Practice Test 2 (5/19)

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Practice Test 2 ◾ 225

61. Assume you are the portfolio manager for the leading toothpaste company.

As a major sporting event soon will be under way in which counties from

throughout the world will be participating, your company learned today that

some feel toothpaste may be used to conceal explosives. You want to ensure

your products are completely safe, and no tampering is possible so you

decide to add a component and announce it through a press release. This is

an example of a(n):

a. Structural risk

b. Execution risk

c. Unknown unknown

d. Need for a management reserve

62. Different stakeholders require involvement in governance activities at differ-

ent times in portfolio management. In your new camel milk portfolio, a new

venture for the dairy cooperative, phase- gate reviews should include repre-

sentatives from:

a. Engineering

b. Manufacturing

c. Research and development

d. Legal

63. Your portfolio stakeholders review a number of reports each month to moni-

tor the overall value of the value of the components to the business. One

report of interest shows the assigned resources to components and then

shows how much work is completed and how much is remaining with work

tracked in person days. Such a report is a:

a. Resource prioritization report

b. Funnel diagram

c. Histogram

d. Burn- down chart

64. You are working to ensure you identify how often the various stakeholder

groups require information about the status of the portfolio and how to best

provide it to them. You also decide to conduct a review of your analysis in

order to:

a. Ensure redundant information is not provided

b. Ensure consistent messages are delivered regardless of the frequency

c. Determine how the information will be stored and retrieved

d. Ensure all portfolio information is provided

226 ◾ PfMP® Exam Practice Tests and Study Guide

65. Assume you are the portfolio manager for your natural gas distribution system

company. It is considering acquiring a transmission company in the same area

of the country, and this acquisition, once approved by regulatory authorities,

will broaden the portfolio enormously. You have organized the portfolio for

your company by categories, and this approach is benecial as it:

a. Enables appropriate balancing

b. Provides a way to use software easily in prioritization

c. Identies those components in greatest need of key subject matter

experts

d. Ensures components in each category have a common goal

66. As the portfolio manager, you and your team collect a variety of tangible

and intangible metrics to assess performance of the components in the portfo-

lio. Each component manager submits reports to the sponsor, who consolidates

them and sends them to you. You and your team then prepare a report for the

Portfolio Review Board. As portfolio management has evolved in your new prod-

uct development company in the past nine years, a metric now of interest is:

a. Internal rate of return

b. Net present value

c. Sustainability

d. Cycle time reduction

67. Having worked in the portfolio management eld for more than 10years,

you realize having an up- to- date roadmap is extremely useful as it promotes

portfolio management and shows the ‘to- be’ state in a way that is visually

appealing. The dependencies and integration of the components in the road-

map also inuence:

a. The portfolio organizational structure

b. The number of sub- portfolios in the organization

c. The portfolio processes to follow

d. The portfolio management plan

68. Previously, you were the portfolio manager for a consulting company, but

given the downturn in the economy and its decreased revenues, you applied

for and were offered the position of portfolio manager for a major pipeline

company. It has not implemented portfolio management before, and you

know a strategic plan is useful. You are nding its preparation to be more

difcult than when you did so at the consulting company because:

a. It is a completely new function

b. There are external environmental factors to consider

c. People require training in why portfolio management is needed

d. The company’s growth and ROI are strong

Practice Test 2 ◾ 227

69. Assume you are working to prepare your portfolio communications plan.

You have started the process of preparing your stakeholder analysis. You

found many stakeholders are unsure as to how their work ts into the over-

all portfolio and want information about it. This means:

a. You should set up a dashboard to portray the overall priorities in the

portfolio

b. A forecast of the portfolio’s direction would be helpful

c. The roadmap is useful to show the portfolio’s structure

d. An assessment of the value of the portfolio should be part of the plan

70. The dynamic nature of portfolio management makes it difcult to imple-

ment. If the organization has dened processes to follow and an engaged

Portfolio Review Board that meets regularly, components will be added to

the portfolio, and others will be terminated or deferred. When components

are removed from the portfolio, the organization then:

a. Revises its component categories

b. Reallocates resources

c. Revises the portfolio performance plan

d. Revises the portfolio strategic plan

71. It is important to have a dened process in place to determine the priority

of each component in the program for many reasons, one of which is to:

a. Guide talent development

b. Minimize risks

c. Understand strategic objectives

d. Document assumptions and constraints

72. Assume you have completed your risk probability and impact assessment.

Since you work in a non- regulatory environment and also one in which the

potential effect of legislation is low on your portfolio’s components, these

types of risks probably do not require additional work. However, a best

practice is to:

a. Continue to monitor them if the strategy changes

b. Conduct some scenario analyses to determine whether or not further

analysis is required

c. Realize further investment is not needed on these risks

d. Maintain them on a watch list

228 ◾ PfMP® Exam Practice Tests and Study Guide

73. It is estimated that billions of dollars are lost annually because of software

projects that cannot be completed or on other software projects that are

completed but later are found to have effects. Often the problem is the

lack of capability of the assigned resources to do the work, and defects are

identied at the time the software is to be delivered. Because of the costs

involved with resource misallocations, your company decided it would

develop an economics- based model it then could sell to others to best allo-

cate resources to software projects. Such an approach:

a. Will not be helpful unless agile development will be used

b. Can support resource capacity analysis

c. Can model scenarios to use resources based on priorities

d. Will be useful in dependency analysis

74. As a portfolio manager in an organization that is in the process of formal

implementation of portfolio management, you reviewed a number of prioriti-

zation models and software packages that could be used. You then decided

on a scorecard approach focusing on alignment to strategy, ROI, risk, and

dependencies. This approach:

a. Is documented in the portfolio strategic plan

b. Is documented in the portfolio performance plan

c. Receives stakeholder buy in from the communications plan

d. Is part of the governance model

75. Your company has embraced portfolio management. Each business unit has

a Portfolio Review Board that meets monthly for detailed reviews and pri-

oritization, and the company’s executives meet quarterly to prioritize at the

corporate level. There are numerous artifacts to maintain, especially these

governance decisions. As the corporate portfolio manager, you decided to:

a. Establish a portfolio management information system

b. Establish a portfolio management portal

c. Maintain a governance decision register

d. Establish a portfolio knowledge management system

76. Assume you are considering a proposed project to be part of your portfolio.

But, when the Portfolio Review Board met, it realized it could not consider it as

overhead because of its size, and it was not time to treat it as a capital invest-

ment because of nancial constraints in your oil company. It also is considered

to have many risks associated with it. You decide the best approach is to:

a. Set it up to treat the project as an option

b. Inform the project’s sponsor to resubmit it at a later time

c. Prepare a NPV analysis

d. Use probability and decision- tree analyses

Practice Test 2 ◾ 229

77. Assume you have decided to use interviews and questionnaires to help

identify risks on an ongoing basis and to maintain a risk register. You plan

to have a report available on the top ten risks that might affect the portfolio,

either positively or negatively, and assess the probability and impact of the

ten on this list. The list will change, and you then will update members of

the Portfolio Review Board and other interested stakeholders. In your portfo-

lio risk plan, you should:

a. Document this approach in the methodology section

b. Use subject matter experts to validate your approach before you prepare

your risk plan

c. Select risks to be in the top ten with at least one from your ve risk

Table of Contents for Practice Test 2 (5/19)

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Table of Contents for
Practice Test 2 (5/19)