UC ETP Wk 2 Keflavik Paper Co & In Search of Effective Project Managers Case Studies

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tbhenigrfg01

Business Finance

University of the Cumberlands

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Case Study 3.1 Keflavik Paper Company

Keflavik Paper is an organization that has lately been facing serious problems with the results of its projects. Specifically, the company’s project development record has been spotty: While some projects have been delivered on time, others have been late. Budgets are routinely overrun, and product performance has been inconsistent, with the results of some projects yielding good returns and others losing money. They have hired a consultant to investigate some of the principal causes that are underlying these problems, and he believes that the primary problem is not how project are run but how they are selected in the first place. Specifically, there is little attention paid to the need to consider strategic fit and portfolio management in selecting new projects. This case is intended to get students thinking of alternative screening measures that could potentially be used when deciding whether or not to invest in a new project.

Questions

  1. Keflavik Paper presents a good example of the dangers of excessive reliance on one screening technique (in this case, discounted cash flow). How might
  2. Assume that you are responsible for maintaining Keflavik’s project portfolio. Name some key criteria that should be used in evaluating all new projects before they are added to the current portfolio.
  3. What does this case demonstrate about the effect of poor project screening methods on a firm’s ability to manage its projects effectively?

Case Study 4.1—In Search of Effective Project Managers

This case involves Pureswing Golf, and illustrates the problems when organizations attempt to locate competent project managers without any systematic plan for identifying and training good potential candidates. They are discovering that the “voluntary approach,” whereby new project managers are solicited seemingly at random from around the company, simply does not work. Many of these individuals likely do not have the skills or a reasonable understanding of what it takes to manage projects effectively.

Questions

  1. Imagine you are a human resources professional at Pureswing who has been assigned to develop a program for recruiting new project managers. Design a job description for the position.
  2. What qualities and personal characteristics support a higher likelihood of success as a project manager?
  3. What qualities and personal characteristics would make it difficult to be a successful project manager?

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Explanation & Answer

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ETP WEEK 2 ACTIVITY

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Management Questions: Case Studies
Student’s Name
Institutional Affiliation
Date

ETP WEEK 2 ACTIVITY

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Case Study 3.1 Keflavik Paper Company
Keflavik Paper presents a good example of the dangers of excessive reliance on one
screening technique (in this case, discounted cash flow). How might excessive or exclusive
reliance on other screening methods discussed in this chapter lead to similar problems?
For Keflavik, screening its projects' discounted cash flow technique is risky and does not
make economic sense. The company has experienced problems with this project screening
method making the results of its projects poor. The company's project results are subjective
because the discounted cash flow technique only focused on the project's cash flows. When
screening a project using discounted cash flow technique, the company overlooks other vital
aspects, including the project's demographic analysis and competitive analysis. The technique
does not also look at the project as a complementary project of the current portfolio. As a result,
the company suffered a significant challenge in its project budgets, leading to loss of funds.
Overreliance on the Internal Rate of return and the scoring model techniques may lead to a
problem similar to that Keflavik was facing. The internal rate of return does not include the cost
of capital required to fund the project. As a result, IRR may not provide the accurate estimate
cost required for the project, leading to budget overrun (Sanchez & Terlizzi, 2017). The scoring
model technique is strictly a relative measure of the company's projects. It does not present the
value of the project and thus does not directly indicate whether or not the company should
undertake the project. As a result, it leads to inconsistency in the performance of the projects.

ETP WEEK 2 ACTIVITY

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Assume that you are responsible for maintaining Keflavik's project portfolio. Name some
key criteria that should be used in evaluating all new projects before they are added to the
current portfolio.
The criteria used to evaluate the projects Keflavik's project portfolio may include the
effectiveness, relevance, coherence, and efficiency. The criterion of effectiveness may be used to
assess whether or not its development project has achieved its goals. For the company to make
meaningful comparisons of targeted results and actual results. The project's goals should be
expressed in the form of quantifiable production levels (Sanchez & Terlizzi, 2017). The
relevance criterion is used to determine whether the project has fulfilled its important objectives
from a development perspective. The company may use this criterion to assess whether the
project design is suited to achieve the project's overall goals (Soto, 2019). Therefore, it means
that the project assessment is done to assess whether the project appropriately addresses its
essential goals.
The coherence criterion involves evaluating the project's compatibility with the
development policy taken in the partner sector or country. This means that the effects of
development cooperation (DC) should be considered in a context-coherent manner to distinguish
between external and internal coherence. The internal coherence focuses on the intervention's
consistency with the company's policy, while the external coherence focuses on interventions of
other sectors (Gomes, 2016). However, the company should focus more on external coherence to
evaluate its projects because it emphasizes the duplication of interventions. The criterion of
efficiency helps the project managers to evaluate the project's cost-effectiveness. The main
objective of this criterion is to ensure that the company economically uses project resources.
Besides, it aims at achieving an adequate ratio between the project funds and achieved results.

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What does this case demonstrate about the effect of poor project screening methods on a
firm's ability to manage its projects effectively?
The company's ad hoc approach to project selection shows that even though taking
projects with high cash flows is necessary, it could adversely affect the organization. This is
because the organization may be unable to manage the project well. Also, Keflavik's approach to
project selection highlights the risks involved when using a single method of project selection
(Gomes, 2016). Usually, project portfolios are carefully constructed and managed as a coherent
opportunity. Therefore the company should not construct project portfolios as a collection of
diverse opportunities. The case of Keflavik Company demonstrates that poor screening methods
may be worse for the company to complete the project. Some of the effects of poor screening
methods include late running and delays, unrealized profits, and over-expenditure on the
projects...

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Rice University

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