12/15/2023

Ethiopian Defense University

College Of Resource
Management
Department of Management

Course Name: Project Management

Title: Individual Assignment

Student Name: Meles Megersa

ID No: 0010/12

Submitted To: Mr. Endale

Submission Date: Dec 15, 2023.
Q#1. Why is project prioritization important? Discuss in detail factors that project manager need
to consider in ranking and selecting projects.
Project prioritization is a critical aspect of project management. It is the process of determining
the order and importance of tasks, which helps to achieve maximum productivity and
accomplish more. Here's why it's important:
1. Efficiency: Prioritization helps to focus on tasks that are important and urgent, allowing
for attention to be given to lower priority tasks later. This leads to better use of resources
and time.
2. Strategic Alignment: Projects should align with the organization's objectives to ensure
they contribute to the overall goals.
3. Resource Allocation: Prioritization ensures correct allocation of company resources
based on unique needs.
4. Risk Management: By identifying high-priority tasks, potential risks can be managed
more effectively.
When it comes to factors that a project manager needs to consider in ranking and selecting
projects, they include:
5. Strategic Alignment: The project's alignment with the organization's strategic goals is
crucial.
6. Return on Investment (ROI): The potential financial return from the project is a key
consideration.
7. Resources: The availability and allocation of resources (human, financial, etc.) need to
be considered.
8. Risk: The potential risks associated with the project, including financial, operational,
and reputational risks, should be evaluated.
9. Timelines: The project's timeline, including any hard deadlines, should be taken into
account.
10. Benefits: The potential benefits of the project, beyond just financial return, should be
considered.
These factors can be weighed against each other using a project prioritization matrix or a scoring
model. This helps in making an informed decision about which projects to pursue. Remember,
the goal is to select projects that bring the highest returns, align with strategic goals, and can be
efficiently executed with the available resources.

