cost management - funding limit reconciliation

Submitted by vijayavadrevu on Sat, 03/30/2013 - 12:09

A seller submits an invoice that is outside the funding limit reconciliation completed during project planning. What is the least likely cause?

A) An activity is taken longer to complete than planned

B)The critical path was fast tracked during project planning

C)Equipment was received earlier than planned

D)There was a cost increase to the successor activity of a critical path activity

Correct answer is given as (B). Can someone explain the concept?

 

Forums: 
PMP / CAPM exam Question bank
  • Log in to post comments
  • 4206 reads

Renji2013

Sat, 03/30/2013 - 14:10

The invoice is assumed to be generated during the execution phase. The Question is LEAST Likely to cause..


A. Work took Longer than expected : will increase costs. This is not delay. Delayed work doesnt increase the costs.


B. Fastracking which was planned: The works got parallely executed with the resources originally planned. So no increase likely for the cost ( if crashed it would have increased)


C. Equipment receved earlier. Will increase costs for this invoice because, the cost was accounted for a later period of time


D. Cost increase for the next activity in CP. Yes, will also  increase the cost, but that is not included in this time frame invoice


hence, Im not able to decide between B and D 


 


 

vijayavadrevu

Sat, 03/30/2013 - 17:28

 The hint given is "Final funding limit reconciliation would have been done after fast tracking"

Can the solution be explained now?? I would like someone to explain the concept final funding limit reconciliation

Renji2013

Mon, 04/01/2013 - 02:36

When the budget is determined which usually happens after the project schedule is created in the planning time, the time phased budget requirement of the project is cross checked for actual frunding available from the organization. We will be usually using the funds from organization, but later get it billed from the client of course. The funds from the org are not coming in the same rate as the project requires , it comes typically in Steps/phased disbursements. Hence, there is an adjustment required in the project schedule, eg  to re destrubute the taks or to introduce delays etc. Hence  whatever tasks relationships that was established in planning will ensure that, FLR will not be broken, while the execution is in swing. And also see that based on the contract established, the invoicing can happen multiple times during the execution phase.


In the Q, now I saw the hint clearly. Fastracking is already established on the project schedule [planned]. So, among the 4 choices, this is the LEAST likely one to over ride the allotted funds during this partcular invoice cycle.


Does this make sense ? Did I miss something ?


Renji


 

sspawar

Sun, 03/31/2013 - 03:01

 question is not clear, either author is unable to explain his comprhension or his/her concepts are missing something.

-----------------------

PMBOK p178 - def is clear 

sandeepdel

Mon, 04/01/2013 - 00:47

 Normally when seller complets the activity it sends a bill or invoice to buyers for a payment .and this happens in execution phase only. The choices given in this question, a,c & d falls in execution process so chances are there that some activities could violates funding limits for a particular period . And option b is in planning so b will  not outline the funding limits as in planning we are suppose to consider all dimensions of project mgt.