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CBAP · Question #16

You are the business analyst for your organization and you are preparing the business case for a proposed solution. You need to include the management horizon in your business case. What is the…

The correct answer is D. It is the point in time for the solution to break even on cost and begin earning a profit. The management horizon in a business case is the point in time at which the proposed solution recoups its costs and begins generating a net profit, also known as the break-even point.

Strategy Analysis

Question

You are the business analyst for your organization and you are preparing the business case for a proposed solution. You need to include the management horizon in your business case. What is the management horizon?

Options

  • AIt is the expected deliverables that will be beneficial for the organization.
  • BIt is the point in time when the solution will be completed.
  • CIt is the duration of each phase of the project until the solution earns a profit.
  • DIt is the point in time for the solution to break even on cost and begin earning a profit.

How the community answered

(42 responses)
  • A
    5% (2)
  • B
    14% (6)
  • C
    5% (2)
  • D
    76% (32)

Why each option

The management horizon in a business case is the point in time at which the proposed solution recoups its costs and begins generating a net profit, also known as the break-even point.

AIt is the expected deliverables that will be beneficial for the organization.

Expected deliverables that will be beneficial to the organization describe the expected benefits or outcomes of the solution, not the management horizon.

BIt is the point in time when the solution will be completed.

The point in time when the solution will be completed describes the project completion date or go-live milestone, not the financial break-even concept.

CIt is the duration of each phase of the project until the solution earns a profit.

The duration of each phase until the solution earns a profit describes a phased financial timeline, which is not the standard definition of management horizon.

DIt is the point in time for the solution to break even on cost and begin earning a profit.Correct

The management horizon represents the future point at which cumulative benefits from the solution equal cumulative costs, meaning the investment has broken even and subsequent returns represent profit. This metric is critical to a business case because it tells decision-makers how long they must sustain investment before realizing a financial return. It is used alongside ROI and NPV to justify the viability of the proposed solution.

Concept tested: Management horizon and break-even analysis in a business case

Source: https://www.iiba.org/standards-and-resources/babok/

Topics

#business case#management horizon#break-even analysis#financial planning

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