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authority as they have in a project-based organization.

9. A. The discounted cash flow technique compares the total value of each year’s
expected cash inflow to today’s dollar. IRR calculates the internal rate of return,
NPV determines the net present value, and cost-benefit analysis determines the
cost of the project versus the benefits received.

10. D, E. The steps required to validate a project are validating the business case (which
encompasses a feasibility analysis, justification for the project, and alignment to the

strategic plan) and identifying and analyzing stakeholders.

11. C. Negotiating involves obtaining mutually acceptable agreements with individuals
or groups. Leadership involves imparting a vision and motivating others to achieve
the goal. Problem-solving involves working together to reach a solution.
Communicating involves exchanging information.

12. A, B, C, E. The business case establishes the justification for the project, how it
aligns to the strategic goals of the organization, the business need or opportunity
that brought about the project, alternative recommendations and analysis, a

recommendation on which alternative to choose, and the feasibility study or the
feasibility study results may or may not be included in the business case.

13. D. Payback period is a technique that calculates the expected cash inflows over time
to determine how many periods it will take to recover the original investment. IRR
calculates the internal rate of return, NPV determines the net present value, and
discounted cash flows determine the amount of the cash flows in today’s dollars.

14. D. The next best step to take in this situation is to perform a feasibility study.

Feasibility studies are typically undertaken for projects that are risky, projects that
are new to the organization, or projects that are highly complex. Projects of
significant risk to the organization shouldn’t be taken to the selection committee
without having a feasibility study first, and writing the project plan doesn’t make
sense at this point because you don’t know if the project will be chosen or not. You
also can’t reject the project because there isn’t enough information to determine
whether it should be rejected until the feasibility study is completed.

15. C. The project manager is ultimately responsible for managing the work of the
project. That doesn’t mean they should work without the benefit of input from
others.

16. D. The key problem with a projectized organization is that there may not be a new
project in place at the conclusion of the one team members were released from.
This leaves specialists “sitting on the bench” with no work to do and is costly to the

organization. It’s an advantage to a projectized organization to work on projects.
Costs aren’t necessarily any higher in this type of organization than others. Costs
will depend on the type of project you’re working on, not the organizational
structure. And the project managers have control over who works on the projects in
a project-based organization.

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