PM Test Center

Processes in the Initiating process group are:

A. Develop Project Charter, Identify Stakeholders
B. Develop Project Charter, Develop Preliminary Scope Statement
C. Develop Project Management Plan, Identify Stakeholders
D. Develop Project Management Plan, Plan Communications, Identify Stakeholders

Answer: A. Develop Project Charter, Identify Stakeholders
Develop Project Charter from the Integration knowledge area and Identify Stakeholders from the Communications knowledge area are the only two processes in the Initiation process group.

Your company is in the process of deciding whether to continue with Project A or terminate it and begin Project B instead. You have already invested 12 months and $100,000 on Project A. It will take another 24 months and $50,000 to complete it. Project B is actually a better solution since the end product will result in a greater long-term savings. However, it will take 18 months and $250,000 to complete. Additionally, all time and money spent on Project A already would be wasted. Which project should the company chose?

A. Project A because the company has already spent 12 months and $100,000
B. Project A because it is still more inexpensive than Project B
C. Project B because time and money spent on Project A is irrelevant to the decision
D. Project B because it can be completed in less time than Project A

Answer: C. Project B because time and money spent on Project A is irrelevant to the decision
When a decision is being made from a cost perspective, expended (or sunk) costs are ignored. The goal is to make the best decision regardless of what paths were taken prior to that point in time.

While determining which project to pursue, your management decides to use net present value (NPV) as the key criteria. If the NPV for Project X is 12,000 and the NPV for Project Y is 15,000, which project should be chosen?

A. Project X
B. Project Y
C. Either can be chosen since the numbers are so close
D. NPV cannot be used to chose projects

Answer: B. Project Y
The net present value (NPV) is basically the value of total benefits minus the costs. It is can be used to determine which project to embark on. If you are comparing project using NPV, the higher the value, the better.

While determining which project to pursue, your management decides to use internal rate of return (IRR) as the key criteria. If the IRR for Project X is 10% and the IRR for Project Y is 8%, which project should be chosen?

A. Project X
B. Project Y
C. Either can be chosen since the numbers are so close
D. IRR cannot be used to chose projects

Answer: A. Project X
The internal rate of return (IRR), in simple terms, is the rate at which inflows and outflows are equal. Often times, it is used to determine which project to embark on. If you are comparing projects using IRR, the higher the percentage, the better.

All of the following are functions of a project charter except:

A. Formalizes a project
B. Describes project deliverables in detail
C. Identifies a project manager
D. Documents initial requirements

Answer: B. Describes project deliverables in detail
A project charter is created in the Develop Project Charter process and provides all of the functions listed with the exception of describing project deliverables in detail, which is a function of a project scope statement that is created in the Define Scope process.

Which of the following statements about project scope and product scope is true?

A. Product scope ensures effective flow of a project while project scope is used to create a product.
B. Project scope and product scope can be used synonymously.
C. Product scope cannot be used to describe a project but project scope can be used to describe a product.
D. Project scope refers to work that needs to be accomplished to create a product; product scope refers to features that characterize a product.

Answer: D. Project scope refers to work that needs to be accomplished to create a product; product scope refers to features that characterize a product.
All other choices are false.

You are in the initiating phase of the project. After the project charter is created, which of the following processes would you mostly likely work on next?

A. Collect Requirements
B. Acquire Project Team
C. Plan Communications
D. Identify Stakeholders

Answer: D. Identify Stakeholders
Develop Project Charter and Identify Stakeholders are the only two processes that fall under the Initiating process group. The charter is also a key input when identifying stakeholders for the project. The stakeholder register, an output of Identify Stakeholders process, becomes an input to Collect Requirements and Plan Communications.

You have just been hired as a project manager for a telecommunications company. You are tasked with managing a project that will create smaller cellular phones. The business case for this is based on:

A. Organizational need
B. Strategic offering
C. Social need
D. Technological advance

Answer: D. Technological advance
The business case, which helps determine whether a project is worth the investment, is an input to the Develop Project Charter process. Strategic offering is noise so of the three real choices (market demand, ecological impact and customer request are the other three possible business cases), technological advance is the most accurate.

There are two projects being evaluated but only one can be undertaken. Your finance department decides to use Benefit Cost Ratio (BCR) to help make the decision. Before they even perform the BCR, they inform you that a possible outcome is that neither is a good fit for the organization and you may have to find another solution. After completing their analysis they determine that Project A has a BCR of 0.8 and Project B has a BCR of 0.6. Based on their BCR scores, you should:

A. Choose Project A
B. Choose Project B
C. Choose neither and seek alternative projects
D. Ask for more information to make a decision

Answer: C. Choose neither and seek alternative projects
A Benefit Cost Ratio (BCR) weighs benefits against costs. A BCR of 1.0 means that benefits equal costs. Anything over 1.0 represents that benefits outweigh the costs. For instance, a BCR of 3.5 means that benefits are 3.5 times the costs. Conversely, a BCR of under 1.0 shows that the costs outweigh the benefits. Unless the project must be completed, such as meeting a regulatory requirement, a BCR under one should not be started. In this example, both projects have a BCR of under 1.0.

While developing a charter, you are asked to consider enterprise environmental factors. These may include all of the following except:

A. Historical information
B. Marketplace conditions
C. Government standards
D. Industry standards

Answer: A. Historical information
Enterprise environmental factors can include government standards, industry standards, organization infrastructure, and marketplace conditions. Historical information is an organizational process asset.