Case Study

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 excessive or exclusive reliance on other screening methods discussed in this chapter lead to similar problems?

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?