Premature closure of a project phase that is managed using an Adaptive approach is likely to experience greater failure due to sunk costs versus a project managed using a Predictive approach.

You are a project manager working on contract for an upscale retail toy store. Your project involves implementing a Party Event Planner department in stores in 12 locations across the country as a pilot to determine whether this will be a profitable new service all the stores should offer. You’ve identified two alternative methods of implementing the pilot. Alternative A’s initial investment equals $598,000. The PV of the expected cash inflows is $300,000 in year 1 and $300,000 in year 2. The cost of capital is 12 percent. Alternative B’s initial investment equals $625,000. The PV of Alternative B’s expected cash inflows is $323,000 in year 1 and $300,000 in year 2. The cost of capital is 9 percent. Which of the following is true?

You are the project manager for a company that produces mobile phone applications. Currently, the director of the consumer division is evaluating two projects. Funding exists for only one project. Project UV aims to produce a mobile phone application that sends alerts when the UV rays are at dangerous levels, alerting users to stay indoors; Project Fun aims to send alerts when it detects that users have not visited any destinations outside of their usual routine. The director asks you to calculate the payback period and NPV for both projects, and here is what you derive: Project UV: The payback period is 12 months, and the NPV is (100). Project Fun: The payback period is 18 months, and the NPV is 250. Which project would you recommend to the director?

Yasmin is a senior project manager who has just taken on a project that will produce a new line of medical widgets for a Fortune 100 company. The entire industry is buzzing with excitement over this project, which is estimated to span three years and require an investment of $1.5 billion from the company. What type of project is this?