PMP Exam Chapter Wise Q & A’s Project Management Frame Work - By SN Panigrahi

SN Panigrahi,
Essenpee Business Solutions, India 1

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SN Panigrahi is a Versatile Practitioner, Strategist, Energetic Coach, Learning Enabler & Public Speaker.
He is an International-Corporate Trainer, Mentor & Author
He has diverse experience and expertise in Project Management, Lean Six
Sigma; Contract Management, Supply Chain Management, Procurement,
Strategic Sourcing, Global Sourcing, Logistics, Exports & Imports,
Indirect Taxes – GST etc.
He had done more than 150 Workshops Globally on above
Published more than 500 Articles; More than 90 Youtube Presentations &
90 SlideShares
He is an Engineer + MBA +PGD ISO 9000 / TQM with around 29 Yrs of
Experience
He is a certified PMP® from PMI (USA) and PMI India Champion in 2016
Also a Certified Lean Six Sigma Black Belt from Exemplar Global & KPMG
Have been Trained in COD for 31/2 Yrs. on Strategy & Leadership
GST Certified – MSME – Tech. Dev. Centre (Govt of India)
ZED Consultant – Certified by QCI – MSME (Govt of India)
Member Board of Studies, IIMM
Committee Member Indirect Tax; International Trade, FTCCI
Empanelled Faculty in NI MSME
He has shared his domain expertise in various forums as a speaker & presented a number of papers in various national and
international public forums and received a number of awards for his writings and contribution to business thoughts.
SN Panigrahi 9652571117
snpanigrahi1963@gmail.com
Hyderabad

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SN Panigrahi, Essenpee Business Solutions, India

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Project Basics
Project Definition – Project Characteristics
Project Vs Operation
Project Management
Portfolio – Program – Project
Organizational Project Management (OPM) & OPM @3
Project Management Office (PMO)
Project Life Cycle – Phases – Project Management
Processes
Progressive Elaboration vs Rolling Wave Planning and
Prototyping
Project Configuration Management
Organizational Systems
• Management Elements
• Governance Frameworks
• Organizational Structure Types
5 Project Management Process Groups – 10
Knowledge Areas
Systems Approach to Project Management –
Processes – ITTOs
Roll of Project Manager – Sphere of Influence
Project Environment
Enterprise Environmental Factors (EEF)
Organizational Process Assets (OPA)

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Project is a temporary endeavor to achieve defined objectives by creating a unique product,
service, result or outcome with a definite start and end date.
It is - Performed by people - Constrained by limited resources - Planned, executed and controlled
What is Project
Project
Features
Temporary
Endeavour
Unique
Product,
Service, Result
or Outcome
Achieve
Defined
Objectives
As per PMBOK 6th Edition
Temporary doesn’t mean shorter duration of the project it refers to the
project’s engagement having a definite beginning and end
The duration of a project is finite - Limited Time Frame - a Definite Start and
End Date
Projects are undertaken to Fulfill Objectives by producing deliverables
Projects Drive Positive Change
Projects Enable Business Value Creation
Projects involve doing something that has not been done before in the same
environment – Outcome May be Tangible or Intangible – Not Repetitive
The project may require some innovation to be completed.

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Project Management is the Application of
Knowledge, Skills, Tools and Techniques to meet
the Project Requirements*
Project Management is the Planning, Organizing,
Monitoring and Controlling of all aspects of a project
in a continuous process to achieve its objectives, both
internal and external
Accomplished through appropriate application and
integration of project management processes identified
for the project
*Project requirements are stakeholders need and
expectations from the project
Set of Skills
Application
of Tools &
Techniques
A Series of
Processes

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Portfolio
Sub-
Portfolio’s
Programs Projects Operations
Portfolio
Related
Or
un-related
Projects, Programs, Sub-portfolios,
and Operations
Portfolio Management
➢ Corporate Top Level Strategies
➢ Decision Making,
➢ Prioritization, Review,
➢ Realignment, and
➢ Reprioritization of a firm’s projects.
Programs
Program
Only Related
Projects
Program Management
❖ Focuses on Interdependencies between
Projects to determine optimal approach
for managing them.
❖ Managing groups of projects in a
coordinated way
Projects
Only Related
Activities
Project Management
Focus on to achieve the project objectives :
Project Completion as per Scope, within
Budget & Timelines
Sub-Programs
Projects Projects

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Portfolio
Oil & Gas Power
Power Project
- 1
Power Project
- 2
Power Project
- 3
Road
Projects
Rail
Projects
Water
Projects
Water
Project - 1
Water
Project - 2
Operations
Related Projects
Programs
Projects
Programs
Related Projects

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Aligns with organizational strategies by
selecting the right programs or projects,
prioritizing the work, providing resources
etc
Program Management
Project Management
Harmonizes its projects and program
components and controls interdependencies.
Focusses on Optimal Approach for Managing
them
develops and implements plans to achieve
specific scope driven by objectives of the
program or portfolio
Organizational
Project
Management
(OPM)
Aligning
Organizational
Strategieswith
OPM : Aligning Portfolios – Programs - Projects
OPM
The Framework used to align
project, program, and portfolio
management practices with
organizational strategy and
objectives, and customizing or
fitting these practices within the
organization’s context, situation, or
structure.

Directive
Controlling
Supportive
•Directive PMOs take control of the projects by directly managing the
projects. This injects a great deal of professionalism into the
projects, and, since each of the project managers originates
and reports back to the directive PMO, it guarantees a high
level of consistency of practice across all projects
•Controlling PMOs provide Support and Require Compliance through
various means. Requirements might include adoption of
specific methodologies, templates, forms, conformance to
governance, and application of other PMO controlled sets of
Rules. The degree of control provided by the PMO is moderate
Supportive PMOs provide support in the form of on-demand
expertise, consultative role to projects by supplying templates, best
practices, training, access to information and lessons learned from
other projects. The degree of control provided by the PMO is low.
Project Management Office (PMO)
A project management office (PMO) is a management structure that standardizes the project-related
governance processes and facilitates the sharing of resources, methodologies, tools, and techniques.
There are several types of PMO structures in organizations, each varying in the degree of control and
influence they have on projects within the organization, such as:

SN Panigrahi, Essenpee Business Solutions, India 11
The three most significant project constraints -- schedule, cost and scope -- are sometimes known as the triple
constraint or the project management triangle. Additionally Three more Constraints are Added : Quality, Risk
& Resources.
If any one of these factors changes,
then at least one of the other factors
also will change.
Competing Project Constraints

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When scope, time, and cost are defined within the early phases of the project.
Any changes must then be carefully managed through Change Control
Mechanism. Also known as waterfall life cycles
The deliverable is produced through a series of iterations that successively add
functionality within a predetermined time frame - getting feedback on a regular
basis. The deliverable are completed only after the final iteration.
Small Incremental Deliveries Frequently. Each increment includes Analyse, Design, Build
&Test, Deliver. Each increment integrates additional parts of the solution until the final increment,
where the remaining parts of the solution are integrated.
A project life cycle is the phases that a project passes through from its start to its completion. It
provides the basic framework for managing the project. PMBOK® ed 6
Within a project lifecycle, there is typically at least one phase related to developing the product,
service or result; also known as a development life cycle, of which there are several types:
Adaptive Life Cycle is also called a flexible or change-focused method (or agile or change-
driven methods) and it Combines both Incremental & Iterative Life Cycles to Deliver
Incremental Small Packages & Repeated take Iterations (Feedback) for Continuous
Improvements.

