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PMP · Question 21 · Task 5: Plan and manage budget and resources

A project manager is reviewing the budget performance and notices that the project is currently over budget due to higher than expected resource costs. The sponsor is concerned about cost overruns and wants to understand the future budget implications. The project is 60% complete with a CPI of 0.85. What should the project manager do FIRST?

Answer options:

A.

Calculate the Estimate at Completion (EAC) to project the final project cost based on current performance

B.

Implement immediate cost reduction measures to bring the project back on budget

C.

Request additional budget from the sponsor to cover the cost overruns

D.

Analyze the root causes of the higher resource costs to prevent future overruns

How to approach this question

When sponsors are concerned about budget implications, provide data-driven projections first to enable informed decision-making before implementing solutions.

Full Answer

A.Calculate the Estimate at Completion (EAC) to project the final project cost based on current performance✓ Correct
EAC calculations provide stakeholders with data-driven projections of final project costs based on current performance, enabling informed decisions about budget management strategies.

Common mistakes

Students often choose immediate cost reduction (B) or budget requests (C), missing the need to first provide analytical projections that enable informed stakeholder decision-making.
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