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PK0-003 · Question #351

As a result of changes in the economy, it has been communicated that the current costs for needed components have doubled from what was originally budgeted. If the procurement occurs, this would resul

The correct answer is A. Evaluate alternatives that could be used that would result in the same scope to be produced. When faced with significant cost increases exceeding the baseline, the project manager's initial action should be to evaluate internal alternatives to achieve the same scope more cost-effectively.

Project management concepts

Question

As a result of changes in the economy, it has been communicated that the current costs for needed components have doubled from what was originally budgeted. If the procurement occurs, this would result in exceeding the cost baseline for the project. Which of the following actions should the project manager take?

Options

  • AEvaluate alternatives that could be used that would result in the same scope to be produced
  • BUse contingency funds to cover the procurement of the components
  • CCreate a change request to see if the baselines can be revised to incorporate the appropriate
  • DContact the customer to let them know that the costs will be higher, and await approval from the

How the community answered

(40 responses)
  • A
    63% (25)
  • B
    10% (4)
  • C
    23% (9)
  • D
    5% (2)

Why each option

When faced with significant cost increases exceeding the baseline, the project manager's initial action should be to evaluate internal alternatives to achieve the same scope more cost-effectively.

AEvaluate alternatives that could be used that would result in the same scope to be producedCorrect

Before escalating to stakeholders or utilizing contingency funds, a project manager should proactively investigate alternative solutions, such as different suppliers, materials, or methodologies. This aims to mitigate the cost overrun within the project team's control while preserving the defined scope.

BUse contingency funds to cover the procurement of the components

Contingency funds are for known-unknown risks, not typically for systemic baseline changes due to market shifts; using them without further analysis or a change request is generally not the first action for such a large issue.

CCreate a change request to see if the baselines can be revised to incorporate the appropriate

While a change request may be necessary, it should generally follow the exploration of internal solutions, as baselines are formal documents requiring careful consideration before modification.

DContact the customer to let them know that the costs will be higher, and await approval from the

Contacting the customer is an important step, but it should ideally occur after the project manager has explored potential solutions and can present an informed impact assessment and proposed course of action.

Concept tested: Cost management and change control

Source: https://www.pmi.org/learning/library/cost-management-101-6893

Topics

#Cost management#Procurement management#Risk response#Project control

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