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➢ If we need any feedback for any Change or Improvement,
it comes from the successor phase to the previous one,
we make Iteration.
➢ Requirements dynamic, repeated until correct, single delivery
➢ Develop the product through a series of repeated cycles,
➢ Allows feedback on partial completed or unfinished work to
improve and modify deliverable.
➢ Works well when uncertainty is high, when project incurs
frequent changes and stakeholders have different view of
desired
Analyze Design
Build
Test
Deliver
Analyze Design
Build
Test
Deliver
Incremental
Delivery - 1
Analyze Design
Build
Test
Deliver
Incremental
Delivery - 2
Analyze Design
Build
Test
Deliver
Incremental
Delivery - 3
Analyze Design
Build
Test
Deliver
Incremental
Delivery - n
❖ Requirements dynamic, performed once
for a given increment, frequent small
deliveries
❖ Provide finished deliverables which
customer can use immediately
Feedback for
Improvement
Feedback for
Improvement
Feedback for
Improvement
Final
Delivery

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Conception
Initiation
Analysis
Design
Construction
Testing
Deployment
Conception
Initiation
Analysis
Design
Construction
Testing
Deployment
Conception
Initiation
Analysis
Design
Construction
Testing
Deployment
Conception
Initiation
Analysis
Design
Construction
Testing
Deployment

Progressive
Elaboration
Rolling Wave
Planning
Prototyping
Progressive elaboration involves continuously improving and detailing a plan
as more detailed and specific information and more accurate estimates become
available. Progressive elaboration allows a project management team to define
work and manage it to a greater level of detail as the project evolves.
The technique of rolling wave planning is a form of progressive elaboration. The
earliest parts of the project are planned in sufficient detail for work to begin.
Later phases of project work are planned at a high level. As the project
progresses, and more information impacting the work becomes available, plans are
elaborated in sufficient detail to accomplish the work.
Prototyping is a method of obtaining early feedback on requirements by providing a “tangible” working
model or a mock-up of the expected product before actually building it. Prototypes help to identify
problems early in the project and reduce project risks.
Let’s take an example again. Your company wants to build a commercially viable model of a Hydrogen-
powered car. Initially, your researchers build several working models (prototypes) of the car, maybe of a
smaller size, to conduct experiments and check the feasibility of the project.
Based upon the results of the feasibility studies, your company decides whether to move forward with or kill
the project.
SNPanigrahi,EssenpeeBusinessSolutions,India

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Time Line
The earliest parts of the project
are planned in sufficient detail
for work to begin.
Later phases of project work
are planned at a high level.
As the project progresses,
and more information
impacting the work
becomes available, plans
are elaborated in sufficient
detail to accomplish the
work.

Software Project - Phases
Design BuildAnalyze Test Deliver
Civil Infrastructure Project - Phases
Design ProcurementPlanning Construction Inspection
Handover /
Deliver
Project Life cycle - is a sequence of project
phases from project initiation to closure, generally
phased in a sequential order.
A Project Life Cycle is the Phases that a Project
Passes through from its start to its completion.
The term project phase refers to a collection of
activities within a project. Each project
phase is goal-oriented and ends at a milestone.
Process Groups are logical groupings
of Project Management Processes.
There are Five Process Groups :
Initiation, Planning, Execution,
Monitoring & Control, Closure.
These are Structured into Each
Phase & are Common for All Types
of Projects.

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A project phase is a “collection of logically related project activities that culminates in the
completion of one or more deliverables” PMBOK® Guide. These phases are often identified by
the work to be completed within them (e.g. concept, design, build, or test)
A Phase Gate is a review that is held at the end of a phase. It is undertaken to establish that the
project has both completed the activities within the phase and to ensure the project remains
justified from a business/strategic point of view.
Phase gates may also be known as phase reviews, stage gates, go/no go decision points, or
kill points
It is the point in time during the execution phase of the project where the stakeholders or the
sponsor review the progress and decide on whether to continue or kill the project.

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Though the project
management processes are
presented as discrete
elements, they are seldom
either discrete or onetime
events;
they are overlapping
activities that occur
throughout the project with
well-defined interfaces.
If the project is divided into phases, the Process Groups interact within each phase. In multi-phase
projects, processes are repeated within each phase until the criteria for phase completion have been
satisfied
Sixth

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➢ Each stage in the project life cycle has
different characteristics in terms of cost and
staffing levels, level of uncertainty, and the cost
of changes
➢ Cost and staffing – levels are low at the
start, peaks in the middle and fall off, and
drop rapidly as the project draws to a
conclusion.
Sixth

•Cost of changes is lower at the start and higher
as the project continues.
•Completion – The probability of successful
completion generally gets progressively higher as
the project continues.
•Level of uncertainty and Risk is greater at the
start , chance of successful completion grows
higher as the project continuous
Sixth

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• Refer to both internal & external environmental factors that surround or
influence a project’s success
• As an input in almost all project management process
• May enhance or constrain project management options
Enterprise Environmental Factors
Internal to Organization External to Organization
➢ Organizational culture, structure, and
processes
➢ Infrastructure
➢ Geographic distribution of facilities and resources
➢ Resource Availability
➢ Employee Capability
➢ Information Technology Software (PMIS)
➢ Marketplace conditions
➢ Political, Social and Culture Influences and
Issues
➢ Legal Restrictions / Govt. Regulations
➢ Commercial Databases
➢ Government or Industry standards
➢ Academic Research
✓ Financial considerations
✓ Physical environmental elements

