210 ◾ PfMP® Exam Practice Tests and Study Guide
16. Each time the Portfolio Review Board meets, components, both proposed
and those in progress, are reviewed in terms of risk. The Board members
are typically risk adverse especially since the company is the market leader
in the package delivery market. However, during the recent holiday season,
it was unable to keep up with the demand as there was tremendous on line
ordering, and the result was bad publicity and extensive customer complaints.
The Board is meeting on Friday to determine what actions to take to mini-
mize these problems. The goal is to:
a. Add new components and reallocate resources
b. Minimize portfolio risks
c. Analyze how to best optimize the portfolio
d. Make decisions concerning existing components
17. Assume you are the sponsor for a new component in your government
agency. The agency has a dened portfolio management process, and a
Portfolio Oversight Group comprised of the agency executives and chaired
by the Administrator. It meets regularly to determine whether existing com-
ponents in the portfolio should be included and whether new components
should be added. As the sponsor, you must follow the Agency’s standard set
of key descriptors as you present your proposal to the Portfolio Oversight
Group. Such descriptors:
a. Ensure all components are comparable
b. Provide a categorized list for ongoing evaluation
c. Address similar Agency needs
d. Optimize the portfolio for value delivery
18. Assume you are the portfolio manager for one of the leading high tech-
nology companies in Silicon Valley, California. Change is constant as your
company works in many areas to be the market leader in its products and
services. The Portfolio Review Board meets weekly to approve new com-
ponents, decide whether others should be terminated, and to rebalance the
portfolio. One goal is to have breakthrough platforms that lead to greater
value. A key to success for successful benets realization from this changing
portfolio is to:
a. Have an easy- to- use PMIS
b. Involve stakeholders
c. Ensure the communications messages are consistent after each meeting
d. Have an easy- to- use rebalancing method
Practice Test 2 ◾ 211
19. Assume you are the portfolio manager for your research and development
business portfolio. It is a critical role as this portfolio represents the break-
through initiatives to be pursued by your automotive company. While you
were not involved in creating the company’s strategic plan, you do monitor
changes that may affect the organization, and also you:
a. Determine the portfolio algorithm to be used
b. Determine the organization’s strategic objectives
c. Provide information on progress and results
d. Select the decision support system to use
20. For many companies difcult market conditions can represent a window
of opportunity in portfolio management. Long- term success may mean
acquisitions as well as shredding or divestiture of some lines of business.
Divestitures then can raise capital for acquisitions. Locating such windows of
opportunity mean:
a. Recognizing portfolio dynamics
b. Focusing on interdependencies between high- priority portfolio components
c. Enhancing potential improvements in the performance of portfolio
components
d. Focusing on generating new portfolio components
21. Assume your dairy cooperative is new to portfolio management. It decided
to embrace it as an audit from the Food and Drug Administration showed
that the cooperative was using inappropriate animal drug residues to test
for milk safety. The audit also revealed the cooperative had not fully imple-
mented mandatory Hazard Analysis and Critical Control Point procedures.
