PMI SH - Evaluate and Address External Business Environment Chan

A project is under scrutiny for its amount of water usage. The government's water licensing branch is changing its policy to be more restrictive.

What should the project manager do?

• Align project resources to oppose the new water license standard.

• Cancel the project because of the uncertainty introduced with the policy change.

• Assess the impact of the policy change on the project scope.

• Create a new project schedule based on potential changes to the water policy.

Answer explanation

Solution: C. Assess the impact of the policy change on the project scope.

The external business environment for the project has changed, the project manager must reassess the impact on the requirements or scope of the project.

This question and rationale were developed in reference to:

Identifying and Managing Project Risk, 3rd Edition (No Date) Tom Kendrick//6 Managing Project Constraints and Documenting Risks/ [Item SCOPE MODIFICATION

Proposed changes to the project deliverable may be easily accepted, absolutely nonnegotiable, or anything in between. This depends on the project, the sponsors and users, and the type and magnitude of the change. Whatever the circumstances, a conscientious project team will spend at least a little time examining the effect on the project of adjusting the project deliverable. This what-if exercise helps your team understand the work better and provides you with valuable information for decision making.]

A team is working on a new product using a gated approach. After the third sprint they noticed that the market needs may be changing, and the product may not fit the new market needs.

What should the project manager do next?

• Survey the market for possible impacts on the project.

• Change the product’s scope to meet the new needs.

• Finalize the product on time and budget to launch as planned.

• Review the backlog to see the impact of the new needs.

Answer explanation

Solution: A. Survey the market for possible impacts on the project.

The PM needs to evaluate and address external business environment changes for impact on scope, and continually review external business environment for impacts on project scope/backlog

Without surveying the external business environment it is unclear whether the project scope needs to be changed

Launching the product as planned may not accomplish project objectives in light of new business requirements

Reviewing the backlog is immaterial to the decision that is required.

A project manager is asked to manage a project that will allow the company to comply with a new, upcoming regulation. Just after project kick-off, the scope is modified to have the project team now work on specific tasks, while a global team will manage the program for several countries in parallel. The project management plan has not yet been shared, and the deadline to complete the project is fixed.

What should the project manager do to handle the scope and changes?

• Create a risk entry in the risk management plan due to the lack of a global project management plan.

• Formalize the change in the scope with the project sponsor to limit accountability for the specific tasks.

• Review the organizational process assets (OPAs) from similar situations and the approaches that were implemented.

• Define an initial backlog and start working on the clearest tasks, then incrementally refine the scope.

Answer explanation

Solution: D. Define an initial backlog and start working on the clearest tasks, then incrementally refine the scope.

When external factors or business decisions are not certain but there is a fixed deadline, the agile approach allows the formality and the flexibility to take care of the project under a "controlled situation". In order to handle the scope and changes, the project manager should define an initial backlog and start working on the clearest tasks, then incrementally refine the scope.

This question and rationale were developed in reference to:

Essential Scrum: A Practical Guide to the Most Popular Agile Process (No Date) Kenneth S. Rubin//3 Agile Principles/ [Item Accept That You Can’t Get It Right Up Front

Plan-driven processes not only mandate full requirements and a complete plan; they also assume that we can “get it right” up front. The reality is that it is very unlikely that we can get all of the requirements, or the detailed plans based on those requirements, correct up front. What’s worse is that when the requirements do change, we have to modify the baseline requirements and plans to match the current reality (more about this in Chapter 5).

In Scrum, we acknowledge that we can’t get all of the requirements or the plans right up front. In fact, we believe that trying to do so could be dangerous because we are likely missing important knowledge, leading to the creation of a large quantity of low-quality requirements (see Figure 3.7).]

In order to identify and assess the hindering and enabling factors that may affect project delivery as a result of the organization's specific environment, a project manager undertakes an environmental scan.

Which of the following combinations represents some of the factors that will be considered in this scan?

• Laws and regulations, market trends, and new technology.

• Published research, articles, and journals.

• Seminars, exhibitions, and upcoming conferences.

• New technology, seminars, and webinars.

Answer explanation

Solution: A. Laws and regulations, market trends, and new technology

Environmental scanning is a process that systematically surveys and interprets relevant data to identify external opportunities and threats that could influence future decisions. Laws and regulations, market trends, and new technology have the PESTLE factors that an environmental scan will normally look out for.

PESTLE stands for:

Political

Economic

Social

Technological

Legal

Environmental

The other answers are incorrect because they will not provide a comprehensive understanding of the hindering and enabling factors that may affect project delivery as a result of the organization's specific environment. The project manager must assess the laws and regulations, market trends, and new technology to adequately identify and assess environmental factors that may impact project delivery of the business environment as a whole. 

A project manager is assigned to a water treatment investment project. The local government has recently passed a law that requires compliance with clean water according to global standards. This is a new regulation that was initiated in the last month and was quickly passed.

What should the project manager do?

• Inform the stakeholders and continue with the project according to the original plans since the law was passed after the project started.

• Meet with the project sponsor and recommend that the project continue because the new legal requirements can be delivered.

• Conduct an analysis of the impact of the regulation on the project and the business and communicate it to stakeholders.

• Recommend that all work on the project be stopped immediately until the impact of the regulation is understood.

Answer explanation

Solution: C. Conduct an analysis of the impact of the regulation on the project and the business and communicate it to stakeholders.