Includes plans, policies, processes, Guidelines, SOPs and knowledge bases specific to and
used by performing organization.
Configuration management specialists identify and document configuration requirements, control changes, record and report
changes, and audit the products to verify conformance to requirements.
This contains the change history: different versions and baselines for the company standards and policies and for the archived
project documents.
Processes & Procedures Corporate Knowledge Base
➢ Organizational Standard Processes such as
Standards, Policies, Procedures
➢ Standardized Guidelines, Work Instruction,
SOPs, Proposal Evaluation Criteria, and
Performance Measurement Criteria
➢ Templates
➢ Financial Control Procedures
➢ Procedures for Prioritizing, approving, and
issuing work authorization, etc.
➢ Process measurement databases
➢ Project files from previous projects
➢ Historical Information & lesson learned
knowledge bases
➢ Risk Register
➢ Stakeholder Register
➢ Issue and defect management databases
➢ Configuration management knowledge
bases
➢ Financial Databases, etc.
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Project Management Information System (PMIS)
A project management information system (PMIS) is
how information needed to run a project is
organized. It collects and uses project information
through one or more software applications. What
these programs do is help project managers to plan,
execute and close their project. It’s a way to
organize that flood of information, so you don’t
drown in data.
The Project Management Book of
Knowledge (PMBOK) states that a PMIS is “an
information system consisting of the tools and
techniques used to gather, integrate, and
disseminate the outputs of project management
processes. It is used to support all aspects of the
project from initiating through closing and can
include both manual and automated systems.”

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A stakeholder is an individual, group, or organization or an Entity who may affect, be affected by, or perceive itself to be affected
by a decision, activity, or outcome of a project. Stakeholders may be actively involved in the project or have interests that may be
positively or negatively affected by the performance or completion of the project. Different stakeholders may have competing
expectations that might create conflicts within the project. Stakeholders may also exert influence over the project, its deliverables, and
the project team in order to achieve a set of outcomes that satisfy strategic business objectives or other needs“
Stakeholders may be internal or external; positive or negative; performing or advising.
Sixth
External stakeholders:
❖ Customers,
❖ End users,
❖ Suppliers,
❖ Shareholders
❖ Regulatory bodies, and
❖ Affected Local
Community
Internal stakeholders:
❖ Sponsor,
❖ Project Mgr & Project Team
❖ Resource Manager,
❖ Project management office
(PMO),
❖ Portfolio Steering Committee,
❖ Program Manager,
❖ Project Managers of other
Projects,
Stakeholders have different levels of authority and Stakeholder Influence is highest at the start and
gets progressively lower as the project continues.
Stakeholder identification is a continuous process throughout the life cycle of the project.

26SN Panigrahi, Essenpee Business Solutions, India
Six

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Functional Organization Structure – FM has more power
Projectized Organization Structure – PM has more power
Balanced Matrix Organization Structure – PM and FM has equal power
Weak Matrix Organization Structure – FM has more power
Strong – Matrix Organization Structure – PM has more power

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Project Configuration Management is the process of tracking and controlling
changes to important project documents and products.
Configuration Management plan that sets out how all aspects of the project will be
tracked. For example, it can manifest as a document control system, a parts
numbering system, unique numbers for each node of the work breakdown
structure, or numbers allocated to each change request received.
The purpose of the Configuration Management Plan is to make sure everyone knows
what version of the scope, schedule, and other components of the project
management plan are the Latest and Relevant.
The configuration management plan defines how you will manage changes to the
deliverables and the resulting documentation.
The configuration management plan specifies which documents (or products) require
change control, and what parameters will be controlled.
Project Configuration Management

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Work Authorization System
The PMBOK defines a work authorization system as "a collection of formal
documented procedures that defines how project work will be authorized to ensure
the work is done by the identified organization, at the right time, and in the proper
sequence." This is most often a written authorization to begin a specific activity or work
package that is part of the project plan.
A work authorization system is used to coordinate when and in what order
the work is performed so that work and people may adequately interface with
other work and other people.

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Process Groups
Total
49
Processes
10
Knowledge
Areas
The Inputs, Tools, Techniques and Outputs (ITTOs) of each
Process is laid out

INITIATING
Develop Project Charter
with Defined Objectives
Also Identify Stakeholders
PLANNING
Develop Detailed Project Plan
EXECUTING
Directing and Managing
Project Execution
MONITORING &
CONTROLLING
Measuring – Feedback &
Taking Corrective
Measures
CLOSING
Complete Formalities,
Contract Closure,
Archive Documents
SN Panigrahi
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Undertake Business Study, Benefit Analysis, Develop Charter - Start a New Project by Defining
its Objectives, Purpose and Deliverables to be Produced - Broad Scope, Milestones, Budget,
High Level Risks, Appoint Project Manager & Authorize to use Resources; Identify
Stakeholders, & Determine their Influence.
.
Create a Comprehensive Project Plan - Refine the High-level Tasks - Determine How you will Plan the
Planning, Executing, and Monitoring and controlling of Subsidiary Plans; Develop the Final Project
Management Plan, Project Documents, and Performance Measurement Baseline - Gain formal approval
of the Project Management Plan from the Sponsor; Hold a Kickoff Meeting with Key Stakeholders
Execute as per Plan; Implement the Most up-to-date Version of the Project Management Plan – including
Approved Change Requests by Following Organization Policy, Practices & Procedures; Select Overview
Team; Overview Work Performance of Vendors; Measure & Reports on Project Performance; Implement
Risk Responses (Strategies); Rise Change Requests if Required.
Compare, Analyze & Evaluate Project Performance against Management Plans & Baselines; -
Determine Variances; Recommend Changes; Perform Quality Inspections of Deliverables -
Get Acceptance of Deliverables from Customers.
Confirm that all Project Requirements have been Met. Obtain Formal (legal) Sign-off and Final
Acceptance of the Product of the Project from the Customer. Obtain Financial, Legal & Administrative
Closure; Transfer the Product / Service / Result to the Next Phase or to the Operations; Celebrate Project
Success! Release Resources

(No. of Processes)
Project Knowledge Areas As per PMBOK
6th Edition,
there are
5 Process
Groups
&
10 Knowledge
Areas
= Total 49
Processes
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Knowledge Areas
Initiating Process Group
Planning Process Group Executing Process Group
Monitoring & Controlling
Process Group
Closing Process Group
4. Project Integration
Management
4.1 Develop Project
Charter
4.2 Develop Project Management Plan
4.3 Direct and Manage
Project Work
4.4 Manage Project
Knowledge
4.5 Monitor and Control
Project Work
4.6 Perform Integrated
Change Control
4.7 Close Project or Phase
5. Project Scope
Management
5.1 Plan Scope Management
5.2 Collect Requirements
5.3 Define Scope
5.4 Create WBS
5.5 Validate Scope
5.6 Control Scope
6. Project Schedule
Management
6.1 Plan Schedule Management
6.2 Define Activities
6.3 Sequence Activities
6.4 Estimate Activity Durations
6.5 Develop Schedule
6.6 Control Schedule
7. Project Cost
Management
7.1 Plan Cost Management
7.2 Estimate Costs
7.3 Determine Budget
7.4 Control Costs
8. Project Quality
Management
8.1 Plan Quality Management 8.2 Perform Quality Assurance 8.3 Control Quality
9. Project Resource
Management
9.1 Plan Resource Management
9.2 Estimate Activity Resources
9.3 Acquire Resources
9.4 Develop Team
9.5 Manage Team
9.6 Control Resources
10. Project
Communications
Management
10.1 Plan Communications
Management
10.2 Manage Communications 10.3 Monitor Communications
11. Project Risk
Management
11.1 Plan Risk Management
11.2 Identify Risks
11.3 Perform Qualitative Risk
Analysis
11.4 Perform Quantitative Risk
Analysis
11.5 Plan Risk Responses
11.6 Implement Risk Responses
11.7 Monitor Risks
12. Project Procurement
Management 12.1 Plan Procurement Management
12.2 Conduct Procurements 12.3 Control Procurements
13. Project Stakeholder
Management
13.1 Identify Stakeholders 13.2 Plan Stakeholder Management 13.3 Manage Stakeholder
Engagement
13.4 Monitor Stakeholder
Engagement
Project Management Frame Work

