Project Initiation & Business Case Development Flashcards

An executive sponsor wants to know the expected return on a $500,000 project investment. Which financial metric expresses the return as a percentage of the original investment?

Answer: Return on Investment (ROI)

ROI expresses the net benefit of an investment as a percentage of its cost, making it easy to compare the return against the original investment amount.

What distinguishes a project constraint from a project assumption during the initiation phase?

Answer: Constraints are known limiting factors; assumptions are believed-to-be-true conditions not yet verified

Constraints are definite limitations (budget caps, fixed deadlines) while assumptions are conditions the team believes to be true but has not confirmed, and carry risk if wrong.

A project sponsor is preparing a benefits realization plan. Which element is MOST critical to include?

Answer: Measurable benefit metrics, timing of realization, and responsible owners

A benefits realization plan must define specific, measurable benefits, when they will be achieved, and who is accountable for delivering them to ensure benefits are actually tracked post-project.

Which project selection method calculates the discount rate at which the present value of future cash flows equals the initial investment?

Answer: Internal Rate of Return (IRR)

IRR is the discount rate that makes the NPV of all cash flows from a project equal to zero, representing the project's expected rate of return.

A project manager is initiating a project under a PMO that uses a project portfolio management (PPM) framework. What is the PRIMARY role of the PPM framework during initiation?

Answer: To ensure proposed projects align with organizational strategy and resource capacity

PPM frameworks prioritize and select projects based on their strategic alignment, expected value, and the organization's capacity to execute them simultaneously.

During initiation, who is PRIMARILY responsible for developing the business case for a proposed project?

Answer: The project sponsor or requesting business unit

The business case is owned by the project sponsor or requesting business unit, as they understand the business need and are accountable for delivering the expected benefits.

A feasibility study concludes a project is financially viable but operationally infeasible. What should the project sponsor do NEXT?

Answer: Investigate whether operational barriers can be resolved or the approach modified before committing

When one feasibility dimension fails, the sponsor should explore whether the operational barriers are surmountable through redesign, additional investment, or phased delivery before making a go/no-go decision.