Your executive team realized its focus was too heavily oriented toward
existing products and being the rst to market with new products, and as a
result, it overlooked some components that were mandatory. Now you have
put together portfolio management practices and a portfolio management
plan, and the executive team is serving as the Portfolio Oversight Group. It
is meeting on Friday to optimize the portfolio. At this meeting you should:
a. Provide each member with a copy of the Portfolio Model
b. Have the portfolio roadmap available
c. Discuss the scoring approach you and your staff used to make recom-
mendations as to new components to pursue and others to terminate
d. Provide each member with an inventory of all the work in the portfolio
212 ◾ PfMP® Exam Practice Tests and Study Guide
22. As you work as a portfolio manager, you have a number of activities to per-
form. However, you also recognize they:
a. Reect on the investments made or planned by the organization
b. Identify and align organizational portfolios
c. Measure value versus benets
d. Assist in managing risks and communications
23. You have four possible components to recommend as you work to optimize
the portfolio. There are limited resources in your company, which prides
itself on time to market as an attribute that distinguishes it from its competi-
tors in the automobile parts eld. Each component contributes to the organi-
zation’s strategy. Component A will eliminate features if there is a trade- off
situation. Component B will delay its schedule if necessary. Component C
has a exible structure with a focus on innovative features at a minimum
cost. Component D plans to focus on technical, cost, and schedule as its
metrics to report regularly. You recommend:
a. Component A
b. Component B
c. Component C
d. Component D
24. Recently, your company, a low price but quality department and food store,
had credit card theft, and many customers across the country were affected
adversely. It had not been focusing on brand recognition as an organiza-
tional value area, and now the number of customer complaints is at an
all- time high. Metrics are necessary in the area of customer relationship
management, and new components to repair the quality brand image for
customers are required to be added to the portfolio. This situation shows:
a. These new metrics will not be quantiable and therefore are hard to t
the “SMART” criteria used for portfolio management
b. These metrics will be difcult to collect and achieve positive gains in a
short time frame
c. The portfolio management ofce is ideal to develop and collect the new
metrics
d. The damage to repair the brand image is such that it may be impossible
to completely recover
Practice Test 2 ◾ 213
25. Desiring a federal government career representing security and safety in
terms of downsizing and budget cuts that are so prevalent, assume you
left your position as a portfolio manager at a leading global training rm
and joined the Census Bureau as its portfolio manager. In addition to the
country’s national census every four years on the number of people in
the country, the Bureau conducts other types of censuses periodically.
Most of the employees have been in this Bureau for their entire careers as
it is considered a ‘safe’ place to work, and a risk adverse culture prevails.
However, current executives are concerned that other initiatives should
be pursued so the organization remains independent. This approach
means that:
a. New initiatives should be ones that are considered to be in the high risk/
high benet category
b. Strategic objectives must be optimized
c. An orientation on risk management as both threats and opportunities
should be available to employees
d. The new approach represents a major culture change, and a targeted
communications strategy
26. Working to prepare the portfolio risk management plan, you asked those
stakeholders who have been active proponents of portfolio management
since the CEO announced it was being implemented to work with you. The
stakeholders represent a cross section of the company’s eight business units.
Since the portfolio management plan has been prepared, approved, and dis-
tributed, your team is reviewing it as it contains:
a. Stakeholder risk tolerances
b. Organizational risk tolerance
c. Portfolio resources
d. Portfolio components
27. Each time the portfolio is updated with changes to authorized components,
then documentation is available so work on them can begin. As well, a best
practice to follow as the portfolio manager is to:
a. Provide information to those in portfolio component support functions
b. Update the inventory of existing work under way
c. Update the roadmap
d. Review the organizational process assets to see if updates are required
214 ◾ PfMP® Exam Practice Tests and Study Guide
28. Your organization uses a funding process for components in the portfolio
in which funding is divided between components based on contractual
milestones for the components. This approach has been effective as some
components require a lot of funding immediately to meet a contractual mile-
stone, while others may be in the design phase for some time and not need
as much funding immediately. This is an example of:
a. Information in a report used to authorize the portfolio
b. A funding reconciliation method so that each component in the portfolio
receives funds when they are required
c. An approach to monitor and track portfolio components based on key
milestones
d. A method to effectively use the roadmap to project funding requirements
29. Assume you are preparing your portfolio communications management plan.
You want to structure it in a way that is the most meaningful for your stake-
holders. Therefore, your rst section should:
a. State the recipients of the plan
b. Describe goals and objectives
c. Link the plan to the portfolio strategic plan
d. Present the results of your stakeholder analysis
30. Assume you have been asked to create some portfolio scenarios to aid your
Portfolio Review Board at its upcoming meeting as the company is facing a
20% budget cut. You prepare an expanded version of the roadmap, which is
an example of:
a. An interdependency analysis
b. A prioritization analysis
c. A sensitivity analysis
d. An afnity diagram
31. Your company specializes in accessories for smart phones. Recognizing that
phone companies strive to add new features to phones to stay ahead of the
competition, your company has a strategic goal to ensure its accessories
can be used on future products without change. To do so as the portfolio
manager, you focus on a number of marketing factors as you recognize that
changing one of these factors may affect the entire portfolio or the portfo-
lio’s strategy. To do so, you use:
a. Trend analysis
b. Time- to- market variability
c. Market- payoff variability
d. Market requirement variability analysis
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