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A Project can be viewed as a Total System which
Transforms Input into Output, and has a
Feedback Mechanism to assure that the output
meets the goals and objectives set for the project.
System - a set of things working together as parts of
a mechanism or an interconnecting network.
Output of one Process may become Input to Other Processes
Input
• All that is Required
to Carryout a
Process
Process
Tools & Techniques
• ….. Which are Applied on the
Inputs. This is where Project
Manager’s Skills are Put to Use
Output
• What is Produced out of this
Process – Project
Deliverables
PMBOK® describes the fundamentals of project
management in terms of processes. Each Project
Management Activity is Accomplished as a
Process. A process has some Inputs. A Set of
Tools and Techniques are then applied on these
inputs. As a Result some outputs are produced.
These outputs may further become inputs to some
other processes.
Feedback
Each process is characterized by its Input, Tools
& Techniques & output (ITTO)
SNPanigrahi

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The project manager is the person assigned by the performing organization to lead the team
responsible for achieving the project objectives. The project manager’s reporting relationships are
based on the organizational structure and project governance.
In addition to any specific technical skills and general management proficiencies required for the project,
project managers should have at least the following attributes:
Knowledge
Skills
Abilities
Other Attributes
Knowledge about project management, the business environment,
technical aspects, and other information needed to manage the project
effectively;
Skills needed to effectively lead the project team, coordinate the work,
collaborate with stakeholders, solve problems, and make decisions
Abilities to develop and manage scope, schedules, budgets,
resources, risks, plans, presentations, and reports
Other attributes required to successfully manage the project, such as
personality, attitude, ethics, and leadership

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The ideal skill set – the Talent Triangle – is a combination of technical, leadership and
strategic and business management expertise.
Technical Project
Management
Domain Specific
Examples:
•Requirements gathering
techniques
•Project scheduling and
Costing
•Risk Management
•Scope Management
•Project Planning
•Project Control
Leadership
knowledge, skills and
behaviors specific to
leadership-oriented skills
examples:
•Negotiation; Conflict
management
•Motivation; Communication
•Giving/receiving feedback
•Influencing
•Problem solving
•Team building
•Leading groups and teams
Strategic & Business
Management
examples:
• Strategic planning/alignment; Mission Business
and environmental analysis; Goals and objectives
•Finance
•Operational functions – e.g. marketing, legal
•Contract management
•Complexity management
•Innovation

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PM
Interpersonal
Skills
Leadership
Team building
Motivating
Communicating
Influencing
Decision MakingCoaching
Political and Cultural
Awareness
Negotiating
Facilitating
Managing Conflict

PMBOK® Guide) – Sixth edition, Project Management Institute, Inc., 2017,
The Project Manager
• Fulfills numerous roles within their sphere of influence
• Role reflect project manager’s capabilities and are representative
of the value and contributions of the project management
profession
• Works to balance the competing constraints on the project with
the resources available
• Performs communication between sponsor, team members, and
other stakeholders
• Uses soft skills to balance the conflicts and competing goals of
the stakeholders, in order to achieve consensus
PPP = Project, Program, Portfolio
5SN Panigrahi, Essenpee Business Solutions, India

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Interpersonal
Role
➢ Work with a
Diverse Range
of
Professionals
➢ Solve Team
Disputes /
Conflicts
➢ Build Positive
Relationships
➢ Motivate
Team
Members
Informational
Role
❖ Communicate
with all
stakeholders
effectively
❖ Keep people up-
to-date
❖ Organize Team
Meetings
Frequently
❖ Provide
Performance
Feedback
Decisional
Role
➢ Make a Range of
Decisions at
Each Stage
➢ Stay Clear and
Focused
➢ Balance the
Competing
Constraints
➢ Scope, Time,
Cost and
Resource etc.
➢ Prevent Scope
Creep and
Budget Slippage
Management
Role
❖ Responsible for
Accomplishing
Project
Objectives
❖ Recruit and
Manage Team
❖ Manage finances
❖ Respond well to
ambiguity
❖ Adhere to
business
priorities

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Project Design
Deliverable -2
Financing
Deliverable -3
Placing
Contracts
Deliverable -4
Project
Execution
Deliverable - 5
Milestone -2
Project
Design
Ready by
30th Sep
Milestone - 3
Availability of
Funds
By
2nd Oct
Time Lines
Total Project Schedule
Example:
Common Facility Center (CFC) Project
Project
Handover
Deliverable -6
Project Planning
Deliverable - 1
Milestone - 4
Contract
Finalization
By 1st Nov
Milestone - 5
Project Work
Completion
15th Jan
Milestone - 6
Project
Handover to
Customer
By 26th Jan
Milestone - 1
Overall Project
Milestones,
Timelines,
Budgets etc
Finalized
By 15th Sep
SN Panigrahi
Starting of
the Project
15th Aug
End of the
Project
26th Jan
A project milestone is a task of zero duration that shows Significant Achievement along a
project timeline.

