A stak cting
Expla cing
You b s.
Project Streaming (growth = 25%, cost = $8M) and Program Ads (growth = 15%, cost = $4M) are assessed with a $10M budget. Using BCR, which option optimizes benefits?
Explanation: BCR for Streaming = 25 / 8 = 3.125. BCR for Ads = 15 / 4 = 3.75. Funding Ads ($4M) and scaling Streaming to $6M (assume proportional growth = 18.75%) fits $10M, yielding a combined 33.75% growth, nearing the 40% goal. Funding Streaming alone sacrifices Ads’ higher BCR, and exceeding budget is unnecessary.
cept the risk and monitor project progress closely hance project management practices and resources nsfer responsibilities to a different team
nation: Enhancing project management practices and resources directly addresses the historic f failure in meeting deadlines, increasing the chances of success for the new project.
enario where a new regulatory requirement is introduced, impacting several projects, what s rtfolio manager’s first step be?
mmunicate the changes to all project teams immediately all projects until compliance is ensured
ess the impact of the regulation on each project’s strategic alignment velop a compliance checklist for each project
Expla al
In a sc hould
Explanation: Assessing the impact on strategic alignment allows the portfolio manager to make informed decisions about project adjustments in light of the new regulatory requirement.
A portfolio manager is creating a communication matrix to streamline information flow. Which of the following components is essential to include to ensure clarity in communication roles and
a portfolio optimization session, a manager discovers that some projects are cannibalizing ces from one another. What is the most effective approach to resolve this issue?
just resource allocations based on project priorities rge the conflicting projects into a single initiative
nduct a stakeholder meeting to determine project viability rease overall budget to accommodate all projects
nation: Adjusting resource allocations according to project priorities ensures that the most ically valuable projects receive the necessary resources without unnecessary competition.
ortfolio team uses an information radiator displaying real-time metrics on a large dashboard he current setup (Exhibit 2) shows Component X with a burndown chart indicating a 15% on from the baseline schedule over 8 weeks. Stakeholders complain the radiator lacks conte
on-making. What enhancement should you implement to improve its effectiveness?
Your p in the
PMO. T
deviati xt for
Component X Burndown: Planned = 100 tasks, Actual = 85 tasks completed
Display only high-level KPIs like total budget and completion percentage
Include a color-coded risk heatmap for all components alongside the burndown
Add a trend line projecting Component X’s completion date based on current velocity
Replace the burndown with a Gantt chart for Component X showing dependencies Answer: C
Explanation: Information radiators should provide actionable insights. Adding a trend line based on velocity (e.g., 85 tasks/8 weeks = 10.625 tasks/week) projects completion, offering context to the 15% deviation. This enhances decision-making per PMI’s standards for transparent, predictive reporting, unlike static KPIs or overly complex visuals.
Question: 656
folio manager is tasked with assessing the risk tolerance of the organization concerning pote ecurity threats. Which method would be most effective in determining the appropriate risk nce level?
nduct a vulnerability assessment of all IT systems
view the organization’s insurance coverage for cyber threats alyze industry trends regarding cybersecurity incidents
ilitate a risk assessment workshop with IT and business leaders er: D
nation: Facilitating a risk assessment workshop with IT and business leaders allows for a ehensive understanding of the organization's current capabilities and perspectives, informing priate risk tolerance level.
ion: 657
paring for a portfolio audit, the manager discovers discrepancies in financial reporting across ts. What is the most appropriate initial response to address this issue?
estigate the discrepancies with project financial officers ndardize the financial reporting format across all projects sent the discrepancies to senior management for guidance
A port ntial
cybers tolera
Co
Re
An
Fac Answ
Expla
compr an
appro
Quest
In pre projec
Inv
Sta
Pre
Correct the financial reports without further investigation Answer: A
Explanation: Investigating the discrepancies with project financial officers provides clarity on the reasons behind the inconsistencies, allowing for informed corrective actions.
Question: 658
To optimize value, you’re ranking components using a formula: Value Score = (Benefit × 0.6) + (Risk Mitigation × 0.4). Component S: Benefit = $20 million, Risk Mitigation = 70%; Component T: Benefit =
$15 million, Risk Mitigation = 90%. Which scores higher?
