220 ◾ PfMP® Exam Practice Tests and Study Guide
46. Assume you are working to optimize your portfolio, and your management
is interested in your using quantitative analysis as you do so. You are consid-
ering four possible components but only can recommend one given resource
constraints Each one has benets supporting the company’s strategic goals
and objectives, but you are to recommend the one with the shortest payback
period. Project A is estimated to cost $100,000 to implement with annual net
cash inows of $25,000. Program A is estimated to cost $75,000 with inows
of $20,000. Program B is estimated to cost $225,000 with inows of $80,000.
Project B is estimated to cost $275,000 with inows of $90,000. You have net
present value (NPV) data available as follows:
Project A NPV at Program A NPV at Program B NPV at Project B NPV at
5% = $2,399 5% = $2,105 5% = $6,400 5% = $4,065
10% = $3,112 10% = $1,254 10% = $3,275 10% = $1,852
15% = $1,402 15% = $1,001 15% = $1,679 15% = $925
Based on these data, you recommend:
a. Project A
b. Program A
c. Program B
d. Project B
47. Although there is a talent gap in the program and project management
elds, in your government agency because of the economic downturn, many
people lost their jobs, and the challenge is to do ‘more with less’ to justify the
agency’s existence. As the portfolio manager, you have an inventory of the
work that is under way and has been authorized. You also have documented
acceptable ranges for optimal resource capacity utilization in your:
a. Resource management plan
b. Risk management plan
c. Performance management plan
d. Portfolio value plan
48. Assume the Portfolio Review Board met and made some recommendations
for changes to ve portfolio components as it passively accepted changes to
three components and actively accepted changes to two others. As the port-
folio manager, you need to:
a. Update changes in the portfolio component lists
b. Update the portfolio issues register
c. Reassess overall portfolio risks
d. Reassess overall organizational risks
Practice Test 2 ◾ 221
49. Your railroad has been using a formal portfolio management process for
more than 10years; it also as an Enterprise Program Management Ofce for
its programs and projects. One way the Portfolio Management Ofce can
best work with and support the Enterprise Program Management Ofce is by:
a. Using the Portfolio Ofce to negotiate for resources to support
components
b. Providing frameworks and methodologies to support portfolio, program,
and project management in the railroad
c. Forecasting resource supply and demand
d. Assisting in risk identication and risk strategy development and commu-
nicating all risks and issues to all stakeholders
50. Assume your organization set up a pilot project in one business unit to see
the benets from a dened portfolio process during the past year. The pilot
uncovered several projects that were under way that did not contribute to
the organization’s current strategies but had not been terminated. It also
revealed gaps as some key objectives were not supported. The results of
using portfolio management were positive, and as the portfolio manager for
this business unit, you were selected as the portfolio manager for the com-
pany. You explained a key rst step was to:
a. Prepare a portfolio charter
b. Set up a portfolio roadmap
c. Set up a governance structure at the highest level chaired by the CEO
d. Document communications required for successful implementation
51. Assume you are managing a portfolio in a business unit in your telecommu-
nications company. You have set up the process to follow to authorize com-
ponents to be in the portfolio and have an active Portfolio Review Board.
One Board member, who recently joined the company, used dashboard
reporting on portfolio status at his previous company and has asked you to
prepare dashboard reports every two weeks. This means:
a. The purpose is to chart progress
b. In addition to visual graphs, you will provide comments
c. Your focus is on events
d. The reports are periodic snapshots
222 ◾ PfMP® Exam Practice Tests and Study Guide
52. In your construction company, assume the Construction Industry takes each
company in various markets and rates it from best in class to the worst in
terms of overall customer satisfaction, quality, and health and safety. In the
past three years, your rm’s rating has been decreasing, and this year it was
last on the list. Your executives now realize drastic action is required and is
reexamining its portfolio. They have approved business cases for new pro-
grams and projects to reverse this trend. To do so, senior managers are leading
these new components, a PMIS has been established, and you are leading a
Portfolio Management Ofce. You prepared a portfolio strategic plan and an
innovative communications plan. In four years, the rm moved to number
two on this list. You attribute success to:
a. Strong executive support
b. Development of a robust yet customized portfolio management process
c. Stakeholder engagement from the start
d. A structured portfolio performance plan
53. Assume you work actively since you are the portfolio manager with your
stakeholders to provide a framework that is best to operationalize the stra-
tegic goals and objectives. However, your oil and gas company recently
acquired a major competitor, and it now is the largest in your country. Since
this merger, the company has completely changed its strategy. You realize
detailed stakeholder analysis is critical because:
