PfMP Portfolio Management Professional (PfMP) Questions and Answers

One of your team members came to you asking about the risk "Watch List"; he heard this term in a meeting on risk analysis and did not know what it meant. What will your advice to your team member be?

In a portfolio, data is an abundant asset, and managing the information aiming for a a better decision making is critical. For this you use a variety of Quantitative and Qualitative analysis methods. These methods are performed in 4 of the portfolio management processes and serve a slightly different purpose in each and every one of them. Considering that you are currently performing risk assessment and handling risk responses, how can you make use of the quantitative and qualitative analysis?

Managing risk is key to the success of any initiative. Risk is considered to be inherent in any activity we do in project management and at any level. Risk is incorporated in all process groups as well. As a portfolio manager, how do you map the risk management elements to process groups?

When managed correctly, the balanced scorecards can change the way an organization does business. Balanced scorecards keep focus on results. Which of the following are factors that can be targeted by the Balanced Scorecards method?

Along your portfolio lifecycle, you have been conducting multiple review meetings to ensure continuation from one phase to another and to ensure the alignment and value delivery, in addition to communicating decisions and valuable information to the related stakeholders. Changes to the approach of portfolio governance may be a result of review meetings. Which of the following options include updates to the governance model?

Portfolio managers tend to use the efficient frontier analysis as a modeling approach that gives decision makers the analytical tool to optimize portfolios given resource constraints such as risk. In which of the Portfolio management processes the efficient frontier is mostly used

Managing risk is key to the success of any initiative. Risk is considered to be inherent in any activity we do in project management and at any level. Risk is part of project, program and portfolio management and has a different exposure in each and every one. Multiple risks have already been spotted in your portfolio and you are now identifying, assessing and developing risk response plans for them, in addition to monitoring and controlling them. What are you looking for? You were finding this hard at first however you asked the help from a senior portfolio manager and he redirected you to use

Assume you are the portfolio manager for a leading drug store in your country that offers numerous products. In the past four years, nearly every store has had to enlarge its pharmacy unit and hire additional staff members with the aging population. Observing this change, two years ago, stores set up clinics to provide customers with immediate care. As you see the growth in the stores in the health arena, you are looking at trends and realize:

When we talk about portfolios, programs and projects, it is inevitable to mention the business value which is the sum of tangible and intangible assets of an organization, also known as the net quantifiable benefit. When it comes to business value, at which level of the organization is the delivery of Business Value optimized?

The Scenario Analysis is used twice as a tool and technique, once while developing the charter and another time while managing Supply and Demand (It also exists as part of the quantitative and qualitative analysis as part of the optimize Portfolio process). When it comes to Manage Supply and Demand, which of the following represents a correct description of the Scenario Analysis?

Even though you do not work in an industry that is heavily regulated by your government, such as in new product development, health, or safety, recently your government issued a mandate that senior management of all corporations must certify the accuracy of reported financial statements to prevent any accounting fraud. These controls are to be implemented in the next fiscal year. This obviously is not in your portfolio strategic or management plans but is an example of a(n):

Roadmaps may be prepared to show different elements, and at the beginning they may not provide details of the various components. As a high-level plan at the portfolio level, the roadmap:

As a portfolio manager you visit and re-do the Optimize Portfolio process continuously. Which of the following, in your opinion, is the objective/purpose of the Optimize Portfolio Process?

You have been recently assigned to a critical portfolio in your company and wanted to start right away and decided to begin with aligning the strategic management of the portfolio to the organizational strategy and objectives. For this you will use

Your Portfolio Review Board is scheduled to meet in a week. Resources only are available to support one project, and detailed business cases have been prepared for two of them. Your company has a policy of being risk adverse. Based on the following table, which project would you recommend to the Board, and what else would you mention to them?

A portfolio includes a lot of independent components with the same strategic aim. As a portfolio manager you will need to preare a qualified list of components to be used to reach the strategic goals and objectives. What input can you use in order to define the mix of portfolio components?