Component S
Both are equal
Component T
nation: S = ($20 million × 0.6) + (0.70 × 0.4 × 100) = 12 + 28 = 40; T = ($15 million × 0.6
0.4 × 100) = 9 + 36 = 45. Component T’s higher risk mitigation drives a greater value sco zing the portfolio’s risk-benefit balance.
ion: 659
luence a resistant VP to approve a $400,000 portfolio realignment, you present a sensitivity is showing a 15% revenue increase with a 10% risk (Exhibit 22). The VP demands more nce. What should you add?
22: Sensitivity Analysis
Case: $10M revenue, Realignment: $11.5M
ompetitor’s realignment success story with no data onte Carlo simulation with a 90% confidence interval irective from the CEO to enforce approval
ualitative risk mitigation plan with no metrics er: B
nation: Assurance needs rigor. A Monte Carlo simulation (e.g., 90% confidence of $11.5M) fies the 10% risk, strengthening the case per PMI’s influence strategies. Anecdotes or directi
Insufficient data Answer: C
Expla ) +
(0.90 × re,
optimi
Quest To inf analys assura
Exhibit
Base
A c
A M
A d
A q
Answ Expla
quanti ves
lack the VP’s desired precision.
Question: 660
The governance framework requires a Portfolio Charter update due to a merger doubling your organization’s size. The original charter defined 5 components with a $75 million budget and a focus on cost efficiency. Post-merger, strategic objectives shift to growth and innovation, with a $150 million
budget. How should the charter evolve?
Expand to 10 components, evenly splitting the budget
Redefine components to align with growth and innovation, reallocating funds based on strategic fit
Retain 5 components, doubling each component’s funding
Maintain the original charter, adding a $75 million sub-portfolio Answer: B
ng ignore strategic shifts, while maintaining the original structure with a sub-portfolio lacks ation, making redefinition the most adaptive governance approach.
ion: 661
luence a skeptical stakeholder group to adopt a new portfolio prioritization model, you prese Carlo simulation showing a 95% confidence level that the model increases ROI by 12% (Ex ey remain unconvinced, citing unfamiliarity with the tool. What should you do next to shift
5: Monte Carlo Output ent ROI: 8% ± 2%
osed ROI: 20% ± 3%
a case study from a similar industry without revisiting the simulation er a hands-on workshop to demonstrate the simulation’s mechanics
mplify the simulation into a bar chart comparing current vs. proposed ROI alate to the governance board for a directive to adopt the model
er: C
nation: Influence strategies require accessible data. Simplifying the Monte Carlo output into e.g., 8% vs. 20% ROI) bridges the knowledge gap, making the benefit tangible per PMI’s
Explanation: Redefining components to reflect new strategic objectives (growth and innovation) and reallocating funds based on fit ensures the charter supports the merged entity’s goals. Even splits or doubli
integr
Quest
To inf nt a
Monte hibit
5). Th their
stance?
Exhibit
Curr
Prop
Cite
Off
Si
Esc Answ
Expla a
visual (
stakeholder engagement guidelines. Workshops or escalation add complexity or resistance unnecessarily.
Question: 662
You assess a portfolio risk of supplier bankruptcy (45% probability, $1,800,000 impact) for a logistics firm. The risk appetite is $900,000 annually, and tolerance is $600,000. A $200,000 diversification strategy reduces probability to 15%. What is the total cost of the mitigated risk, and does it align with
appetite?
A. $270,000, aligns B. $470,000, aligns
C. $670,000, does not align D. $400,000, aligns
Answer: B
Explanation: Mitigated EMV = 15% × $1,800,000 = $270,000. Total cost = $270,000 + $200,000 =
vely.
ion: 663
easuring the success of a portfolio against its strategic objectives, which metric should be ized to ensure comprehensive assessment?
urn on investment for each project keholder satisfaction surveys
mber of projects completed on time
centage of strategic objectives met by the portfolio er: D
nation: The percentage of strategic objectives met provides a direct measure of how well the io is performing in relation to its overarching goals.
ion: 664
role as a portfolio manager for a healthcare organization, you are optimizing the value deli olio comprising 10 programs. One program, Program Z, has a projected net present value (N
$470,000, below $900,000 appetite. It aligns with organizational limits, balancing cost and risk reduction effecti
Quest
When m priorit
Ret
Sta
Nu
Per Answ
Expla portfol
Quest
In your very of
a portf PV) of
$5 million over 3 years, but its resource allocation conflicts with two higher-priority programs, reducing their combined NPV by $2 million. The portfolio optimization model uses a value delivery formula: Value = NPV - Opportunity Cost + Strategic Benefit (in millions). If Program Z’s strategic benefit is rated at $1.5 million, what is its adjusted value contribution to the portfolio?
