n):
A) cost-plus contract.
B) lump sum contract.
C) time and material contract.
D) fixed wage contract.

12) The framing crew would never know when it was time to order more $400 hammers without
their fancy new:
A) acquisition control system.
B) specification control system.
C) configuration control system.
D) design control system.
13) The period of highest risk impact for a project risk exists primarily in the:
A) development stage of the project life cycle.
B) concept stage of the project life cycle.
C) implementation stage of the project life cycle.
D) termination stage of the project life cycle.

14) The greatest project opportunity occurs when:

A) the project is in the concept phase.
B) the project is in the development phase.
C) the project is in the implementation phase.
D) the project is in the termination phase.

15) A project manager can identify the skills needed for the project from the:
A) departmental personnel listings.
B) project budget.
C) stakeholder meeting.
D) work breakdown structure

16) While thrilling, there is a chance that you would have an accident if you elected to drive on
the Autobahn while blindfolded, an outcome that could be described as:
A) high in consequence and high in probability.
B) low in consequence and low in probability.
C) low in probability and high in consequence.
D) high in probability and low in consequence.

17) The project team's office needed a revolving door to facilitate the influx and outflow of
personnel. Team members needed name tags to keep track of who was who and what their duties
were. The project was jeopardized by:
A) poor leadership.
B) high turnover.
C) lack of team motivation.
D) poor communication among team members
18) A method for conducting risk factor identification that consolidates the judgments of isolated
anonymous respondents is:
A) a brainstorming meeting.
B) the Delphi method.
C) past history.
D) multiple assessments.

19) The terpsichorean was familiar with the risks associated with various moves, the accountant
knew financial risks forwards and backwards, while the civil engineer could quantify the risks
associated with distributed loads on the temporary stage. Their input was used as part of:
A) a brainstorming meeting approach to risk factor identification.
B) the Delphi method approach to risk factor identification.
C) a past history approach to risk factor identification.
D) a multiple assessments approach to risk factor identification.

20) "Our work here is done," the project leader shouted as he surveyed the scene. "Go home and
reflect on what you've accomplished and I'll see you at the world premier once we're all
immortalized in a feature length movie." This project team is in the:
A) forming stage of group development.
B) norming stage of group development.
C) performing stage of group development.
D) adjourning stage of group development.

21) The consequences of failure categories of cost, schedule, reliability, and performance were
believed to be 0.2, 0.6, 0.5, and 0.7. What is the overall consequence of failure?
A) 0.2
B) 0.3
C) 0.4
D) 0.5
22) If the risk of a negative outcome is slight, the best course of action might be to:
A) minimize it.
B) share it.
C) transfer it.
D) accept it.

23) Which of the following is a direct cost?

A) labor
B) rent
C) depreciation on equipment
D) health benefits

24) Which of these indirect costs is typically classified as a selling or administrative cost?
A) secretarial support
B) utilities
C) insurance
D) depreciation

25) Which of these is typically a recurring cost?

A) preliminary market analysis
B) personnel training
C) outplacement services
D) logistics

26) The charge that is most likely a fixed cost is for:

A) materials.
B) equipment rental.
C) direct labor.
D) utilities.

27) Unplanned costs incurred when steps are taken to speed up project's completion are called:
A) expedited costs.
B) accelerated costs.
C) pass-through costs.
D) normal costs.
28) The order of magnitude cost estimate is used when:
A) ballpark estimates are not considered accurate enough.
B) historical data are readily available.
C) information or time is scarce.
D) parametric estimation has already been performed

29) Which of these estimates should be the most accurate?