Assume you are the portfolio manager for your HVAC (Heating, Ventilating, and Air Conditioning) company, one of the largest in the world. Preparing for a meeting with the Portfolio Governance Committee, you have been reviewing the success of components that have been completed as well as the progress of current portfolio components. In many cases people who only purchased heating units in the northern part of the country, and people who purchased only air conditioners in the south, now are buying state-of the art products to easily switch as needed. You found the risks of climate change led to the need for these new energy efficient products and did so by:

You have been assigned as the manager for a major transformation portfolio in your company. You are acquiring the position due to the failure of the previous manager and the strategic importance of the portfolio. You start by consulting the portfolio strategic plan. What do you expect finding in that plan?

Portfolios have a lot of components in them and are executed along an extended lifecycle. For this, as a portfolio manager, you continuously monitor and control the progress and status. What input can you use to help you with this?

Many people in your country are no longer eating food from cans because of the risk of botulism and eColi O1H747. Your low acid canned foods company is seeing its revenues decrease as a result, and it is updating its overall strategy for the company to diversify into other markets as well as to add an aggressive marketing campaign to ensure the public that its low acid canned foods are generally recognized as safe by the Food and Drug Administration. This means in terms of portfolio management:

You are managing a complex portfolio with high risk levels due to emerging technological breakthroughs and a short benefit window to market your product. You know that managing risk is key to success and you are coaching your team on the same. While planning for risk management, multiple investment choice tools are used as part of the quantitative and qualitative analyzes. Which of the following tools determine the effect of changing the portfolio?

When it comes to managing a portfolio, you have a variety of assets, plans and tools and techniques used. It requires a good experience to handle all of these artifacts. One of your portfolio team members came to you asking about the relation between the portfolio performance management plan, the portfolio management plan and portfolio strategic plan. What should your answer be?

Different types of risks affect the portfolio, and they may be positive or negative. As the portfolio manager, one has to maximize the opportunities and minimize the threats. An example of a negative portfolio risk is:

As you work to determine which of four possible components to optimize the portfolio, assume you are using the internal rate of return as the key crite rion to make your recommendation. Only one new component can be added based on financial constraints. Each of the four potential components has benefits that support the strategic plan. Based on the following data, you recommend:

Your sponsor has urged you to analyze Portfolio Risk before the end-of-week governance board meeting as the CEO will be present and is interested in Portfolio risk data in particular. Currently, you do not have adequate risk information in order to analyze data and give recommendations. Which tool is the most suitable for you to use in this case?

Due to multiple occurrences of risk realization, the CEO has asked you to re-assess the portfolio risks once again. Up to what level in the organization do you go when you need to assess risks?

Developing the Portfolio Management Plan is a major step in a Portfolio and for a Portfolio Manager. You are currently developing this plan and having focus groups and brainstorming activities during which you are using mind-maps diagrams to organize the idea into logical groupings. Which of the below are you using?

You are in the process of planning the portfolio for a major client and wanted to put an extra effort on planning for managing the performance as the portfolio has a lot of technical aspects and correct performance management is key to success. What tools and techniques can you use for this purpose?

Assume after the acquisition of the natural gas transmission company by your company, a natural gas distribution company, was approved by the various regulatory agencies. You now are overseeing more components with this acquisition as the portfolio manager. While you had each of the components in your company set up in various categories, this approach had not been followed by the transmission company. You explained to its portfolio manager and staff such an approach enables:

Consider you are a veteran portfolio manager and that you are managing the most important portfolio in your company. What are the processes you execute as part of the portfolio governance?

Over the years, your organization has grown significantly as it has entered new markets while maintaining its presence in its traditional product line of security systems. The company now has eight different business units rather than three, which was the case only two years ago, and it set up funding originally such that it was only allocated to one business unit and could not be transferred to others. At the recently held Portfolio Oversight Committee meeting, five business units did not add components, but some were completed. The other three added a number of programs and projects, which were authorized. Now funding for these new components is an issue. This means:

You are in the toughest phase of the portfolio life cycle due to the governmental issues in your country. Yesterday night, one of the key team members quit and left the country. You have included this in the portfolio risk register while planning the portfolio because you knew that this could happen and that this key resource has family in Canada and can leave if the situation gets bad. Following this, you activated the response plan, which is to initiate a new component that will cater for reaching the deliverable in another way. However, an immediate approval is needed for initiation of this component or the end-of-month major deliverable will be delayed. To whom you should present the proposal for urgent approval?

