PFMP · Question #647
Over the years, your organization has grown significantly as it has entered new markets while maintaining its presence in its traditional product line of security systems. The company now has eight…
The correct answer is D. Changes are required as to how funds are allocated. The scenario reveals a structural funding problem: the financial allocation model was designed for a three-business-unit organization and cannot transfer funds between units. With eight business units and newly authorized components in three of them, the existing funding…
Question
Over the years, your organization has grown significantly as it has entered new markets while maintaining its presence in its traditional product line of security systems. The company now has eight different business units rather than three, which was the case only two years ago, and it set up funding originally such that it was only allocated to one business unit and could not be transferred to others. At the recently held Portfolio Oversight Committee meeting, five business units did not add components, but some were completed. The other three added a number of programs and projects, which were authorized. Now funding for these new components is an issue. This means:
Options
- AAnother Committee meeting is required to focus on the funding problem
- BThe sponsors of the newly authorized components need to work with their business units to
- CThe three business units need to evaluate their portfolios and recommend termination of some
- DChanges are required as to how funds are allocated
How the community answered
(34 responses)- A9% (3)
- B6% (2)
- C3% (1)
- D82% (28)
Explanation
The scenario reveals a structural funding problem: the financial allocation model was designed for a three-business-unit organization and cannot transfer funds between units. With eight business units and newly authorized components in three of them, the existing funding structure is no longer fit for purpose. The correct response is to change how funds are allocated-updating the portfolio's financial governance model to reflect organizational reality. Scheduling another committee meeting (A) or expecting sponsors to negotiate internally (B) are workarounds, not solutions. Recommending termination (C) punishes the active business units rather than addressing the root cause.
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