A) parametric
B) definitive
C) comparative
D) order of magnitude

30) Project management people skills include:

A) team building.
B) scheduling.
C) budgeting.
D) project evaluation.
Essay questions (25 Marks)(Each point 5 mark)

Answer only 5 questions

1) Explain the difference between normal and expedited costs, fixed and variable costs, and
recurring or nonrecurring costs (Illustrate your answer with examples)

Normal Costs Expedited Costs

Unplanned costs incurred when steps are
taken to speed up the project’s completion.
Examples:
Incurred in the routine process of working to - fast tracking replacement of a
complete the project according to original damaged or lost asset, overtime,
planned schedule agreed to by all stakeholder transportation will cost additionally.
at the beginning of the project. Such expenses are covered under
Examples: insurance plans.
- costs associated with using additional
overtime
- or hiring additional workers
specifically to hasten project.
Fixed Costs Variable Costs
Are costs that are independent of output.
Variable costs are costs that vary with
These remain constant throughout the
output. Generally variable costs increase at a
relevant range (not relevant to output
constant rate relative to labor and capital.
decisions).
Examples:
Examples:
- wages, utilities, materials used in
- Rent, Insurance, Taxes; Supervisory
production (Direct Material); Direct
salaries;
Labor; Indirect material; commissions
- administrative salaries & advertising
& shipping costs)
(S&GA Costs)
Recurring Costs Nonrecurring Costs
Nonrecurring Costs are costs associated with
Recurring costs are those that typically
charges applied once at the beginning or end
continue to operate over the project's life
of a project
cycle.
Examples:
Examples:
- preliminary market analysis; Site
- such as market research and
study,
labor training
- Feasibility study &personnel training

2) Define learning curve theory and describe how learning curves are used in project
management.
 A learning curve is a graphical representation of repetitive tasks that, when done on a continuous
basis, lead to a reduction in activity duration, resources and costs. Getting behind on the learning curve might
mean getting seriously behind on your project.

The calculation could be as the following:

3) How are top-down and bottom-up budgets created? What advantages does each approach hold
over the other?

4)What are the four distinct stages of systematic risk management and what takes place at each?
What are the basic qualitative methods for identifying risk factors? What are the advantages and
disadvantages of each method?

A) The 4 Risk Management stages are:

 As cumulative quantity doubles (he was manufacturing 1 product then 2 then 4 then 8), cumulative
Risk identification: the process
average production timeofper
determining the specific
unit decreases by fixedrisk factors that(learning
x percentage can reasonably be expected
curve percentage).
to affect the project
 Learning curve theory says that a task can be performed more quickly as repetitions increase,
specifically a doubling of output results in a fixed percentage reduction in time required to complete
Analysis of probability and consequences: the potential impact (project risk) of these risk factors is
the last unit produced. Learning curve rates can be used in a project if there is an activity that remains
determined by how likely they are to occur and the effect they would have on the project if they did occur
fairly constant and is performed repeatedly
 The result
Risk mitigation will be asteps
strategies: timetaken
estimate lower than
to minimize thebypotential
direct multiplication, which
impact of these might permit
risk factors deemedthe project
manager to more accurately
sufficiently threatening to the project gauge the amount of labor and time required and prepare a more
competitive bid
Control and documentation: creating a knowledge base for future projects based on lessons learned.

B) There are several techniques when performing qualitative risk analysis to determine the
probability and impact of risks, including the following:

 Brainstorming, Delphi techniqueHistorical data

 Strength, weakness, opportunity, and threats analysis (SWOT analysis)
 Risk rating scales

C)
a. Brainstorming: is a creativity method for developing ideas in a group. Its essential
characteristic is the collection of as many spontaneous utterances in response to a
particular question or problem as possible.
i. The advantages of brainstorming:
1. Many participants already know the rules of brainstorming.
2. Lots of risks can be recognized quickly.
3. One idea inspires the next.
4. Participants need not be afraid that their ideas will be evaluated during
the session.
ii. The disadvantages:
1. Not everyone actively takes part in brainstorming. Some participants are
more quiet and don’t like to speak spontaneously in groups.
2. Other participants speak too much.
3. Some participants need longer to understand the theme and can’t
immediately provide ideas.
 4. It’s not possible to cover all risks with brainstorming.
5. The results of brainstorming are largely groupthink and not necessarily
individual thoughts or ideas.