Managing risk is key to the success of any initiative. Risk is considered to be inherent in any activity we do in project management and at any level. Risk is part of project, program and portfolio management and has a different exposure in each and every one. Which of the following highlights this difference?

A portfolio manager needs to continuously balance the need and requirements with the available resources and needs to maintain a balanced portfolio and portfolio resources in order to optimize delivery. Capability and Capacity analysis is performed in 4 of the portfolio management processes and it serves a slightly different purpose in each and every one of them. You are currently using it in the development of your charter. What is its purpose in this case?

While planning for risk management, multiple investment choice tools are used as part of the quantitative and qualitative analyzes; which of the following tools determines the effect of changing one or more factors?

Two functional managers within your portfolio are arguing about one scarce resource, and each one is claiming that the resource should be assigned to them. What should you do as a portfolio manager in order to solve this issue?

Your company got recently acquired by another company and the strategic directions which your portfolio is based on have been changed. Which document do you, as a portfolio manager, update to reflect how the new strategy will be implemented?

Embracing a management-by-projects culture means there tends to be far more projects to pursue than available resources. An approach then is required to guide decisions as to components in the portfolio. A best practice to follow is to:

You are the portfolio management for a big corporate with existence in 3 continents. While planning the performance management and in particular the dashboards and reporting tools, which of the following options is the most important to account for the different geographical locations?

You have just finished the development of the Portfolio Communication Management Plan. The portfolio team is looking for portfolio value assessment, status reports, and portfolio forecast with variance to plan. Where should they find this information?

You are a portfolio manager for a company with volatile market conditions and continuous strategic changes. It is always important for you to use methods such as simu-lation techniques, flowcharts and decision trees to be able to balance the portfolio with the actual needs. Which of the following tools and techniques you are using in this case?

Your company acquired another company. The sponsor asked you to check the other company's current inventory of work and see what could be added to your current portfolio. You have a meeting coming up to show the sponsor the portfolio dependencies. Which document should you be showing him?

Programs and projects in your company, one of the largest banks in the world, are required to submit metrics as to their individual progress each month. To simplify the collection and reporting process, you held interviews with members of the Portfolio Review Board to see their areas of greatest interest and also with program and project managers to determine how difficult it would be to collect the data. You then selected 10 possible metrics to the Board, with a goal that five would be regularly reported. It is important to note that:

Various people are responsible for communications to different stakeholder groups, both internal and external to the organization. These delegations of authority are:

Assume you work for a technology company that is publically owned, and the value of its stock is tracked daily by the CFO and is reported to the portfolio manager. Quarterly meetings are held with stockholders as the company went public through an Initial public offering (IPO) last year. These stockholders:

Portfolio management processes are performed in an environment broader than a portfolio; therefore, an organization-level implementation team supported by executive management, a governing body, and portfolio managers join forces to implement organization-level portfolio management processes. After Defining roles and responsibilities for portfolio management process implementation, what should be the FIRST next step?

You are mid-way through your portfolio and you are approaching a major milestone where multiple components will be authorized for execution and implementation. For informed decision making, as a portfolio manager, you will be communicating reports that will be viewed and analyzed, and used as critical information for taking a decision for the authorization of components. After passing through the authorization process, multiple reports are generated and others are updated. What type of reports is generated from this process?

You are managing a complex portfolio with high risk levels due to emerging technological breakthroughs and a short benefit window to market your product. You know that managing risk is key to success and you are coaching your team on the same. When it comes to Managing portfolio risks, a risk owner, along with the portfolio manager, should select the strategy or mix of strategies most likely to be effective. Which of the following is not a risk strategy?

In order to guide the work and correctly manage the portfolio, one of the major documents to be prepared is the Portfolio Management Plan acting as guideline for portfolio management. What are the tools and techniques you could use while developing this plan?

Your team members were having a discussion about the contents of the Portfolio Charter and they came to you for advice because they could not agree on a common answer. What would be your advice to them?

