Information Technology Project Management
9th Edition
ISBN: 9781337101356
Author: Kathy Schwalbe
Publisher: Cengage Learning
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Chapter 7, Problem 2DQ
Explanation of Solution
Basic Principles of cost management:
The basic principles of cost management are the key measures for reviewing an IT project in terms of profit, life cycle costs, tangible and intangible costs and benefits, direct and indirect costs, and reserves.
Profit:
- Profit of a project is referred to as the revenue of the project minus total expenditures spent on IT projects.
- The best way to increase the profits of IT project is by increasing the revenue of the company and reducing the expenditures spent during the project development.
Life cycle costs:
- Life cycle cost is defined as the total cost of ownership of a project throughout its life cycle.
- The project managers must consider the life cycle costs of the project while taking financial decisions on any project.
Tangible costs:
- A tangible cost represents the cost that can be linked up with a specific activity or product for task which includes purchasing of materials, hardware systems and paying employees.
Intangible costs:
- Intangible costs represent variety of costs that consists of losses in productivity, and goodwill of customer...
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Distinguish between one-time and recurring costs, as well as between tangible and intangible advantages and expenditures.
The board of directors of a company determines that senior management
should be rewarded in order to achieve the company's objectives. The board of
directors determines whether to award bonuses based on growth in share value
at the conclusion of each fiscal year. Bonuses will be given in stock, which the
managers may keep or sell on the open market. What are the ramifications of
instituting a rewards scheme like this?
The board of directors of a company decides that senior management has to be rewarded in order to achieve the company's objectives. The board of directors selects whether or not to award bonuses based on growth in share value at the end of each fiscal year. Bonuses will be given in shares, which the managers can keep or sell on the open market. What are the ramifications of implementing a bonus system like this?
Chapter 7 Solutions
Information Technology Project Management
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Similar questions
- Differentiate between up-front and ongoing expenses, as well as major and immaterial gains and losses.arrow_forwardThe board of directors of an organization determines that it is necessary to create incentives for senior management to advance the organization's aims. The board of directors determines whether to award bonuses based on growth in share value at the conclusion of each fiscal year. Bonuses are to be given in shares that managers may hold or sell on the open market. What are the consequences of implementing such a bonus system?arrow_forwardThe board of directors of an organization determines that it is necessary to create incentives for senior management to advance the organization's aims. The board of directors determines whether to award bonuses based on growth in share value at the end of each fiscal year. Bonuses are to be paid in shares that managers may hold or sell on the open market. What are the consequences of implementing such a bonus system?arrow_forward
- Includes direct costs to producing a product or service include marketing utilities, and administrative costs. a) Working expense b) Operating expenses C) Cost of goods sold d) Money on handarrow_forwardA Cost Benefit Analysis, sometimes referred to as a CBA, is a technique for conducting an economic review that entails the computation of all of the positive and negative monetary implications that a certain programme may have. This approach is also frequently referred to as a Cost Benefit Analysis. Explain.arrow_forwardWhat is the definition and description of capital expenses, and how do capital expenses differ from operational expenses?arrow_forward
- Examples of one-time costs include all of the following except: hardware acquisition insurance site preparation programmingarrow_forwardDescribe the workings of a system that uses activity-based costing.arrow_forwardThe board of directors of a firm believes that top management should be rewarded for their efforts in furthering the company's goals. At the conclusion of each year, the board of directors determines whether or not to award bonuses based on share price increases. Bonuses will be paid out in the form of stock, which managers will be able to keep or sell. What are the repercussions of implementing such a bonus program?arrow_forward
- Part 1: Planning PhaseUnder this section, include the following: • Project identification – Chose one of the projects above (Project Title, Project Description precisely stating the Core Problem to be solved, Primary Customer and Stakeholders) • Feasibility studies (Technical Feasibility, Economic Feasibility and Organizational Feasibility) • Adopt an SDLC development methodology • List the Tasks to be Performed and Develop a Work Plan (Gantt Chart) Part 2: Analysis PhaseIn this section, you are required to determine the main business requirements; consequently, the following must be included:• List the functional and nonfunctional business requirements for the system. • Create Use Cases for each requirement• Draw context diagram as well as level 0 Data Flow Diagram• Identify Entities, attributes, and relationships.• Based on these entities and relationships, draw ER diagram with specifying the cardinalities constrains. 3: Design PhaseUnder this section, include the following:• Draw a…arrow_forwardWhat are the steps in cost-benefit analysis?arrow_forwardExplain the challenges and limitations associated with the use of cost estimation tools.arrow_forward
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