PSI Project and Financial Management 3

Question 1

What is the purpose of a project charter?

Accepted Answer

To formally authorize the project and grant the project manager authority

Answer

A project charter formally authorizes a project and grants the project manager authority to apply resources to project activities.

Question 2

Which financial metric calculates the time required to recover the initial investment from a project?

Accepted Answer

Payback Period

Answer

The payback period measures how long it takes for a project's cumulative cash inflows to equal its initial investment.

Question 3

A project manager identifies that a key vendor may not deliver on time. Which risk response strategy involves negotiating a penalty clause with the vendor?

Accepted Answer

Risk transfer

Answer

Risk transfer shifts the financial consequence of a risk to a third party, such as through contracts with penalty clauses or insurance.

Question 4

What is float (or slack) in project scheduling?

Accepted Answer

The amount of time an activity can be delayed without delaying the project end date

Answer

Float is the amount of time a task can be delayed without affecting the project's overall completion date.

Question 5

Which budgeting technique requires managers to justify every expense from scratch each budget cycle?

Accepted Answer

Zero-based budgeting

Answer

Zero-based budgeting starts from zero each period and requires justification for all expenses, rather than adjusting the prior budget.

PSI - Exams Practice Test

PSI - Exams Practice Test

PSI Project and Financial Management 3