Budget Question

Submitted by pmpstudent121 on Fri, 04/03/2015 - 11:58

Hi,

 

Can you please help with this question? I tried searching for this on PMZILLA before but could not find any discussion on this.

 

A project team receives an approved change request from customer. The team has previously estimated that the cost to implement this change is $10,000. The customer has agreed to pay this amount for the additional work. The customer realizes that there is a 50 percent chance that this change will not work and will later be removed. What change, if any, should be made in the budget?
a. The project budget should not be increased
b. The project budget should be increased by $15,000
c. The project budget should be increased by $10,000
d. The project budget should be increased by $5,000

Ans is C.

My understanding is that for contingency we have to use expected monetory value of probability X Impact. Then shouldn't the answer be d?

 

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poonam713

Fri, 04/03/2015 - 13:13

Hi,

 

I think the answer is C since the budget is approved and available. the answer could be A, if there was a change request of not to implement this change, because of posssibility of the change not working.

The answer cannot be D because even if the change is in effective the amount required to implement the change is 10000 and would not reduce.

pmpstudent121

Fri, 04/03/2015 - 13:36

I think it makes sense. The question is asking what change be made to the budget (i.e. baseline) now that the change request is approved. The possibility of the changes not being useful or the risk is a distraction.

The question is focused on the budget change in relation to the approval of change request. If the risk contingency need to be added, it has to go through the Integrated change control to get approval to be added to the budget.

coolpmp69

Fri, 04/03/2015 - 13:37

The correct answer is option C  as the customer has agreed to pay the amount.