CAPM Practice Tests - Business Analysis Frameworks

The project sponsor expressed concerns to the project manager about whether the resulting product would meet business needs. Therefore, the project sponsor is looking to keep costs to a minimum.

What should the project manager do?

• Identify and implement the requirements for making a Minimum Viable Product (MVP).

• Gather all requirements and execute the project using an incremental approach.

• Exclude certain stakeholders from the scope definition process in order to limit requirements.

• Sign with the sponsor a fixed-cost contract to limit project costs.

Answer explanation

The Minimum Viable Product (MVP) is used to define the scope of the first release by identifying the requirements that would deliver value to customers (PMBOK Guide 7th Edition, page 243).

Option B: An incremental approach is not suitable for the described scenario since the client won't get a usable product until the end of the project. It's not appropriate to exclude certain stakeholders in order to limit requirements.

Option C: The project manager should involve all stakeholders in the process of collecting and prioritizing product features.

Option D: A fixed-cost contract will not solve the problem in the described scenario since the main concern of the sponsor is verifying the product's business demand.

A project manager determines viable options and provides recommendations about the investment efficiency of two potential projects by implementing valuation techniques. Knowing that the discount rate is unknown, what should the project manager do?

• Choose the project that has the highest ROI

• Choose the project that has the lowest ROI

• Choose the project that has the highest NPV

• Choose the project that has the lowest NPV

Answer explanation

Calculating a project's Net Present Value (NPV) requires knowing its discount rate (i):

Net Present Value (NPV) = Future payment (F) / | (1 + Discount rate (i) ) ^ number of periods in the future the cash flow is (n) ].

Since this is not an option in the described scenario, the project manager should rely on the Return On Investment (ROI) and pick the project with the highest value. (The PMI Guide to Business Analysis, page 90)

An organization is considering two potential projects with identical payback periods. After conducting a benefit measurement analysis, the project manager discovers that Project B has a higher Internal Rate of Return (IRR) than Project A. Which project should the organization select?

• Project A

• Project B

• There is no difference

• The available information is not enough to make a decision

Answer explanation

The Internal Rate of Return is the annual rate of growth a project is expected to generate.

The higher the IRR, the more desirable an investment is. Project B has a higher IRR, thus it will obviously be selected over Project A.

The customer sends the project manager a document outlining the new project's requirements. While checking the document, the project manager struggles to understand some of the requirements, outputs, and especially the ultimate goal of the project. What should the project manager do next?

• Ask the customer for clarification

• Reject the new project as it involves a lot of ambiguity

• Start planning the first iteration

• Acquire a team to help analyze the project requirements

Answer explanation

In case of ambiguity, the project manager should first ask for clarifications from the customer before making any further decisions.

Option C: The project involves unclear requirements and objectives. Thus, it's not appropriate to start planning project work or acquire a team without first creating a clear vision of what the project consists of.

To guide the development team on what they intend to achieve, a product owner provides a table that includes the key deliverables of each quarter of the 9-month project. What artifact does this table represent?

• Product vision statement

• Product wireframe

• Product roadmap

• Product backlog

Answer explanation

A product roadmap is a strategic plan that highlights the key components of a product that are scheduled for delivery across a portfolio, program, or several project iterations or releases, including the likely order in which these components will be delivered (The PMI Guide to Business Analysis, page 55).

The product roadmap indicates where the product is headed in both the short and long terms. In agile organizations, the product roadmap serves as a guide rather than a project plan.

Option A: A product vision statement outlines what a product would look like to ultimately achieve its vision and give purpose to its existence. A vision statement should be short, simple, and specific.

Option B: The Product wireframe is a mockup or a sketch of the user interface, high-level functionality, page layout, etc.

Option D: The product roadmap is different from the product backlog in that the product roadmap provides the big picture while the product backlog tackles the practical and feasible steps required to tangibly create the product.

A business analyst is eager to implement a new solution for the company. The stakeholders requested an assessment of the business value it will bring.

What should the business analyst do?

• Conduct a cost-benefit analysis

• Use a benchmarking technique

• Conduct a feasibility study

• Conduct a feature injection

Answer explanation

A cost-benefit analysis evaluates the financial return of implementing the solution by comparing the expected benefits against the costs. It's an effective way to assess the business value of a solution.

Option B: Benchmarking typically involves comparing a company's performance or processes to industry standards or best practices. While useful for understanding relative performance, it doesn't directly assess the specific business value of a new solution.

Option C: A feasibility study assesses whether a project or solution is viable and can be successfully implemented. It focuses more on the practicality of the solution rather than its business value.

Option D: Feature injection involves breaking down and analyzing features to understand their value and implementation. While this can help in understanding specific aspects of a solution, it doesn't directly assess the overall business value.

The project team finds out that several implemented features deviate from what is specified in the scope statement.

Which document should the project manager consult to address the issue?

• WBS

• WBS dictionary

• Requirements traceability matrix

• Project charter

Answer explanation

The traceability Matrix is a document that maps requirements as well as other aspects of the project.

It's used as evidence to confirm that requirements have been fulfilled, as it typically documents those requirements along with issues and test results (PMBOK Guide 7th Edition, page 189).

To validate requirements, a business analyst used a technique illustrated by the following graph.

What technique did the business analyst use?

• Focus Groups

• Nominal Group

• Brainstorming

• Delphi

Answer explanation

Delphi is a consensus-building method that consolidates anonymous input from subject matter experts (SMEs) using rounds of voting (The PMI Guide to Business Analysis, page 228).

A project team is actively working on creating a solution and preparing it for delivery to the business.

In which phase of the project would this activity take place?

• Execution

• Planning

• Monitoring and controlling

• Closure

Answer explanation

In the Execution Phase, the project team develops, implements, and delivers the solution to the business. This phase involves carrying out the work defined in the project plan, managing resources, and ensuring that the deliverables meet the project's objectives.

Option B: The Planning Phase involves creating detailed plans to guide the execution and control of the project. This includes defining tasks, schedules, budgets, resources, and risk management strategies. While crucial for setting up the project, this phase does not involve implementing or delivering the solution.

Option C: The Monitoring and Controlling phase involves tracking the project's progress, ensuring it stays on track with the plan, and making adjustments as needed. This phase is about oversight and control rather than the active development or delivery of the solution.

Option D: The Closure Phase marks the formal completion of the project. In this phase, final deliverables are handed over, project documentation is completed, and a post-project review may be conducted. Although this phase may include the final delivery of the project outcome, it does not involve the actual development or implementation of the solution, which is done during the Execution Phase.

An organization has appointed a new project manager to replace the one who recently left.

What should the new project manager do first?

• Check the issue log and the lessons learned register for any serious problems

• Check the project charter to understand the project's goal and business case

• Check the project management plan to learn about the project baselines

• Check the stakeholders' register to start interacting with the different parties involved in the project

Answer explanation

First and foremost, the project manager has to understand why the project is being created in the first place; aka its business case. Moreover, the project manager should be aware of the project's predefined goals. These two elements along with the main deliverables are all defined in the project charter.