PSI Project and Financial Management 4

Question 1

A project's NPV is calculated as -$50,000. What should a project manager recommend?

Accepted Answer

Reject the project because it will destroy value

Answer

A negative NPV means the project's costs exceed its discounted future benefits, indicating it will destroy value and should generally not be pursued.

Question 2

Which change control process step comes immediately after a change request is submitted?

Accepted Answer

Evaluating the impact of the proposed change

Answer

After submission, a change request must be analyzed for its potential impact on scope, cost, schedule, and quality before any decision is made.

Question 3

What is the Schedule Performance Index (SPI) formula?

Accepted Answer

SPI = Earned Value / Planned Value

Answer

SPI = EV / PV; a value greater than 1.0 means the project is ahead of schedule, while less than 1.0 means behind schedule.

Question 4

A project manager is using bottom-up estimating. Which characteristic best describes this approach?

Accepted Answer

Detailed estimate built by aggregating individual work package estimates

Answer

Bottom-up estimating develops detailed cost estimates for individual work packages that are then rolled up to produce a total project cost.

Question 5

What is the primary goal of earned value management (EVM)?

Accepted Answer

To integrate scope, schedule, and cost measurements to assess project performance

Answer

EVM provides an objective measure of project performance by integrating scope, schedule, and cost baselines into a single framework.

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