a. The merger means the composition of the Review Board will change
b. Continuity and alignment of expectations are critical to success
c. The mix of components in the portfolio will change
d. You need stakeholder support for the portfolio function to continue
54. A PMIS can be a simple spreadsheet or a sophisticated software system.
Since your organization has a mature portfolio management process in use,
assume it has an enterprise software system to support it. This system is
used by component managers, the portfolio manager and staff, the portfolio
management ofce, and stakeholders at all levels, including executives. Such
an advanced system is helpful in that:
a. It links to the project management information system
b. It enables resource optimization
c. It has measures and templates for reporting
d. It links to the staff members’ knowledge, skills, and competency proles
Practice Test 2 ◾ 223
55. Assume you live in Canada where hurricanes typically are extremely
rare except for remnants of those from the U.S. and Caribbean off
Newfoundland. You are the portfolio manager for Canada’s Weather Service.
You have been tracking the number of hurricanes that have affected the coun-
try, and you found the trend is increasing as is the intensity of the storms.
Some have affected Nova Scotia and Prince Edward Island. When the hur-
ricanes strike, the Weather Service is ill equipped to provide sufcient warn-
ing for them as is done in the U.S. You feel that the Weather Service requires
new components to be in the portfolio, and the Portfolio Oversight group
agrees. This situation shows:
a. The need for reports to address trends and show variance analysis
b. The changing nature indicative of all portfolios
c. The need to update the strategic goals and the corresponding portfolio
strategic plan
d. An emphasis on risk management may lead to new components
56. Assume you are the portfolio manager for your transit company, the largest
in your country. You planned to expand the commuter train lines to serve
more commuters and to set more lines up with higher rates of speed that
were non- stop trains. Other new components involved expanding the bus
service and making the buses more energy efcient. However, a major com-
muter train derailment caused many fatalities, and as a result, all new com-
ponents are on hold pending safety inspections at the Federal, State, and
City levels by mass transit ofcials. This means:
a. Compliance programs now have the highest priority in your portfolio
model
b. The strategy for the transit company requires change
c. You need approval to update the portfolio strategic plan
d. The next step is to inform sponsors of the proposed components that
they are deferred until further notice
57. Assume you are the leader of the portfolio planning team, and your team is
working with the Portfolio Review Board to prepare templates and examples
for performance measures and performance targets. Once these are in place
the next step is to:
a. Document them and provide them to component managers
b. Establish a focus group for validation that these metrics can be collected
easily
c. Prepare an orientation session for interested stakeholders on these mea-
sures and targets
d. Have the Portfolio Review Board obtain approval by the executive team
224 ◾ PfMP® Exam Practice Tests and Study Guide
58. You are setting up a portfolio management process in your baby food com-
pany as the CEO wants to expand and also enter the pet foods business
where it lacks any presence. As you work to set up portfolio management,
you are dening how the company’s assets and resources will be planned in
the portfolio based on the corporate environment, which means you are:
a. Preparing the governance model
b. Using organizational process assets
c. Following environmental factors
d. Establishing portfolio assets
59. Although you used communication requirement analysis as you prepared
your communications management plan, you plan to again use it to deter-
mine effective ways to manage portfolio information. One reason why it will
be helpful is that it:
a. Can determine the most effective ways to communicate portfolio status
b. Can provide advanced warning to decision makers regarding market
trends affecting the portfolio
c. Can build forecasts based on trends in the data
d. Can communicate multiple messages on portfolio status
60. Assume you are the portfolio manager of a leading department store that
specializes in high- end clothing, furnishing, and other items. It is exclusive,
and many cities in your country want a store. The existing stores recently
added a bistro, and each one is recommended highly. However, last month
your store was the victim of cyber security fraud across the country. You
now need to actively restore the image of the store to continue to attract
wealthy shoppers. You have a series of components to recommend, but after
conducting a supply and demand analysis, you nd that to sustain strategic
alignment, you must recommend to the Portfolio Governance Board that it:
a. Postpone some planned openings of three stores
b. Put existing components on hold to reallocate resources to restore brand
image
c. Update existing portfolio resource allocations and schedules
d. Provide new funding to the components to restore the store’s image
while continuing with the existing portfolio mix
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