42
A deliverable is a Quantifiable tangible or intangible good or service produced as a result of a
project or part of a project that is intended to be delivered to a customer (either internal or
external).
A deliverable could be a Product, a Part, a Report, a Document, a Software Product, a Server
upgrade or any other building block of an overall project.
A work breakdown structure is based on these Deliverables.
Deliverable
Deliverable
Quantifiable
Results
Tangible
or
Intangible
To be
Delivered
To a
Customer

43
Project Selection Methods
Financial Analysis
Strategic Alignment
Solving Problems
Taking Advantage of Opportunities
Fulfilling Requirements
Time Frame
Weighted Scoring Model

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Non Numerical Models
Sacred Cow
Operating
Necessity
Murder board
Competitive
Necessity
Numeric (Financial)
Models
Benefit Cost Ratio
Payback Period
Present Value (PV)
Net Present Value (NPV)
Internal Rate of Return (IRR)
Profitability Index (PI)
Return on Investment (RoI)
If the Ratio is > 1 Select
Lower Payback Period is Better
Select Project with Lower one
Convert Future Value into
Present Value (PV)
Higher NPV is Better
Select Project with Higher NPV
Higher IRR is Better
Select Project with Higher IRR
Higher PI is Better
Select Project with Higher PI
Higher RoI is Better
Select Project with Higher RoI

DepreciationSunk costOpportunity Cost
Purchase Value
•The initial cost to purchase the
resources (or equipment)
Salvage Value
•The scrap value of the resources (or
equipment) at the end of the project
Depreciation
•Large assets purchased by the
company lose value over time
(Purchase Value –Salvage Value).
➢ A Reduction in the value of an
asset over time, due in
particular to wear and tear.
Depreciation =
(Purchase Value –Salvage Value) /
Useful Life
"Sunk cost is a loss which
should not play any part in
determining the future of the
project."
Unfortunately, project sponsors
and other senior executives (and
even project managers) often
value completion over
usefulness and it does take
courage to suggest to your
sponsor that you stop a project
that has already seen significant
investment
These costs are often forgotten
in business cases, but they are
essential to know about.
Opportunity Cost is the Loss of
Potential Future Return from
the Best Alternative (which is Not
Selected) Project when a choice is
required for several mutually
exclusive projects.
It can also be defined as “the
opportunity (potential return) that
will NOT be realized for the
second best project not selected”.
Since there are limited resources
such as human, time, money, etc.,
we cannot work on infinite
number of projects at the same
time. Opportunity cost is a
concept to help you judge which
project(s) to take and which
project(s) NOT to take based on
the relative potential returns of
the project(s).
SNPanigrahi,EssenpeeBusinessSolutions,India

46
Heena is tasked with the responsibility to manage the process of
producing cars. She has to overlook the availability of raw
materials, manufactured components and labour. Also she has to
ensure the cars produced meet the quality standards specified
by the company. What is Helena working on?
1.Project
2.Operation
3.Program Management
4.Profolio

Ans : 2 Operation
The Process of Producing Cars is Repeatitive &
Routine Operation

48
That project managers will be updating orders daily, resolve
issues and ensure that the customer formally accepts the
product within 30 days of completion. The project manager will
not perform planning or provide documentation other than daily
status. How would you define this situation?
A.Because each individual order is a “temporary endeavor,” each
order is a project
B.This is program management since there are multiple projects
involved
C.This is a recurring process
D.Order incurring revenue over $100,000 would be considered
project and would involve project management

Answer is C
Explanation: Because orders are numerous and of short
duration and about resolving issues, these are recurring
processes, not a project.
The project manager is not doing planning or other
project management activities, part of operations.

A project is best defined as:
A. A temporary endeavour undertaken to provide a unique
product, service or result
B. A collection of tasks with a common objective
C. A significant non-routine change with defined objectives and
a clear start and end
D. An extraordinary enterprise that is outwith the scope of
business as usual

51
Project is a temporary endeavor to achieve defined objectives by creating a unique product,
service, result or outcome with a definite start and end date.
Ans : A
Project
Features
Temporary
Endeavour
Unique
Product,
Service, Result
or Outcome
Achieve
Defined
Objectives
Temporary doesn’t mean shorter duration of the project it refers to the
project’s engagement having a definite beginning and end
The duration of a project is finite - Limited Time Frame - a Definite Start and
End Date
Projects are undertaken to Fulfill Objectives by producing deliverables
Projects Drive Positive Change
Projects Enable Business Value Creation
Projects involve doing something that has not been done before in the same
environment – Outcome May be Tangible or Intangible – Not Repetitive
The project may require some innovation to be completed.

Which of the following is not a characteristic of a project lifecycle?
A. Cost and staffing levels are low at the start
B. Costs peak at the End of the lifecycle
C. Stakeholder influence is highest in the early stages
D. Risk & Uncertainty are Lowest at the Initial Stages of the Project

Answer: B
All others are Charecterstics a Project Lifecycle
➢ Cost and staffing – levels are
low at the start, peaks in the
middle and fall off, and drop
rapidly as the project draws to a
conclusion.
•Level of uncertainty and Risk
is greater at the start , chance
of successful completion
grows higher as the project
continuous
Stakeholder Influence
– on the final
characteristics of the
project’s product and
the final cost of the
project is highest at
the start and gets
progressively lower
as the project
continues.

You are a Project Manager and You want to Identify Stakeholders.
Who are Stakeholders
A. Those actively involved in the project or whose interests may be
affected
B. Those who are expected to make an investment of time or money
C. Those who will be responsible for supporting the result after
implementation
D. Those who will be part of the project team

Answer: A
According to the PMBOK Guide, “A stakeholder is an
individual, group, or organization who may affect, be
affected by or perceive itself to be affected by a
decision, activity, or outcome of a project.”

Progressive elaboration is defined as
A. Progressive elaboration allows a project management
team to define work and manage it to a greater level of
detail as the project evolves.
B. Increasing the scope of the work over time
C. Increasing the accuracy of estimates from phase to phase
D. Providing more detailed product specifications at lower
levels of Work Breakdown

Answer: A
Progressive elaboration involves continuously improving and
detailing a plan as more detailed and specific information and
more accurate estimates become available.

Collectively, project phases are also referred to as "Project Life
Cycle". All the following statements about project life cycles are
correct EXCEPT:
1. All project life cycles are usually identical with same project
phases
2. The level of risk is highest at the start of the project, and
decreases as the project progresses.
3. Ability of the stakeholders to influence the final characteristics is
highest at the start, and gets progressively lower as the project
continues.
4. Cost and staffing requirements usually peak during the
intermediate phases

Answer: A
Phases in a Life Cycle are Different from Project to Project.

