PMP Question #1071: Real Exam Question with Answer & Explanation

Question

A bank is considering building another branch in one of three neighboring cities. The project manager has been tasked with demonstrating the benefits of building a new branch, renting an existing building, or not expanding at all. How should the project manager proceed?

Options

• APerform a gap analysis on renting in each of the locations.
• BCalculate the costs for each option in each location and compare the net present value (NPV) for
• CPerform a Kano analysis on building a new branch versus renting in each of the locations.
• DCalculate the payback period (PBP) for building a new branch in each location versus renting an

Explanation

The project manager needs to evaluate the financial viability and benefits of three different expansion strategies across multiple locations for a bank.

Common mistakes.

• A. A gap analysis identifies the difference between the current state and a desired future state but does not primarily focus on the financial benefits or comparative cost-benefit of different implementation strategies.
• C. Kano analysis is used to categorize customer preferences and satisfaction levels for product features, not for evaluating project financial feasibility or comparing expansion strategies.
• D. While payback period (PBP) is a financial metric, NPV is generally preferred for long-term investment decisions as it considers the entire project lifespan and the time value of money, unlike PBP which only focuses on how quickly the initial investment is recovered.

Concept tested. Project financial analysis, investment appraisal techniques

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