THE INTERNATIONAL UNIVERSITY (IU) Course: Project Management

Department of Industrial Systems Engineering

INDEX 1
MIDTERM EXAMINATION

PROJECT MANAGEMENT Duration:

120 minutes

Head of ISE Department Lecturer: Student ID: Date:

March 20th,
2013

Name:
Assoc Prof. Ho Thanh Phong Mr Nguyen Hoang Minh

INSTRUCTIONS:
1. This is an open book examination.
2. Calculator and dictionary are allowed. Students takes 2 decimal digits in calculation
3. Laptop, mobile phone, discussion and material transfer are strictly prohibited
4. There are two parts in this exam. Students do Part 1 in the Question paper, Part II in the
answer paper
Total pages: 06 (including this page)

PART I: MULTIPLE CHOICE QUESTIONS (40%)

There is a total of 20 multiple–choice questions. Please circle the correct choice at each
question number. Each question is worth for 2 points with a total of 40 points.
1. As a Project Manager, you are most likely to have the strongest influence in an organization
which is:
A. A balanced matrix
B. A functional organization
C. Projectized
D. A strong matrix

2. Project stakeholders may include:

1. users such as the eventual operator of the project result
2. those who want to impede the project
3. partners, such as in joint venture projects
4. possible suppliers or contractors
5. members of the project team and their unions

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 THE INTERNATIONAL UNIVERSITY (IU) Course: Project Management
Department of Industrial Systems Engineering

6. interested groups in society

A. All
B. Only 2
C. 1, 3, 5
D. 1, 2, and 3

3. The project’s existence is formally recognized, possibly for the first time, in the project’s:
A. Project SOW
B. Charter
C. Scope statement
D. Project management plan

4. The critical path can be defined as the longest track through a network. The computation of the
network will determine that there are:
A. Only one critical path
B. One or more critical paths
C. Always more than one critical path
D. Always more than two critical paths

5. In a precedence diagram, the placement of the connecting lines to other activities is significant
because the lines indicate:
A. One of the relationships of logic
B. A dashed connectivity for dummy activities
C. The required delay between the finish of one activity and the start of another
D. Resources needed to complete the next activity

6. A project manager is trying to complete a software development project, but cannot get enough
attention for the project. Resources are focused on completing process-related works and the
project manager has little authority to properly assign resources. What form of organization must
the project manager be working in?
A. Matrix
B. Functional
C. Expediter
D. Projectized

7. Who has the MOST power in a projectized organization?

A. The functional manager
B. The team
C. The project manager
D. They all share power

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 THE INTERNATIONAL UNIVERSITY (IU) Course: Project Management
Department of Industrial Systems Engineering

8. All of the followings are characteristics of a project EXCEPT:

A. Temporary
B. Definite begin and end
C. Interrelated activities
D. Repeats itself every month

9. What is a program?
A. An initiative set up by management
B. A means to gain benefits and control of related projects
C. A group of unrelated projects managed in a coordinated way
D. A government regulation

10. A detail project schedule can be created after only creating the:
A. Project budget
B. Work breakdown structure
C. Project management plan
D. Detailed risk assessment

11. In which process group does the team measure and analyze the work being done on the project?
A. Initiating
B. Executing
C. Monitoring and controlling
D. Closing

12. Which of the following would be the MOST appropriate thing to do during the initiating process
group?
A. Create a detailed description of the project deliverables
B. Get familiar with the company culture and structure as it relates to the project
C. Identify the root cause of problems
D. Ensure all project management processes are completed

13. When a project is performed under contract, the SOW (Statement of Work) is provided by which
of the following?
A. The buyer
B. The project sponsor
C. The project manager
D. The contractor

14. Which of the following is true regarding the IRR?

A. IRR assumes reinvestment at the cost of capital
B. IRR is the discount rate when NPV is greater than zero

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 THE INTERNATIONAL UNIVERSITY (IU) Course: Project Management
Department of Industrial Systems Engineering

C. IRR is a constrained optimization method

D. IRR is the discount rate when NPV is equal to zero

15. According to A Guide to the PMBOK, the project SOW (Statement of Work) should contain or
reference which of the following elements?
A. Strategic plan, product scope description, stakeholder influences, and business need
B. Business need, strategic plan, and product scope description
C. Project purpose, business case, stakeholder influences, and product scope statement
D. Requirements, business need, and stakeholder expectations

