PFMP · Question #204
A portfolio manager is managing a portfolio as described in the following table: The CEO has requested that the portfolio manager calculate the health of the portfolio to achieve the benefits to the…
The correct answer is B. below expectations but within tolerance. Applying the weighted health index formula: Portfolio Health = (CPI × 0.80) + (SPI × 0.20). Based on the data provided in the referenced table, the resulting weighted score falls below the ideal benchmark of 1.0, meaning the portfolio is underperforming relative to…
Question
A portfolio manager is managing a portfolio as described in the following table:
The CEO has requested that the portfolio manager calculate the health of the portfolio to achieve the benefits to the organization. The organization has placed more importance on the CPI metric than the SPI metric, weighting cost at 80% and schedule at 20%. The organization considers the portfolio health to be acceptable if benefits are within a +/- 2% tolerance level. The portfolio manager can conclude that in relation to performance expectations, the portfolio’s health is:
Exhibit
Options
- Abelow expectations and out of tolerance.
- Bbelow expectations but within tolerance.
- Cabove expectations but out of tolerance.
- Dabove expectations and within tolerance.
How the community answered
(35 responses)- A11% (4)
- B60% (21)
- C23% (8)
- D6% (2)
Explanation
Applying the weighted health index formula: Portfolio Health = (CPI × 0.80) + (SPI × 0.20). Based on the data provided in the referenced table, the resulting weighted score falls below the ideal benchmark of 1.0, meaning the portfolio is underperforming relative to expectations. However, the deviation from the expected benefit level is within the organization's defined tolerance band of +/- 2%. This means the portfolio is technically below expectations (not at the ideal benchmark) but is still considered acceptable because it has not breached the tolerance threshold. This distinction-below expectations but within tolerance-is critical in portfolio health reporting: it signals a need for monitoring and corrective consideration without triggering an escalation or formal intervention.
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