For a project to be delivered successfully, as the first step, any impact on the projects scope by the business environment must be identified and analysed and the impact on triple constraints [scope, time and cost] needs to be communicated to all stakeholders. Hence this option is correct.

All Regulatory requirements for the project needs to be met for the project to be completed. Hence the Project Manager cannot state that law was passed after the project got started nor can the Project Manager continue with the new regulatory requirement without conducting an impact analysis nor can the Project Manager stop all the work until the impact on the regulation is understood. Hence all these three options are incorrect.

A project manager is leading a project that received a request for additional scope caused by changes in market demand. The change request also seeks a more rapid delivery time frame.

Which two actions should the project manager take? (Choose two)

• Assess company performance and the scope of other projects to ensure minimal impact.

• Organize a workshop with the sponsors and ask them to increase the project budget.

• Collect data and analyze the business environment to validate the business benefits.

• Assess new technologies and competitors, then benchmark the change against them.

• Organize a risk workshop, then update the risk management plan and the risk register.

Answer explanation

Solution: C and E. Collect data and analyze the business environment to validate the business benefits. and Organize a risk workshop, then update the risk management plan and the risk register.

C and E are correct answers, both are referring to preparing a Change Request (CR) to change the project scope and timeframe. Option C) ensure that the PM knows that that the Change Request (CR) should be validated. Any change introduces risk, therefore an update of the Risk Management Plan and the Risk Register are mandatory.

Asking straight for more money or internal and external assessments are not justified. Company performance is not a decision factor in developing a change Request.

A project manager is tracking an infrastructure project that is dependent on a service provider. The service provider informed the project manager that some of the third-party components will no longer be manufactured or supported. Upon an initial review, this would significantly delay the schedule and increase the budget.

What should the project manager do?

• Escalate this issue to the project sponsor.

• Update the risk register.

• Convene a review with the team.

• Update the project status to reflect these findings.

Answer explanation

Solution: A. Escalate this issue to the project sponsor.

External threat beyond scope of project manager should be escalated to project sponsor. This would be significant budget and scope

A project manager is leading a project that requires approval from a government agency. The agency is currently drafting legislation that will impact the project's approval process, but it is unclear when the legislation will become law. The project manager is concerned that the legislation may delay the project's key milestones or limit the project's development options.

What should the project manager do?

• Apply for an additional contingency to prepare for the anticipated delay in project milestones.

• Review the project scope and submit a request to exclude activities associated with the legislation.

• Continuously evaluate exposure to the risk to minimize negative impacts on the project and its outcomes.

• Proceed with the project with the understanding that the pending legislation will pass without delay.

Answer explanation

Solution: C. Continuously evaluate exposure to the risk to minimize negative impacts on the project and its outcomes.

Continuously evaluating exposure to risk allows the project manager to stay informed about developments in the legislation and their potential impact on the project. The project manager should monitor the legislative process closely to identify any potential delays or changes and develop mitigation strategies to minimize the negative effects of legislative changes when they occur.

The other options are incorrect because they make assumptions about the legislation that may not be accurate and do not consider the potential risks and uncertainties associated with it. 

Applying for an additional contingency is not the best solution because allocating resources prematurely could lead to unnecessary costs. There is no clear timeline for when the legislation will become law. At this point, the project manager cannot accurately determine which milestones would be impacted or calculate the appropriate amount of contingency needed. 

Excluding activities associated with the legislation may not be feasible and could reduce the quality or effectiveness of the project. 

Proceeding with the assumption that the legislation will be enacted without delay is risky and could lead to problems. If the legislation is delayed or altered, the project may have to be halted or adjusted abruptly, leading to potential cost overruns and delays.

A project manager had just started a long-term project when the government implemented new legislation that all engineers working in the state need to be registered. Registration is based on work area, experience, and professional development completed in the last 3 years. Due to budget constraints in the company for the past three years, there were limited opportunities for engineers to gain formal professional development.

How should the project manager handle the situation?

• Send a request to the change management board to assess the situation.

• Review the team's skills matrix and update the resource management plan.

• Send all of the engineers to professional development to meet the requirements.

• Inform the engineers that they need to be registered to keep working for the company.

Answer explanation

Solution: B. Review the team's skills matrix and update the resource management plan.

The first step would be to assess each engineer's status and determine where professional development is warranted. Updating the team skills matrix will allow better planning for the projects as you may be able to stagger the implementation of engineers while others are in training. No change request is needed to assess the situation, and it is premature to send all engineers to professional development, before determining which people need it. Requiring all engineers to be registered to continue employment with the company does not address the situation with this project.

A project team just completed an environmental scan and have uncovered a lot of related hindrances that could potentially affect the project delivery negatively. The project manager is working with the team to understand the details of each identified hindrance and how the hindrances relate to each other, in order to understand the overall complexity of the project. This will enable the team to arrive at a plan that addresses the challenges identified.

Which of the following techniques has the project manager used in this instance?

• Pareto analysis

• Critical analysis

• Systems thinking

• Total quality management

Answer explanation

Solution: C. Systems thinking

The Project manager by looking at the connections between the different hindrances to have a full understanding of the picture used system thinking

Total quality management (TQM) is the continual process of detecting and reducing or eliminating errors in manufacturing, streamlining supply chain management, improving the customer experience, and ensuring that employees are up to speed with training.

The Pareto Principle states that 80 percent of a project's benefit comes from 20 percent of the work. Or, conversely, that 80 percent of problems can be traced back to 20 percent of causes. Pareto Analysis identifies the problem areas or tasks that will have the biggest payoff.