ADM Budgeting & Financial Management 1 — Questions and Answers
Question 1: Which budgeting approach aligns best with agile delivery by funding teams rather than projects?
- Activity-based budgeting
- Zero-based budgeting
- Lean portfolio management with capacity allocation (Correct answer)
- Top-down annual fixed budgeting
Correct answer: Lean portfolio management with capacity allocation
Lean portfolio management allocates capacity to stable agile teams, enabling continuous funding without project-by-project approval cycles.
Question 2: An Agile Delivery Manager notices sprint velocity has dropped while burn rate remains constant. What is the most appropriate immediate action?
- Increase the team's headcount immediately
- Conduct a root cause analysis and adjust the sprint plan (Correct answer)
- Request an emergency budget increase from stakeholders
- Cancel the current sprint and restart planning
Correct answer: Conduct a root cause analysis and adjust the sprint plan
A root cause analysis identifies whether the drop is due to technical debt, impediments, or scope issues before committing additional spend.
Question 3: What does 'cost of delay' represent in agile financial management?
- The penalty clause in a vendor contract for late delivery
- The cumulative economic impact of not delivering a feature sooner (Correct answer)
- The overhead cost incurred during a sprint delay
- The additional cost of rework due to defects found late
Correct answer: The cumulative economic impact of not delivering a feature sooner
Cost of delay quantifies the economic value lost per unit of time when a feature or product is not yet available in the market.
Question 4: In an agile context, what is a rolling wave budget?
- A budget that resets to zero at each sprint boundary
- A budget that is detailed for near-term periods and kept high-level for future periods (Correct answer)
- A fixed annual budget divided evenly across sprints
- A budget that escalates automatically based on team velocity
Correct answer: A budget that is detailed for near-term periods and kept high-level for future periods
Rolling wave budgeting provides detailed financial planning for the near term while leaving future periods at a higher-level estimate, matching agile's iterative nature.
Question 5: Which metric best helps an Agile Delivery Manager track financial health at the portfolio level?
- Individual story point completion rate
- Portfolio economic return on investment (ROI) by value stream (Correct answer)
- Number of user stories completed per sprint
- Total lines of code produced per quarter
Correct answer: Portfolio economic return on investment (ROI) by value stream
Portfolio ROI by value stream connects delivery output to business value, giving financial insight at the strategic portfolio level.
Question 6: When using throughput-based forecasting, what does an Agile Delivery Manager primarily rely on to predict project costs?
- Earned value management (EVM) calculations
- Historical cycle time and throughput data (Correct answer)
- Stakeholder-estimated story points
- Fixed-price vendor quotes
Correct answer: Historical cycle time and throughput data
Throughput-based forecasting uses historical delivery rates (items completed per period) to predict future output and associated costs without requiring story point estimation.
Question 7: How does an Agile Delivery Manager typically handle unplanned work that exceeds the sprint budget?
- Automatically approve the overage and report it post-sprint
- Defer it to the backlog for prioritization in the next planning cycle (Correct answer)
- Immediately stop all current sprint work to address it
- Renegotiate the entire project contract with the client
Correct answer: Defer it to the backlog for prioritization in the next planning cycle
Unplanned work is captured in the backlog so the product owner and team can prioritize it against current commitments, protecting the budget boundary.
ADM Budgeting & Financial Management 1
Which budgeting approach aligns best with agile delivery by funding teams rather than projects?