You are the Project Manager of Mason Consultancy. The Project team
members are from the Finance and HR departments. The team members
report to Finance and HR Managers respectively, and you have limited
control over them. What type of organizational hierarchy does Mason
Consultancy follow?
A. Matrix organization
B. Projectized organization
C. Functional organization
D. None of these

Ans: C.
In a functional organization, the project manager has the least support for the
project and has little authority to assign resources.
Functional Organization Structure – FM has more power; PM has No or Least Power

You have reached the end of design phase of your project. You decide to call
a "phase end review" for obtaining authorization to close the design phase
and initiate the next phase (i.e. execution phase) of your project.
Your manager disagrees with your suggestion. He wants a "kill point" to
formally end the design phase of the project. In this context, you should:
1. Disagree with your manager because you know that phase end reviews
should be used at the end of each phase of the project
2. Agree with your manager
3. Escalate this issue to the project sponsor
4. Take advise from a senior project manager about what should actually be
done at the end of each phase of the project

Ans: 2
Justification: A phase end review can be held with the
explicit goals of obtaining authorization to close the
current phase and to initiate the subsequent one... Phase
end reviews are also called phase exits, phase gates, or
kill points

Project Management is the application of knowledge, skills, tools and
techniques to project activities to meet project requirements. As a project
manager, you will often have to contend with conflicting stakeholder
demands and not well-defined or changing requirements. Balancing the
different factors which affect a project is going to be critical in determining
how successful you are as a project manager. When managing competing
project requirements, you should be aware of the following constraints?
a) Deliverables, Time, Budget, Customer Satisfaction
b) Scope, Schedule, Cost, Quality, Risk & Resources
c) Political, Social, Cultural & Ethnic
d) Quality, Performance Criteria & Acceptance Criteria

Ans : B: The three most significant project constraints -- schedule, cost and scope -- are sometimes known as
the triple constraint or the project management triangle. Additionally Three more Constraints are Added :
Quality, Risk & Resources.
If any one of these factors changes,
then at least one of the other factors
also will change.

You are working in the Project Management Office (PMO) of your organization.
Your job responsibility is to:
a) Manage the operational activities in the company
b) Manage human resource and risk management issues for individual projects
c) Provide support functions to project managers in the form of training,
providing software, standardizing policies, etc.
d) Provide subject matter expertise in the functional areas of the project

Ans : C
There are Three basic types of Project Management
Office (PMO) organizations, varying in the degree of
control and influence they have on projects within the
organization. You will need to determine which type you
need to establish in order to have an effective project office.
In the Present Context You are Managing Supportive
Type of PMO
1. Directive PMO
2. Controlling PMO
3. Supportive PMO

The person or group that provides the financial resources,
champions the project and plays a significant role in the initial
scope and charter
a) PMBOK
b) PMO
c) Program
d)Sponsor

Ans : D
The project sponsor is that person or group who owns
the project. ... According to the Project Management Body of
Knowledge (PMBOK), the project sponsor is “a person or
group who provides resources and support for the project,
program or portfolio for enabling success.”

A group of related projects managed in a coordinated way to
obtain benefits and control is Called
a)Operation
b)Program
c)PMO
d)Project

Ans : B: Program
A program is a collection of projects that are managed as a
group in order to achieve efficiencies of scale. Projects are
bundled together into a program when the benefits
of managing the collection outweigh managing projects as
individual units

You have reached the end of the design phase of your project. You decide to call a
"phase end review" for obtaining authorization to close the design phase and
initiate the next phase (i.e., execution phase) of your project. Your manager
disagrees with your suggestion. He wants a "kill point" to formally end the design
phase of the project. In this context, you should:
a) Disagree with your manager because you know that phase end reviews should
be used at the end of each phase of the project
b) Agree with your manager as kill point is a phase-end review
c) Escalate this issue to the project sponsor
d) Take advice from a senior project manager about what should actually be done
at the end of each phase of the project

Ans : B
A phase end represents a natural point to reassess the
activities underway and to change or terminate the
project if necessary. This point may be referred to as a
stage gate, milestone, phase review, phase gate, or kill
point.

You are the project manager in a company where you have maximum
authority. To which organizational structure does your company belong?
a) Functional
b)Weak Matrix
c) Strong Matrix
d)Projectized

Ans : D
Justification
Project managers have maximum authority in a company with a projectized
organizational structure.

Matrix organizations exhibit features of both projectized
and functional organizations. In a weak matrix
organization, the role of a project manager may be that
of a:
a)Coordinator
b)Manager with considerable authority
c)Support person
d)Functional manager

Ans : A
Coordinator
Project Expeditor Project Coordinator
Works as Staff Assistant and
communications coordinator –
virtually cannot make or
enforce any authority
Has powers to make some decisions
have some authority and report to
higher level manager

Since the levels of both cost and risk vary throughout the
project life cycle, which of the following statements is true?
a)Costs are high and Risk is low at the initiating stage
b)Both Costs and Risks are high at the initiating stage
c)Costs are low and Risk is high at the initiating stage
d)Both Costs and Risks are low at the initiating stage

Ans : C
Costs are low and Risk is high at the initiating stage
6th

80
Which of the following processes describes the collection, measurement
and distribution of performance information, and measuring the health of
the project to identify project areas that require corrective or preventive
actions?
a. Direct and manage project execution
b. Monitor and control project work
c. Integrated change control
d. None of the above

81
Ans : b: Monitor and control project work
The progress of the project is measured during the monitor and control
project work process. Monitoring activities include measuring, collecting ,
and distributing performance information, and controlling activities include
determining corrective or preventive actions.

Which of the following is not a PMBOK Knowledge Area?
A. Procurement management
B. Integration management
C. Execution management
D. Communications management

Ans:C
Execution management is not a PMBOK knowledge area. Note that
execution is a process group. [PMBOK 6th Edition, Pages 23, 24]
[Project Framework]

A project manager is managing a research project. Typically,
research projects are not clearly defined and involve a lot of
uncertainty. The project has four phases in which a phase can only
start when its previous phase is complete and each Phase is
Repeated Several Times till Correct Deliverable is reached. What
project lifecycle and phase-to-phase relationship should the project
manager use for this project?
A. Predictive lifecycle with sequential phase to phase relationship
B. Iterative lifecycle with sequential phase to phase relationship
C. Predictive lifecycle with overlapping phase to phase relationship
D. Iterative lifecycle with overlapping phase to phase relationship

Ans : B
The project manager should use the Iterative life cycle since
project phases and activities will most probably be repeated
as the project team’s understanding of the project and
requirements increases. Further, since any project phase
can only start once its previous phase has been completed,
the phase-to-phase relationship should be sequential.
[PMBOK 6th edition, Page 19] [Project Framework]

The transition from one phase to another within a project's lifecycle
(e.g., from design to manufacturing) is typically marked by:
A. Kill point
B. Monte Carlo
C. Constraint
D. Decision tree

Ans : A
The transition from one phase to another within a project's lifecycle typically
involves, and is usually defined by, some form of technical transfer or handoff.
This is also called a kill point. [PMBOK 6th edition, Page 21] [Project
Framework]

Which of the following is an enterprise environmental factor?
A. Configuration Management Knowledge Base
B. Change control procedures
C. Historical information
D. Commercial databases

