Project Management Challenges Strategies and Project Selections
MBA/MIS Project Management
Chapters 1 and 2
Project Management Challenges
Strategies and Project Selections
1. 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?
- The project that has a better cash flow standpoint using the payback period would be the Alpha project. According to the Payback Period, the rate of return on an investment is greater with the Alpha project verses the Beta project. It would take approx 3.75 yrs to “repay” the sum of the original investment for the Alpha project whereas for the Beta project, the rate of investment would take approx 4 years. The company would see their investment back much sooner if they went with the Alpha project.
2. (55 points – 5 points each) Read the “Denver International Airport” case in Project Management Case Studies (pages 539-582). Please answer, in writing, the following questions:
(1) Was the decision to build a new airport at Denver strategically a sound decision?
- Denver International Airport was experiencing such a rapid growth that Denver’s Regional Council of Governments concluded that Stapleton would not be able to handle the necessary traffic expected by the end of the year 2000. Modernization of Stapleton could have extended the inevitable problem to 2005, but were the headaches with Stapleton better cured through modernization or by building a new airport? There was no question that insufficient airport capacity would cause Denver to lose valuable business. Being 500 miles from other major cities placed enormous pressure upon the need for air travel in and out of Denver.
(6) Why was the new baggage handling system so
Chapters 1 and 2
Project Management Challenges
Strategies and Project Selections
1. 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?
- The project that has a better cash flow standpoint using the payback period would be the Alpha project. According to the Payback Period, the rate of return on an investment is greater with the Alpha project verses the Beta project. It would take approx 3.75 yrs to “repay” the sum of the original investment for the Alpha project whereas for the Beta project, the rate of investment would take approx 4 years. The company would see their investment back much sooner if they went with the Alpha project.
2. (55 points – 5 points each) Read the “Denver International Airport” case in Project Management Case Studies (pages 539-582). Please answer, in writing, the following questions:
(1) Was the decision to build a new airport at Denver strategically a sound decision?
- Denver International Airport was experiencing such a rapid growth that Denver’s Regional Council of Governments concluded that Stapleton would not be able to handle the necessary traffic expected by the end of the year 2000. Modernization of Stapleton could have extended the inevitable problem to 2005, but were the headaches with Stapleton better cured through modernization or by building a new airport? There was no question that insufficient airport capacity would cause Denver to lose valuable business. Being 500 miles from other major cities placed enormous pressure upon the need for air travel in and out of Denver.
(6) Why was the new baggage handling system so