Project and Financial Management Flashcards

What is the purpose of a project charter?

Answer: To formally authorize the project and grant the project manager authority

A project charter formally authorizes a project and grants the project manager authority to apply resources to project activities.

Which financial metric calculates the time required to recover the initial investment from a project?

Answer: Payback Period

The payback period measures how long it takes for a project's cumulative cash inflows to equal its initial investment.

A project manager identifies that a key vendor may not deliver on time. Which risk response strategy involves negotiating a penalty clause with the vendor?

Answer: Risk transfer

Risk transfer shifts the financial consequence of a risk to a third party, such as through contracts with penalty clauses or insurance.

What is float (or slack) in project scheduling?

Answer: The amount of time an activity can be delayed without delaying the project end date

Float is the amount of time a task can be delayed without affecting the project's overall completion date.

Which budgeting technique requires managers to justify every expense from scratch each budget cycle?

Answer: Zero-based budgeting

Zero-based budgeting starts from zero each period and requires justification for all expenses, rather than adjusting the prior budget.

In project communications management, what is a RACI matrix used for?

Answer: Defining roles and responsibilities for project tasks

A RACI matrix clarifies who is Responsible, Accountable, Consulted, and Informed for each project activity.

What distinguishes a project from ongoing operations?

Answer: Projects are temporary and produce a unique result; operations are ongoing and repetitive

Projects are temporary endeavors with a defined start and end date, creating unique deliverables, while operations are continuous and repetitive.