Q#2. What do you think is Opportunity study in the process of project management? Why is
opportunity study important and required? What are important issues to be assessed in the
process of opportunity study?
An Opportunity Study is a crucial part of the project management process, typically executed
in the earliest phase of a project. It involves a preliminary investigation of a project idea or the
identification of opportunities. The study can be general, identifying investment possibilities, or
specific, related to an already specified project which will be developed into a specific project
proposal.
The importance of an Opportunity Study lies in its ability to improve the odds of working on
the right project and its potential success. It helps stakeholders better understand the project, the
expected return on investment, and identify potential flaws, business challenges, strengths,
weaknesses, opportunities, threats, and unforeseen circumstances that might affect the project's
success and sustainability.
Important issues to be assessed in the process of an Opportunity Study include:
1. Project Specifications: Choices made concerning project specifications for the expected
project deliverable.
2. Planning Decisions: Decisions related to the work, generally involving trade-offs.
3. Beneficial Uncertainties: Uncertainties inherent to project activities that could
potentially benefit the project.
4. Scoping Choices: The value anticipated from the project deliverable, including initial
assumptions about results and costs.
5. Resource Availability: The availability of resources required for the project.
6. Strategic Alignment: The alignment of the project with the organization's strategic
goals.
7. Risk Assessment: The potential risks associated with the project.
8. Feasibility Assessment: The practicality of the project.
These assessments help in making informed decisions about which projects to pursue, ensuring
that they bring the highest returns, align with strategic goals, and can be efficiently executed
with the available resources.
Q#3. What is Economic analysis of Projects? Why is Economic Analysis important in the
process of Project feasibility studies? What are important issues that need to be taken in to
account while conducting Economic analysis of projects? What are Externalities in the process
of Economic Analysis of Projects? Why is it an issue in Economic Analysis of Projects? Discuss.
Economic Analysis of Projects is a systematic approach to determining the optimum use of
scarce resources, involving comparison of two or more alternatives in achieving a specific
objective under the given assumptions and constraints. It helps identify and select public
investments that will sustainably improve the welfare of beneficiaries and a country as a whole.
Economic Analysis is important in the process of Project Feasibility Studies because it
evaluates whether a given strategy is viable or not from an economic perspective. It helps in
approximating the total costs and benefits that a proposed project will accrue before designating
resources.
While conducting Economic Analysis of projects, important issues to be taken into account
include:
1. Optimistic Assumptions: Lessons should be drawn from the experience of past
projects.
2. Rationale for Public Intervention: The reasons for public intervention should be
clearly explained.
3. Comparison of Alternatives: Alternatives should be properly compared.
4. Risk Handling: Risks should be handled in a way that influences project design.
5. Emerging Issues: Issues that have emerged or become more important since the
adoption of the previous edition, including economic analysis under various financing
modalities, the treatment of the social cost of carbon, and economic analysis of regional
economic cooperation projects.
Externalities in the process of Economic Analysis of Projects refer to the costs or benefits of
an economic activity experienced by an unrelated third party. They are generally the unintended,
indirect consequences incurred in everyday economic operations. Externalities can be both
positive and negative and can affect an individual or single entity, or they can affect society as
a whole.
Externalities pose an issue in Economic Analysis of Projects because they make markets
inefficient, leading to market failures. The external cost or benefit is not reflected in the final
cost or benefit of a good or service. Therefore, economists generally view externalities as a
serious problem. For instance, if goods or services have negative externalities, then we will get
market failure. This is because individuals fail to take into account the costs to other people. To
achieve a more socially efficient outcome, the government could try to tax the good with
negative externalities.
Q#4. Assume that you are a project Manager in XYZ Company and also Assume that you are
using NPV and IRR for project evaluation in your company. What kind of information or clue
that can be obtained from application of this specific methods for investment decisions. What
do you think are the weaknesses and strengths related to these methods?
As a project manager using Net Present Value (NPV) and Internal Rate of Return (IRR)
for project evaluation, these methods provide valuable insights for investment decisions:
1. NPV: This method calculates the difference between the present value of cash inflows
and the present value of cash outflows. A positive NPV suggests that the projected
earnings from a project exceed the anticipated costs in present dollars. It provides an
intrinsic appraisal and is used to determine investment security, assess new ventures,
value a business, or find ways to effect a cost reduction.
2. IRR: This is a metric used in capital budgeting to estimate the profitability of a probable
business venture. It works as a discounting rate that equates the NPV of cash flows to
zero. It reflects a project's inherent characteristics.
Strengths and weaknesses of these methods include:
Strengths:
 NPV: It takes into account the time value of money, considers risk factors, and offers a
comprehensive view of cash flows. It also considers the cost of capital.
 IRR: It considers cash flows over time and reflects a project's inherent characteristics. It
measures profitability as a percentage, showing the return on each dollar invested.
Weaknesses:
 NPV: It does not include any consideration of the size of the project. For example, an
NPV of $100 is great for a project costing $100 but not so great for a project costing $1
million.
 IRR: It can occasionally yield conflicting answers when compared to NPV for mutually
exclusive projects, resulting in what is known as the 'multiple IRR problem'. It doesn't
look at the prevailing rate of interest on the market.
These methods are not perfect, but they provide valuable information that can help in
making informed investment decisions.
Q#5. In the process of managing projects through project cycle, Project implementation phase
is the most important and challenging part of project life cycle. Discuss briefly, how and why
this is a case in project implementation.
The Project Implementation Phase is indeed a critical and challenging part of the project life
cycle. It's the stage where the project plan is put into action and the work on the project occurs.
Here's why it's important and challenging:
1. Execution and Delivery: The implementation phase involves the execution of the work
and proper delivery. The resources used in the implementation have to be accurate. The
project's fate is decided based on the implementation.
 2. Resource Utilization: This phase uses the most project time and resources, and as a
result, costs are usually the highest during this phase.
3. Conflict Management: Project managers also experience the greatest conflicts over
schedules in this phase.
4. Change Management: This phase is typically where approved changes are
implemented. Changes are often identified by looking at performance and quality control
data.
Challenges in the Implementation Phase typically include managing people (especially the most
irreplaceable resources), engaging stakeholders and managing their expectations, managing
organizational politics and personalities, making tradeoff decisions (especially when there is
imperfect information available), anticipating the unexpected, and effectively navigating risks.
Other challenges include scope creep, lack of project visibility, and poor communication.
To overcome these challenges, project managers need to have a clear understanding of all the
project management phases, effective communication strategies, and tools for tracking project
progress. They also need to be prepared to make adjustments to the original project schedule to
ensure that deadlines are met. It's a complex task, but with careful planning and management, it
can lead to successful project completion.
Q#6. What is Project Evaluation? Why is project evaluation important in the process of project
management? Discuss.
Project Evaluation is the process of measuring the success of a project, program, or portfolio.
It involves gathering data about the project and using an evaluation method that allows
evaluators to find performance improvement opportunities. It goes beyond simply measuring
outputs and deliverables; it examines the overall impact and value generated by the project.
Project Evaluation is important in the process of project management for several reasons:
1. Performance Improvement: Project evaluation helps you easily find areas of
improvement when it comes to managing your costs, tasks, resources, and time.
2. Team Performance: Project evaluation allows you to keep track of your team’s
performance and increases accountability.
3. Stakeholder Engagement: Project evaluation is also critical to keep stakeholders
updated on the project status and any changes that might be required to the budget or
schedule.
4. Learning and Growth: Your team learns new methods from each evaluation which can
contribute to the continual improvement of your practices. Creating a habit of feedback
may foster constant learning and organizational growth.
5. Focus on Results: Practicing regular evaluations may help to direct your projects
towards achievable results.
 6. Credibility: When conducting a project evaluation, it is important to use verifiable and
reliable processes, practices, and strategies.
7. Ethics: Selecting and implementing a style of project evaluation requires careful
attention to ethics for the sake of your employees and the sensitivity of the project.
8. Continual Evaluation: Building an organizational habit of evaluation serves to equip
and improve teams and project outcomes.
In essence, project evaluation serves as a critical tool for accountability, learning, decision-
making, performance assessment, stakeholder engagement, accountability to funders, and
knowledge generation. By evaluating projects, we can continuously improve our practices,
maximize project impact, and ensure effective and responsible use of resources.
Q#7. What is Shadow price from project and investment point of view? Why is shadow price
important in Economic analysis of projects?
From a project and investment point of view, Shadow Price is the estimated price for something
that is not normally priced or sold in the market. It's used to assign a dollar value to an abstract
commodity that is not ordinarily quantifiable as having a market price but needs to be assigned
a valuation to conduct a cost-benefit analysis. It's often based on an assumption of the highest
price that a company might be willing to pay to acquire the item in question.
Shadow pricing is important in Economic Analysis of Projects for several reasons:
1. Cost-Benefit Analysis: Shadow pricing is frequently used by financial analysts in cost-
benefit analysis to assign a monetary value to intangible assets. It helps give a broader
picture of the social benefits/costs of a project.
2. Decision Making: It's often required when a financial analyst is doing a cost-benefit
analysis to decide regarding a proposed investment.
3. Value Estimation: Shadow prices are commonly assigned to designate the value of an
intangible asset, such as the benefit to society of creating a public asset (e.g., public
transportation, a park, or bike pathways).
4. Unseen Costs: Shadow pricing is used to approximate the unseen costs to society of
using carbon-based energy sources.
In essence, shadow pricing provides businesses with a better understanding of the costs and
benefits associated with a project. It's a critical tool in project evaluation and investment
decision-making.