16. Which of the following makes up the scope baseline?

A. The project scope statement
B. The scope management plan and the WBS
C. The WBS, project scope statement, and WBS dictionary
D. The scope management plan, the WBS, and the WBS dictionary

17. Projects are initiated in response of:

A. Stakeholder's pressure
B. Business needs
C. Technological obsolescence
D. All of the above

18. The scope statement provides all of the following EXCEPT:

A. A list of assumptions
B. Process and criteria for acceptance
C. A baseline to assist in evaluating potential scope changes
D. How changes will be monitored and controlled

19. The work breakdown structure is a deliverable-oriented grouping of project elements (products or
services) which defines, or provides a structure for defining the:
A. Project staffing, skill requirements, scope definition
B. Work packages, control accounts, schedules
C. Project change control, risk identification, labor rates
D. Project charter, project plan

20. Which of the following BEST describes the contents of a WBS Dictionary entry?
A. The definition of the work package including its net present value
B. Work Package ID and Name, Statement of Work, Required Resources, and Monte Carlo
Analysis
C. Work Package ID and Name, Statement of Work, Risk Register, Earned Value Calculation,
Scheduled CompleteDate, and Cost

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 THE INTERNATIONAL UNIVERSITY (IU) Course: Project Management
Department of Industrial Systems Engineering

D. Work Package ID and Name, Statement of Work, Responsible Organization, Schedule

Milestones, QualityRequirements, Code of Account Identifier, Required Resources, Cost
Estimate

PART II: WRITING (60%)

Question 1:
A consulting engineer has been engaged to advise a town how best to proceed with the construction
of a 20,000 km3 water supply reservoir. Since only 12,000 km3 of storage will be required for the
next 25 years, an alternative to building the full capacity now is to build the reservoir in two stages.
Initially, the reservoir could be built with 12,000 km3 of capacity and then, after 25 years, the
additional of 8,000 km3 of capacity could be added by increasing the height of the reservoir.
Estimated costs are as follows:

Construction cost Annual maintenance cost

Build in two stages
- First stage: 12,000 km3 $14,200,000 $75,000
- Second stage: additional 8,000 km3
of capacity, additional construction $12,600,000 $25,000
cost and maintenance cost
Build full capacity now $22,400,000 $100,000

If the interest rate is at 6%, which construction plan is preferred?

Question 2:
An engineer has received two bids for an elevator to be installed in a new building. The bids, plus his
evaluation of the elevators, are as follows:

Alternative Bid Engineer’s evaluation

Service life Annual Salvage value
(year) operating cost
Westinghome $45,000 10 $2,700 $3,000
Itis $54,000 15 $2,850 $4,500

If the interest rate is 10%, using the present worth method, which bid should be accepted?

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 THE INTERNATIONAL UNIVERSITY (IU) Course: Project Management
Department of Industrial Systems Engineering

Question 3:
Consider the following project:

Activity Immediate Duration (Days)

Predecessor
Optimistic Most likely Pessimistic
A - 2 3 4
B A 4 6 8
C A 3 3 3
D A 5 7 9
E B, C 2 4 6
F C, D 6 7 8
G D 3 4 8
H D 2 3 4
I E, F, G 1 3 5
J F 3 5 7
K F, G 4 6 8
L H 6 8 13
M I, J 2 5 8
N K, L, M 4 6 8

a) Calculate the mean and variance of the duration of each activity.

b) Draw the network diagram of the project.
c) Determine the critical path of the project and calculate the project completion time
d) What is the probability that the project will finish within 36 days?

GOOD LUCK!

