PGM Financial Management 3

Question 1

Which benefit of earned value management (EVM) makes it especially valuable for program-level financial oversight compared to simple budget tracking?

Accepted Answer

It integrates scope, schedule, and cost to provide an objective performance measurement

Answer

EVM's key advantage is that it integrates scope, schedule, and cost into a single framework, providing objective insight into program performance rather than just comparing planned versus actual spending.

Question 2

A program sponsor asks the program manager to explain the difference between the program's funding limit and its budget baseline. Which statement is MOST accurate?

Accepted Answer

The funding limit is the total funds available; the baseline reflects the time-phased spending plan

Answer

The funding limit represents the total authorized financial commitment, while the cost performance baseline shows how and when those funds are expected to be spent across the program timeline.

Question 3

What is the purpose of a 'should-cost' analysis in program financial management?

Accepted Answer

To estimate what a product or service should cost based on independent analysis, used to validate vendor proposals

Answer

Should-cost analysis provides an independent estimate of what a deliverable should cost, enabling the program manager to evaluate whether vendor proposals are reasonable and negotiate effectively.

Question 4

Under the Standard for Program Management, who typically holds ultimate authority over the program's management reserve?

Accepted Answer

The program sponsor or governance board

Answer

Management reserve is controlled by the program sponsor or governance board because it represents funding for unforeseen work, requiring executive-level authorization before release.

Question 5

A program is experiencing consistent cost overruns due to scope growth from multiple approved change requests. Which corrective action BEST addresses the root cause?

Accepted Answer

Re-baseline the cost performance baseline to reflect the approved scope changes

Answer

When scope growth is formally approved through change control, the cost performance baseline must be re-baselined to reflect the new authorized scope, ensuring future variances are meaningful.

(PGM) Program Manager Practice Test

(PGM) Program Manager Practice Test

PGM Financial Management 3