Ans : D
Commercial databases are considered enterprise environmental
factors. The other choices are organizational process assets.
[PMBOK 6th edition, Pages 39-41] [Project Framework]
Enterprise Environmental Factors
Internal to Organization External to Organization
➢ Organizational
culture, structure,
and processes
➢ Infrastructure
➢ Geographic distribution
of facilities and resources
➢ Resource Availability
➢ Employee Capability
➢ Information
Technology Software
(PMIS)
➢ Marketplace
conditions
➢ Political, Social and
Culture Influences
and Issues
➢ Legal Restrictions /
Govt. Regulations
➢ Commercial
Databases
➢ Government or
Industry standards
➢ Academic Research
✓ Financial considerations
✓ Physical environmental
elements
Processes & Procedures Corporate Knowledge Base
➢ Organizational
Standard Processes
such as Standards,
Policies, Procedures
➢ Standardized
Guidelines, Work
Instruction, SOPs,
Proposal Evaluation
Criteria, and
Performance
Measurement Criteria
➢ Templates
➢ Financial Control
Procedures
➢ Procedures for
Prioritizing, approving,
and issuing work
authorization, etc.
➢ Process measurement
databases
➢ Project files from
previous projects
➢ Historical Information
& lesson learned
knowledge bases
➢ Risk Register
➢ Stakeholder Register
➢ Issue and defect
management
databases
➢ Configuration
management
knowledge bases
➢ Financial Databases,
etc.

Projects operating in agile environments where a high degree of
uncertainty exists and where the scope is not yet fully defined, may not
benefit from detailed cost calculations due to frequent changes. Instead,
lightweight estimation methods can be used to generate a fast, high-level
forecast of project labor costs, which can then be easily adjusted as
changes arise. Detailed estimates are:
A. Reserved for short-term planning horizons in a just-in-time fashion.
B. Never developed in an agile project.
C. Only developed if the project stakeholders allow the project manager to
do so.
D. Developed early during the project but are never updated due to
frequent changes.

Ans -A
In agile/adaptive environments, detailed estimates are
reserved for short-term planning horizons in a just-in-time
fashion. The rest of the choices are incorrect. [PMBOK 6th
edition, Page 234] [Project Framework]

92
A formal procedure for sanctioning project work is a:
a) Charter
b) Scope Statement
c) Statement of Work
d) Work Authorization

93
Answer is D.
Notice that the key words are "formal procedure." The document that allocates work is actually
the Charter. But the procedure is called a work authorization system.
The PMBOK defines a work authorization system as "a collection of formal documented
procedures that defines how project work will be authorized to ensure the work is done
by the identified organization, at the right time, and in the proper sequence." This is most
often a written authorization to begin a specific activity or work package that is part of the project
plan.
A work authorization system is used to coordinate when and in what order the work is
performed so that work and people may adequately interface with other work and other
people.

94
You’re the project manager for an industrial design project. Your team
members report to you, and you’re responsible for creating the budget,
building the schedule, and assigning the tasks. When the project is
complete, you release the team so they can work on other projects for
the company. What kind of organization do you work in?
A. Functional
B. Weak matrix
C. Strong matrix
D. Projectized

95
Ans : D.
Projectized
Projectized Organization Structure – PM has more power - Your team members report to PM

96
You’re a project manager working in a weak matrix organization. Which of
the following is NOT true?
A. Your team members report to functional managers
B. You are not in directly charge of resources
C. Functional managers make decisions that can affect your projects
D. You have sole responsibility for the success or failure of the project

97
Ans : D.
You have sole responsibility for the success or failure of the
project

98
The members of your project team have been assigned to your project with general availability
levels of 50%.Yesterday, they reported to you that significant variances occurred during project
execution. You have noted that the team members have been spending less than50% of their
time working on your project. Your project schedule is about to become heavily delayed, and
deadlines are in jeopardy. What should you do?
A. Talk to your sponsor and try to get more resources assigned on similar conditions as the
existing ones.
B. Talk with functional managers. Negotiate clear and written assignments with reliable
scheduling priorities.
C. Ignore the difficulties, adjust your schedule and negotiate new deadlines according to the
slower progress.
D. Focus on internal charges. Make sure that your project is not getting charged for more than
the actual work

99
Ans : B
From the Question it is understood that You are Operating in
Balanced Matrix Organization Structure where PM and FM has
equal power.
Since the Resources are not Devoting Equal amount of Time with
Project, Correct Choice is B

Fill in the blank. _______________ indicates that planning and
Documentation are iterative or ongoing activities.
A. Progressive management
B. Iterative elaboration
C. Waterfall development
D. Progressive Elaboration

Ans :
D - Progressive Elaboration is a characteristic of projects. It allows a
project management team to manage the project to a greater level as
the project evolves. [PMBOK 6th edition, Page 565] [Project
Framework]

What are the three types of PMOs?
A.Project, Program and Portfolio
B.Supportive, Controlling and Directive
C.Plant, Business Unit and Global
D.Projectized, Matrix and Functional

Ans : B
A project management office (PMO) is a management
structure that standardizes the project-related
governance processes and facilitates the sharing of
resources, methodologies, tools, and techniques.
There are 3 Types of PMO : Supportive, Controlling and
Directive

You have been selected as the Portfolio Manager for Company ABC,
which specializes in providing project management services to the
construction industry. As part of your new role, you are asked to
explain your job responsibilities to the CFO. Your job includes:
A. Selection and support of projects or program investments.
B. Managing groups of projects in a coordinated way.
C. Creating unique product, service or result.
D. Progressive Elaboration of projects to ensure customer
requirements are satisfied.

Ans : A
➢ Corporate Top Level Strategies
➢ Decision Making – Related to Investments, Selection of Projects
➢ Prioritization, Review,
➢ Realignment, and
➢ Reprioritization of a firm’s projects.

Which of the following is not a project competing constraint?
A. Budget
B. Procurement
C. Risk
D. Resource

Ans :
B - Six competing project constraints are scope, quality, schedule,
budget, resources and risk. Procurement is not a project competing
constraint. [PMBOK 6th edition, Page 28] [Project Framework]
Competing
Project
Constraints
Scope
Quality

Assume your company is a leader in the market in production of
cereal products. It has been in this market for over 50 years. You are
the project manager for a new product that is a derivative from the
company's core product. As you determine a life cycle for this
project, you believe you should follow one that is______________.
•A. Incremental
•B. Predictive
•C. Iterative
•D. Adaptive

Correct Answer: B
If the product to be delivered is well understood, a predictive life
cycle or one that is fully plan driven is recommended. The project's
scope, time, and cost to deliver it are determined in the project life
cycle as early as possible.