Stakeholders in your company are skeptical of the changes that will occur as portfolio management is being implemented. While some are supportive, most are not as they believe their work may be terminated. As the portfolio manager, you prepared a list of stakeholders, which is included in the:

Your health insurance company has set up its portfolio into five different categories: research and development, IT, Medicare, government health insurance, and non-government health insurance. Funding is allocated yearly to each of these six categories. As the portfolio manager at the enterprise level, you:

Since you work for a global aerospace and defense organization, it decided to pilot the implementation of portfolio management in its cargo aviation business unit. You were asked to lead this initiative and realized before you could proceed, you should find out information about all the existing projects, programs, and operational activities. This task took three months to complete, but with this list, you now can use it to set up categories for the work that is under way and to also define criteria to use to propose new components. As a result you should:

Although it has taken significant time, you and your team inventoried all the work under way in your new product development company. This list of components should be:

Calculate the composite index for the following portfolio having CPI weight = 80% and SPI weight = 20%

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One of the junior portfolio managers learned that she needs to use the roadmap as an input to the portfolio management plan development. She does not understand why, and she came to you for advice. What is your advice to her?

Assume as the portfolio manager you have conducted a stakeholder analysis, gap analysis, and a readiness analysis as your cereal company is now entering the ice cream market. A team was formed and located off site to determine whether this market was one in which your company could compete, and its recommendation to do so was accepted by the Portfolio Review Board. Now you need to:

Portfolios include a lot of work and as a portfolio manager you need to keep an eye on the value realization while maintaining the strategic alignment. You are currently in the process of monitoring the portfolio to ensure alignment with organizational strategy and objectives and make governance decisions. What do you expect as an outcome to this?

Managing risk is key to the success of any initiative. Risk is considered to be inherent in any activity we do in project management and at any level. Risk is part of project, program and portfolio management and has a different exposure in each and every one. When it comes to Managing portfolio risks, a risk owner, along with the portfolio manager, should select the strategy or mix of strategies most likely to be effective. Which of the following may be the responsibility of a risk owner when it comes to managing risks?

Managing Strategic Change is an integral part of any portfolio in order to remain aligned with the strategic objectives. Your portfolio has undergone a major strategic change and you are currently determining if, when, what, and how of implementing the change in order to re-align the portfolio. What are you currently doing?

Processes in the portfolio management layer interact with each others. For example, Manage Portfolio Information interacts with Provide Portfolio Oversight in order to store decisions made during the portfolio review meetings. Where are these decisions stored?

The Portfolio Management Office (PMO) provides support to the portfolio manager throughout the portfolio life cycle. Which of the below is not something that the PMO supports the portfolio manager with?

Efficiency is highly regarded when managing a portfolio and spans all activities i.e. risk management, communication management, etc. A portfolio is considered efficient if it

Based on the data in the following table, your organization should pursue which component:

Managing risk is key to the success of any initiative. Risk is considered to be inherent in any activity we do in project management and at any level. You are currently assessing risk against multiple criteria and classifying them as part of developing the risk management plan. Which of the below reflects what you are doing?

Your portfolio is on a tight deliverables and is considered the major portfolio in your company. Stakeholders are concerned about the purpose of defining a portfolio while already having an inventory of work and are worried that this will cause a lot of time to be wasted. What is your advice to the stakeholders?

Assume you are the portfolio manager for a company that specializes in software, including portfolio management software. It has many components under way to enhance the existing product line but also to move the company into Cloud computing. You regularly prepare reports on the portfolio status but lately have had a large number of stakeholders request ad hoc reports. You decided to survey your stakeholders to learn about their information needs. You next decided to hold some one-on-one interviews with several interested and influential stakeholders in terms of communications requirements. From these interviews you are concerned that some stakeholder groups may be missing so you decided to:

Risk Management is integrated in all the other processes and process groups and is an integral recurrent activity throughout the portfolio life cycle. Which of the following is considered an external risk that can affect the portfolio?

A junior Portfolio manager has come to you for advice. He is hearing a lot about the focus of portfolio management practices, however, he is not sure anymore of the exact answer. What do you, as an experienced portfolio manager tell him?

A new sponsor was appointed by the company in order to push more on the investments underway. The new sponsor wants detailed information on time and money and wants to get things done quickly. Which element of the portfolio management plan will be referred to for managing the sourcing of key resources?

The Portfolio Management Office plays an integral role in Portfolio Management and offers support to the portfolio manager throughout the portfolio life cycle. What is the role of the PMO with respect to the portfolio performance metrics?