b. Delphi method: is a forecasting process framework based on the results of multiple

rounds of questionnaires sent to a panel of experts. Several rounds of questionnaires are
sent out to the group of experts, and the anonymous responses are aggregated and shared
with the group after each round.
i. The Advantages of the Delphi Method : The Delphi method seeks to aggregate
opinions from a diverse set of experts, and it can be done without having to bring
everyone together for a physical meeting. Since the responses of the participants
are anonymous, individual panelists don't have to worry about repercussions for
their opinions. Consensus can be reached over time as opinions are swayed,
making the method very effective.
ii. The disadvantages: while the Delphi method allows for commentary from a
diverse group of participants, it does not result in the same sort of interactions as
a live discussion. A live discussion can sometimes produce a better example of
consensus, as ideas and perceptions are introduced, broken down and reassessed.
Response times with the Delphi method can be long, which slows the rate of
discussion. It is also possible that the information received back from the experts
will provide no innate value.

c. SOWT Analysis:
SWOT Analysis –acronym stands for Strengths, Weaknesses, Opportunities, Threats. It’s
a great tool to use in a group – either in a facilitated session or as a brainstorm. This
method is very helpful for identifying risks within the greater organization context.

Strengths and weaknesses are generally related to issues that are internal to the
organization. Strengths examine what your organization does well or its assets, skill,
core competencies. Weaknesses are areas the organization could improve upon that is
lacking or missing from the organization. Opportunities and threats are usually external
to the organization.

Advantages:
1) Ensures equal focus on both threats and opportunities
2) Offers a structured approach to identify threats and opportunities
3) Focus on internal (organizational strengths and weaknesses) and external
(opportunities and threats)
4) SWOT helps quickly analyze current state of the organization.
5) Surface real problem to share.
6) Helps to develop business requirements

Disadvantages:
1) Focuses on internally generated risks arising from organizational strengths and
weaknesses.
2) Tends to produce high-level generic risks, not project-specific.
 3) SWOT analysis is a very high level view; detailed analysis is almost always
needed.
4) Level of Accuracy for SWOT analysis will be low because tool is highly
subjective and relies on perception of resources that generated it.

d. Brainstorming: is a creativity method for developing ideas in a group. Its essential

characteristic is the collection of as many spontaneous utterances in response to a
particular question or problem as possible.
i. The advantage of brainstorming in a group is mutual stimulation of all
participants;
ii. The disadvantage is that the group will focus too quickly on a certain area.

5) How do mentoring and cross-training mitigate risk?

mentoring program: pairs junior or inexperienced project managers with senior managers in
order to help them learn best practices. This approach mitigates risk by easing the junior
members into new duties with a senior member that can answer questions and clarify problems
as they get their feet wet in the project organization

Cross-training Risk requires that members of the project team learn not only their own duties
but also the roles that other team members are expected to perform. Cross training addresses
more immediate needs; if a member is pulled away for some time, the cross-trained member can
fill in as needed

6) Provide examples and discuss the differences between direct and indirect costs

• Direct Cost: are those clearly assigned to the aspect of the project that generated the cost. Examples
include labor that is hands-on in the production of the project and materials that are used and sold or
consumed in the creation of the project.
• Indirect costs are generally linked to two features: Overhead and Selling and General
Administration.
Examples include Health benefits for the labor force (MOH), taxes, insurance, depreciation and repairs.
• Direct costs of materials and labor are generally easier to calculate than indirect costs, which are often
calculated as a multiplier of some of the direct costs.

7) What is organization breakdown structure?

A process that sets a project’s scope by breaking down its overall mission into a cohesive set of
synchronous, increasingly specific tasks.
WBS accomplishes the following:
 Echoes project objectives
 Offers a logical structure
 Establishes a method of control
 Communicates project status
  Improves communication

8) What is the difference between a turnkey contract and a cost-plus contract? Include in
your discussion the advantages and disadvantages of each.

End of the exam