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  Quiz
Q1:  What financial or accounting metric is generally best for comparing
the relative value creation of alternative project investments?:

A: IRR-Internal Rate of Return (average annual return percentage assuming project breaks even on an NPV basis)
B: ROI-Return on Investment (percentage of some measure of income divided by total development costs)
C: NPV-Net Present Value (present value of some measure of income,
net of the present value of the incremental development costs
of the project)
D: Payback Period (sometimes referred to as "break-even time")
Q2:  How should projects be prioritized or ranked for portfolio decision making?:

A: Projects should be ranked by the primary financial metric of interest
to an organization
B: Projects should be ranked by an overall benefit index that is a weighted-average score of multiple financial, accounting, and strategic criteria
C: Bubble charts with various dimensions on the x and y axes should be used to determine in which quadrant of a 2x2 matrix each project falls, and these quadrants should be used to select a mix of projects as the desired portfolio
D: Projects that compete for the same resource pools should not be prioritized or ranked as if they can be considered independent investments
Q3:  For a predominantly salaried workforce, how should human resource expenses be accounted for at the project-level?:

A: Project-level human resource costs should be tracked only as a distinct project metric and rolled up across projects to compute a portfolio-level total for human resource expense
B: Project-level human resource costs should be accounted for in all measures of project profitability, such as NPV
C: Project-level human resource costs should be completely ignored, since people receive their salaries, regardless of which projects they work on
D: Total human resource expense over the development horizon of interest should be allocated to projects by each project's revenue
on a pro-rata basis
Q4:  How should project-specific risk be modeled to account for relative uncertainties across candidate projects?:

A: Project revenue and cost forecasts can be scaled by a confidence factor, to risk adjust such measures
B: Risk should be included as one of the criteria that is rated and then summed into a weighted-average scoring index to rank projects
C: Probabilities of success for the technical, schedule, and market risks should be estimated and then used to scale any project financial metrics to their expected-value versions
D: Risk tolerance is really a constraint on decision making and should be modeled at the portfolio level, rather than trying to incorporate
project-specific risk into each project's business case
Q5:  What is the best way to allocate the costs of R&D or technology investments that are strictly cost-center projects on which other revenue-generating projects depend?:

A: An allocation basis, such as sales volume or revenue, should be used to proportionally allocate the human and capital investment costs of cost-center projects to the projects that monetize that investment
in the marketplace
B: The costs of a dependent cost-center project should not be explicitly allocated across the revenue-generating projects that may be dependent on the cost-center project, but should be accounted for through the dependencies that exist in a portfolio scenario
C: Each revenue-generating project that depends on a cost-center project should be equally burdened with its fair share of the cost-center project's investment costs
D: 100% of the cost-center project's investment should be allocated to the revenue-generating project that first embodies the R&D or technology content of the cost-center project
 
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