A project manager is managing a research project. Typically, research projects
are not clearly defined and involve a lot of uncertainty. The project has four
phases in which a phase can only start when its previous phase is complete and
each Phase is Repeated Several Times till Correct Deliverable is reached. What
project lifecycle and phase-to-phase relationship should the project manager
use for this project?
A. Predictive lifecycle with sequential phase to phase relationship
B. Iterative lifecycle with sequential phase to phase relationship
C. Predictive lifecycle with overlapping phase to phase relationship
D. Iterative lifecycle with overlapping phase to phase relationship

Ans : B - The project manager should use the Iterative life cycle
since project phases and activities will most probably be repeated as
the project team’s understanding of the project and requirements
increases. Further, since any project phase can only start once its
previous phase has been completed, the phase-to-phase
relationship should be sequential. [PMBOK 6th edition, Page 19]
[Project Framework]

112
The most appropriate project life cycle model for an
environment with a high level of change and extensive
stakeholder involvement in projects to get feedback is:
•A. adaptive
•B. reflexive
•C. predictive
•D. iterative

113
•Ans : A
Adoptive Life Cycle is Flexible or Change-Focused Method (or agile or
change-driven methods) and it Combines both Incremental & Iterative Life
Cycles to Deliver Incremental Small Packages & Repeated take Iterations
(Feedback) for Continuous Improvements.
It is Most Suitable when Scope is Subject to Frequent Changes &
Requires Frequent Interactions with Customer

In Rolling Wave Planning:
(a) Near term work is planned in more detail & Later phases of
project work are planned at a high level.
(b) All planning is completed before starting the actual work
(c) 50% of planning is completed before starting the actual work
(d) Plan all Works whether Near Term or Latter Phases equally
before Execution

Ans: A
Rolling-wave planning is the process of project planning in waves as
the project proceeds and later details become clearer.
Rolling wave planning is a project management technique that involves
progressive elaboration to add detail to the Work Breakdown Structure (WBS) on
an ongoing basis. At the beginning of the project, near term deliverables are
decomposed into individual components (work packages) and defined at the
greatest level of detail. Deliverables and schedule activities that will take place
several reporting periods in the future are more broadly defined.

During a team meeting, a team member asks about the
measurements that will be used on the project to judge performance.
The team member feels that some of the measures related to
activities assigned him are not valid measurements. The project is
BEST considered in what part of the project management process?
A-) Initiating
B-) Executing
C-) Monitoring & Controlling
D-) Closing

Answer is B. Executing. Questions states that team
member feels some of the measures on his activities are not
valid. Therefore, he must be working during the executing
phase of the project where project deliverables are
produced and project members perform most of the work
they should do.
Knowledge Area: Project Management Processes

118
You have been developing a next generation electric engine for
high-speed electric trains. The project is 25% completed, you have
spent 21% of your budget and you are slightly behind the schedule.
The client is worried and asks you to provide him with the progress
and forecasting report as soon as possible. So, you start collecting
information such as the start and finish dates of scheduled
activities, number of change requests, number of defects, actual
costs, actual durations, etc. These are examples of:
(a)Work performance measurements
(b)Work Performance Data
(c)Work performance information
(d)Parameters

119
Answer-2: b
Explanation: Work performance data is raw data on observations and
measurements of the project status; e.g. actual cost, time duration, percentage
of completed work, the number of defects, etc. Work performance information
is an analysis of work performance data against planned progress, for example
actual completed vs planned completion. ‘Work performance measurements’ is
not a term found in the PMBOK Guide 6th Edition.
Reference: The PMBOK Guide, 6th Edition, Page: 26, 95

7
You are working as the project manager for the Museum of History
aiming to build an extension to the current Museum building. You
would like to know what are the restrictions on the plot ratio (i.e.
gross floor area vs site area) of the construction site according to
government requirements. Which of the following would plot ratio be
categorized as:
A. External Enterprise Environmental Factors (EEFs)
B. Organization Process Assets (OPAs)
C. Internal Enterprise Environmental Factors (EEFs)
D. Project Limitation

Ans: A
The plot ratio is determined by the government, it should be
considered as an external environmental factor that cannot be
controlled by the project team (i.e. Enterprise Environmental
Factors).
7

122
Your company has two projects to choose from. Project A is a
billing software project for the Accounts payable department; in
the end it will make the company around $400,000 when it has been
rolled out to all the employees in that department. Project B is a
payroll application that will make the company around $388,000
when it has been put to use throughout the company. After a long
deliberation, your board chooses to go ahead with Project B. What
is the opportunity cost for choosing Project B over Project A?
A. $388,000
B. $400,000
C. $12,000
D. 1.2

123
Ans : B
Opportunity Cost is defined as “the opportunity (potential return) that
will NOT be realized for the second best project not selected”.
Project A
400,000
Not Selected
Project B
388,000
Selected

You are part of a project selection team evaluating three proposed
projects and you need to select the project that would bring the best
return for the organization based on NPV. Project A has an NPV of
$25,000 and an IRR of 1.5, Project B has a NPV of $30,000 and an IRR of
1.25, and Project C has an NPV of $15,000 and an IRR of 1.5. What would
be the opportunity cost of selecting Project B over Project A by
Considering NPV Method?”
a) $15,000
b) $5,000
c) $25,000
d) $30,000

The correct answer is C.
Opportunity Cost is the potential return of the project not selected. In
this case we did not select Project A, so it is $25,000 – Next Best.
There is extra unrelated information in this question; IRR is not relevant
when evaluating opportunity cost. Once all of the unnecessary
information is filtered out the questions is simply asking what is the
dollar value associated with Project A.

For your project, you have hired a freelancer to develop a website in .NET. After
a month, you decide that the freelancer isn’t doing a good job and reach out to
another freelancer. The second freelancer convinces you that your website
project would be better off based on the Java platform. Now you Decided to go
with Java platform. The costs associated with the .NET developer are:
A) Variable
B) Direct
C) Indirect
D) Sunk

Ans : D
Since you have been convinced to go with the Java platform, all of the
.NET related code cannot be used. Therefore, this is an example of
sunk costs

128
A new state-of-the-art computer for your project costs $10K. You expect for it to
last for four years and then sell it for $1K scrap. How much should you book in
depreciation each year for the computer? Assume you are using straight-line
depreciation.
A. $1250
B. $2000
C. $2250
D. $250

129
Ans : C. $2250
(Asset Cost – Scrap Value) / Useful Life
= ($10K – $1K) / 4
= $2250 per year.

130
SN Panigrahi, Essenpee Business Solutions,
India

131
SN Panigrahi SN Panigrahi, Essenpee Business Solutions,
India

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SN Panigrahi
9652571117
snpanigrahi1963@gmail.com
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PMP Exam Chapter Wise Q & A’s Project Management Frame Work - By SN Panigrahi

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PMP Exam Chapter Wise Q & A’s Project Management Frame Work - By SN Panigrahi