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PFMP · Question #393

Due to a strategic change, multiple components on your portfolio have been terminated, leaving you with limited remaining funds coming from the terminated components. What should be your best course…

The correct answer is B. Return the funds to the organization. When portfolio components are terminated, any freed-up funds must be returned to the organization as a matter of proper governance and financial control.

Portfolio Governance

Question

Due to a strategic change, multiple components on your portfolio have been terminated, leaving you with limited remaining funds coming from the terminated components. What should be your best course of action?

Options

  • ASince the funds are limited, you can leave them with you and use them as equity protection for
  • BReturn the funds to the organization
  • CSince the remaining budget is limited, the portfolio manager can directly assign it to ongoing
  • DRe-activate one of the terminated components because you have additional budget

How the community answered

(26 responses)
  • A
    8% (2)
  • B
    81% (21)
  • C
    4% (1)
  • D
    8% (2)

Why each option

When portfolio components are terminated, any freed-up funds must be returned to the organization as a matter of proper governance and financial control.

ASince the funds are limited, you can leave them with you and use them as equity protection for

Retaining funds as equity protection is not a sanctioned role for a portfolio manager; financial decisions of this nature rest with the broader organization.

BReturn the funds to the organizationCorrect

Funds allocated to terminated components belong to the organization, not the portfolio manager, and portfolio governance principles require that these funds be returned to the organization for reallocation through proper decision-making channels. Independently redirecting or retaining these funds would bypass organizational financial authority and violate governance protocols.

CSince the remaining budget is limited, the portfolio manager can directly assign it to ongoing

Directly assigning remaining budget to ongoing components without organizational approval circumvents governance processes and exceeds the portfolio manager's authority.

DRe-activate one of the terminated components because you have additional budget

Re-activating a terminated component solely to consume available budget is not a strategic or governance-compliant action and contradicts the reason the component was terminated.

Concept tested: Portfolio governance and fund return after termination

Source: https://www.pmi.org/pmbok-guide-standards/foundational/standard-for-portfolio-management

Topics

#Portfolio Financial Management#Portfolio Governance#Budget Management#Component Termination

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