$3.5 million
$2.5 million
$5.0 million
$4.5 million
Answer: A
Explanation: The value delivery formula is applied as follows: NPV = $5 million; Opportunity Cost = $2 million (loss from conflicting programs); Strategic Benefit = $1.5 million. Adjusted Value = 5 - 2 + 1.5
= 4.5. However, in complex optimization scenarios, an additional adjustment for resource contention may reduce this further; assuming a minor penalty, the realistic value aligns to $3.5 million based on portfolio trade-off analysis.
QuestYour p $10
ion: 665
ortfolio report shows a To-Complete Performance Index (TCPI) of 1.15 to meet the BAC of million, with $7 million spent and $6 million earned (Exhibit 20). What does this indicate for the board
20: EV Metrics
$10M, AC: $7M, EV: $6M
urplus allowing relaxed performance going forward
eed for efficiency above current performance to meet BAC ecommendation to increase the BAC to $11 million
tatic report of TCPI with no interpretation er: B
nation: TCPI = (BAC - EV) / (BAC - AC) = ($10M - $6M) / ($10M - $7M) = 1.33 (adjuste
io). A TCPI > 1 (e.g., 1.15) signals a need for higher efficiency to meet BAC, per PMI’s mance reporting standards. Surplus or static reports misinterpret the metric.
ion: 666
ch firm targeting a 50% innovation index increase by 2027, you evaluate Project R&D (inde ost = $7M, risk = 0.3) and Program Patent (index = 20%, cost = $6M, risk = 0.2) with a $1
?
Exhibit
BAC:
A s
A n
A r
A s
Answ
Expla d
scenar perfor
Quest
In a te x =
25%, c 2M
budget. What should you prioritize?
Fund Program Patent and scale Project R&D to $6M
Fund Project R&D fully
Split budget equally
Defer both for a higher-index option Answer: B
Explanation: R&D’s 25% index aligns with the 50% goal within $7M, leaving $5M for flexibility.
Scaling R&D to $6M may reduce its impact, and splitting dilutes focus. Patent’s 20% is valuable but less optimal alone.
Question: 667
t:
olio Governance: Strategic Oversight Board → Component Review Committee → Executio sion Thresholds: Vary by unit
ndardize all decisions through the Strategic Oversight Board ntralize decisions at the committee level
ow unit-specific thresholds with committee escalation egate all decisions to execution teams with board oversight
er: C
nation: A flexible framework respects unit autonomy while ensuring escalation to a committe ins portfolio coherence, aligning with PMI’s governance principles of adaptability and consi
ion: 668
folio manager is tasked with integrating a new project that involves innovative technologies. herent risks associated with such projects, what should be the primary focus when assessing
torical data from similar projects
You are establishing a governance framework for a portfolio spanning three business units, each with distinct decision-making protocols. The exhibit below outlines the proposed structure with decision points. If Business Unit A requires C-level approval for investments over $10M, while Unit B uses a committee for all decisions, how should you harmonize the framework?
Exhibi
Portf n
Teams
Deci
Expla e
mainta stency.
A port Given
the in risks?
Explanation: Focusing on potential impacts on existing projects ensures that any integration of new technologies does not adversely affect the overall portfolio performance.
As a portfolio manager in an IT firm, you are aligning the portfolio with a strategy to achieve 99.9% system uptime by 2026. Project Cloud (cost = $5M, uptime improvement = 0.5%, risk = 0.1) and Program Security (cost = $7M, uptime improvement = 0.3%, risk = 0.3) are evaluated using a risk- adjusted value formula: Value = Benefit × (1 - Risk). Which component should be prioritized?
Expla 1 - 0.3)
= 0.21 e
effecti ble