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 THE INTERNATIONAL UNIVERSITY (IU) Course: Project Management
Department of Industrial Systems Engineering

SOLUTION FOR MIDTERM EXAMINATION

Part I: Multiple choice questions: (20 questions – 2 points/question)

Index 1 Index 2
1 C 1 C
2 A 2 D
3 B 3 A
4 B 4 D
5 A 5 C
6 B 6 B
7 C 7 C
8 D 8 A
9 B 9 B
10 B 10 A
11 C 11 B
12 B 12 D
13 A 13 D
14 D 14 A
15 B 15 B
16 C 16 D
17 D 17 D
18 D 18 C
19 B 19 D
20 D 20 D

Part II: Writing: (60 points)

Question 1: (15 points)
Build in two stages: (7 points)

25 years × $75000
$100,000

$12,600,000

$14,200,000

PW = 14,200,000 + 75,000(P/A, 6%, 25) + (12,600,000 + 100,000(P/A, 6%, ))(P/F, 6%, 25)
= 14,200,000 + 75,000(12.783) + (12,600,000 + 100,000(16.667)(0.233)
= 18,481,624.4

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 THE INTERNATIONAL UNIVERSITY (IU) Course: Project Management
Department of Industrial Systems Engineering

Build full capacity: (7 points)

$100,000

$22,400,000

PW = 22,400,000 + 100,000(P/A, 6%, ) = 22,400,000 + 100,000(16.667) = 24,066,700

In this case, we calculate the present worth of cost  the alternative with the smaller cost is chosen
 we should build in two stages. (1 point)

Question 2: (15 points)

Westinghome: (7 points)
$3,000 $3,000 $3,000

10 years × $2700 10 years × $2700 10 years × $2700

$45,000 $45,000 $45,000 $45,000

PW = 45,000 + 2,700(P/A, 10%, 30) + (45,000 – 3,000)(P/F, 10%, 10) + (45,000 – 3,000)(P/F, 10%,
20) – 3,000(P/F, 10%, 30)
= 45,000 + 2,700(9.427) + 42,000(0.3855) + 42,000(0.1486) – 3,000(0.0573)
= 92,713.2

Itis: (7 points)
$4,500 $4,500

15 years × $2850 15 years × $2850

$54,000 $54,000

PW = 54,000 + 2,850(P/A, 10%, 30) + (54,000 – 4,500)(P/F, 10%, 16) – 4,500(P/F, 10%, 30)
= 54,000 + 2,850(9.427) + 49,500(0.2394) – 4,500(0.0573)
= 92,459.4

The present worth of the cost of Itis is smaller than that of Westinghome  Itis bid should be
accepted. (1 point)

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 THE INTERNATIONAL UNIVERSITY (IU) Course: Project Management
Department of Industrial Systems Engineering

Question 3: (30 points)

a) Calculate the mean and variance of the duration of each activity: (7 points)

Activity Immediate Duration (Days)

Predecessor
Optimistic Most Pessimistic Mean Variance
likely
A - 2 3 4 3 1/9
B A 4 6 8 6 4/9
C A 3 3 3 3 0
D A 5 7 9 7 4/9
E B, C 2 4 6 4 4/9
F C, D 6 7 8 7 1/9
G D 3 4 8 4.5 25/36
H D 2 3 4 3 1/9
I E, F, G 1 3 5 3 4/9
J F 3 5 7 5 4/9
K F, G 4 6 8 6 4/9
L H 6 8 13 8.5 49/36
M I, J 2 5 8 5 1
N K, L, M 4 6 8 6 4/9

b) Draw the network diagram of the project: (4 points)

E
J

Start A C
M

F I
N

D End

G K

H L

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 THE INTERNATIONAL UNIVERSITY (IU) Course: Project Management
Department of Industrial Systems Engineering

c) Determine the critical path of the project and the project completion time: (14 points – 1 for
each activity)

Activity Immediate ES EF LS LF Slack

predecessor
A - 0 3 0 3 0
B A 3 9 9 15 6
C A 3 6 7 10 4
D A 3 10 3 10 0
E B, C 9 13 15 17 6
F C, D 10 17 10 17 0
G D 10 14.5 14.5 19 4.5
H D 10 13 15.5 18.5 5.5
I E, F, G 17 20 19 22 2
J F 17 22 17 22 0
K F, G 17 23 21 23 4
L H 13 21.5 18.5 27 5.5
M I, J 22 27 22 27 0
N K, L, M 27 33 27 33 0

Critical path: A – D – F – J – M – N. (1 point)

Project completion time: 33 days (1 point)

d) Find the probability that the project will finish within 36 days: (3 points)
Mean = 33 days (1 point)
Variance = σA + σD + σF + σJ + σM + σN = 23/9 (1 point)
36  33
P( X  36)  P( Z  )  P( Z  1.877)  0.5  0.4697  0.9697 (1 point)
23 / 3

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