Your sponsor has committed to building a high-speed rail from one major inland city, Azules, to the coast. You have two possible routes, either Brazos or Corazon. Given each route's costs, odds, and rewards of high demand and low demand in this decision tree, how would you quantify the expected monetary value of the route to Brazos?

A. 1.6 billion
B. -2 billion
C. 0.8 billion
D. 10.8 billion

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HINT: The expected monetary value is an important calculation in performing decision tree analysis as part of the Perform Quantitative Risk Analysis process. You must account for not only the cost of the decision, but the probability and payoff for each effect.
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All our questions are updated to the latest A Guide to the Project Management Body of Knowledge (PMBOK^® Guide) standard. Stop by at http://free.pm-exam-simulator.com/ and try the PM Exam Simulator free for 7 days. We are a Project Management Institute (PMI)^® Registered Education Provider.

Answer and Explanation:
The correct answer is C.

The expected monetary value is an important calculation in performing decision tree analysis as part of the Perform Quantitative Risk Analysis process. You must account for not only the cost of the decision but the probability and payoff for each path.

In a decision tree, the EMV for a decision is calculated by multiplying the value of each possible profit outcome by its probability of occurrence and adding the products together.

The value of each possible outcome is the net path value. Remember: when you net something, you should consider both positive and negative flows. The formula to compute net path value is to subtract the path reward minus the cost of its decision.

For building the route to Brazos, here are the steps to compute the expected monetary value:
EMV = 0.8(12B - 10B)] + 0.2(6B - 10B)
EMV = 0.8(2B) + 0.2(-4B)
EMV = 1.6B - 0.8B
EMV = 0.8B

Other answer choices do not properly factor the net path value (the payoff minus the cost of the decision) and sum the effects.

Below is the completed decision tree with all the net path values and the resulting expected monetary value of each choice. The EMV for the Brazos route is 0.8 billion, and the EMV for the Corazon route is -5.2 billion (note this is a negative number). Since the path with the largest expected monetary value is the Brazos route at .8 billion, that is the best choice.

Details for each option:

A. 1.6 billion
Incorrect. You might choose this answer if you merely multiply one path's chance by its net path value. For each decision branch, all effects are added to determine the expected monetary value. Even if you chose the most valuable path, the expected monetary value in a decision tree must include all effects.

B. -2 billion
Incorrect. You might choose this answer if you merely added the net path values. However, to compute the expected monetary value, you must factor the probability of each payoff occurring.

C. 0.8 billion
Correct. To calculate the expected monetary value of the route to the Brazos, you multiply each path's chance by its net path value and sum the results. EMV = 0.8(2B) + 0.2(-4B) = 1.6B + -0.8B = 0.8B

D. 10.8 billion
Incorrect. You might have chosen this answer if you merely multiplied the probability by the payoff, e.g. (0.8*12+0.2*6). However, you must also account for the cost of the decision to build the route to Brazos, so this is not the best answer.

Reference: A Guide to the Project Management Body of Knowledge (PMBOK^® Guide) – Sixth Edition, Project Management Institute Inc., 2017, Page(s) 435

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In a software development project, if the developers could start fixing bugs two days after the testers begin testing, this arrangement implies:

A. A start-to-finish relationship with a 2-day lead
B. A start-to-start relationship with a 2-day lead
C. A start-to-finish relationship with a 2-day lag
D. A start-to-start relationship with a 2-day lag

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HINT: Note the difference between lead and lag.
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All our questions are updated to the latest A Guide to the Project Management Body of Knowledge (PMBOK^® Guide) standard. Stop by at http://free.pm-exam-simulator.com/ and try the PM Exam Simulator free for 7 days. We are a Project Management Institute (PMI)^® Registered Education Provider.

Answer and Explanation:
The correct answer is D.

A lag is the amount of time whereby a successor activity will be delayed with respect to a predecessor activity. Thus, if the development team could start resolving issues two days after the testers started testing, it means that the two tasks have a start-to-start or SS relationship with a 2-day lag.

Details for each option:

A. A start-to-finish relationship with a 2-day lead
Incorrect. A situation where bug fixing can start 2 days after testing is a start-to-start relationship.

B. A start-to-start relationship with a 2-day lead
Incorrect. Lead is the amount of time that a successor activity can be advanced from a predecessor activity. In this case, it is a start-to-start relationship where the successor activity is being delayed, not advanced.

C. A start-to-finish relationship with a 2-day lag
Incorrect. Bug fixing can start 2 days after testing starts is a start-to-start relationship.

D. A start-to-start relationship with a 2-day lag
Correct. Lag is the amount of time that the second activity can be delayed with respect to the previous activity. Thus, the question scenario describes a start-to-start relationship with 2- day lag.

Reference: A Guide to the Project Management Body of Knowledge (PMBOK^® Guide) – Sixth Edition, Project Management Institute Inc., 2017, Page(s) 192-193

In a pharmaceutical project, human trials have been started. The CEO is thrilled about the success of the trials up to this point. She announces that the size of the patient pool for the trials should double from the one originally planned and results tracked in the new system launching this week. What should the project manager do first?

A. Ramp up production to match the demand of the CEO
B. Consider what might be included in a change request
C. Adjust the scope baseline to reflect the increased trial size
D. Communicate the change of direction with the stakeholders

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HINT: Does the project team have the approval to make changes?
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All our questions are updated to the latest A Guide to the Project Management Body of Knowledge (PMBOK^® Guide) standard. Stop by at http://free.pm-exam-simulator.com/ and try the PM Exam Simulator free for 7 days. We are a Project Management Institute (PMI)^® Registered Education Provider.

Answer and Explanation:
The correct answer is B.

Managing changes to the project by following the organization's change control process established for the project is important in keeping the project under control and operating effectively. Changes to scope, like in the scenario of doubling the size of the patient pool as well as tracking the results in the new system, require evaluation, agreement, and approval. Who makes those approvals is up to the project organization and its change management plans. But before any changes are implemented or communicated, the change request must be submitted per the project's procedure and approved by those authorized to do so. A CEO's declaration of what should happen in the project does not substitute for the project's change control procedures and the Perform Integrated Change Control process.

Details for each option:

A. Ramp up production to match the demand of the CEO
Incorrect. Without a formal approval of the scope change, the production should not increase regardless of who requested the change (the CEO in this scenario).

B. Consider what might be included in a change request
Correct. The CEO wants to change the project scope. The CEO has to submit a change request (or likely the project manager on behalf of the CEO) to the change control board to consider and make a decision on the change request.

C. Adjust the scope baseline to reflect the increased trial size
Incorrect. If the change to increase the trial size is approved, the scope baseline is likely to be updated. However, the scope baseline is under configuration control. The change in scope has not yet been approved. The scope baseline remains as is until the change has been formally approved.

D. Communicate the change of direction with the stakeholders
Incorrect. No changes to scope and project plans have been approved and implemented. Until that time, communicating the change of plans is premature. Other communications about the situation, the considerations, discussions of the risks, status, and other topics can be communicated.

Reference: A Guide to the Project Management Body of Knowledge (PMBOK^® Guide) – Sixth Edition, Project Management Institute Inc., 2017, Page(s) 170