PfMP Practice Exam 1 — 20 Questions

Question 1

A project within the portfolio is consistently over-budget. What is the portfolio manager's responsibility under the governance framework?

Accepted Answer

Assess the project's ongoing business value and take corrective action or initiate termination.. Under portfolio governance, a consistently over-budget project triggers a value reassessment: the portfolio manager must evaluate whether the project still delivers strategic benefit and either authorize corrective action or recommend termination. This is the portfolio manager's core decision right — balancing investment against strategic return. Ignoring, subsidizing, or transferring the project bypasses governance.

Answer

Ignore the issue as long as other projects are under-budget.

Answer

Pay the overage from the portfolio contingency reserve.

Answer

Transfer the project to a different department.

Question 2

You are a portfolio manager for a retail company. A key supplier, who is also a stakeholder in your portfolio, has repeatedly failed to meet delivery deadlines, impacting portfolio performance. After discussions, the supplier requests a meeting to discuss potential changes to the contract. What should you do FIRST?

Accepted Answer

Review the portfolio stakeholder engagement plan to determine the appropriate approach for engaging with this supplier.. The portfolio stakeholder engagement plan provides guidance on how to interact with key stakeholders like suppliers. Reviewing it first ensures that any meeting or negotiation is conducted in line with the overall engagement strategy, protecting portfolio interests while addressing the supplier's concerns appropriately.

Answer

Immediately agree to all requested contract changes to preserve the relationship.

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Terminate the contract immediately due to repeated failures.

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Escalate the issue to the portfolio governance board without meeting the supplier.

Question 3

A portfolio manager is preparing a quarterly performance report for the Portfolio Governance Board. The portfolio includes 12 components with varying risk profiles. The manager wants to provide a balanced view of performance that highlights both value delivery and risk exposure. Which approach BEST meets this objective?

Accepted Answer

Provide a bubble chart plotting each component's expected value against its risk score, with bubble size representing investment.. A bubble chart plotting value against risk, with investment as bubble size, provides a balanced, multidimensional view of the portfolio. It allows the governance board to quickly identify components that are high value/low risk versus those that are high risk/low value, and to see where the most money is concentrated. This supports informed trade-offs and targeted oversight, meeting the objective of presenting both value delivery and risk exposure.

Answer

Report the aggregate portfolio NPV and the total number of risks across all components.

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List each component's schedule and cost performance indices in a table.

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Summarize the portfolio's benefit realization rate and the number of issues logged this quarter.

Question 4

During a quarterly portfolio review, the portfolio manager discovers that a component with a strong business case is no longer contributing to the organization's revised strategic objectives. The sponsor insists the component should continue because it is already funded. What should the portfolio manager do first?

Accepted Answer

Perform a strategic alignment assessment and present the findings to the portfolio governance body for a decision.. The portfolio manager's role is to monitor and assess how components align with current strategic objectives, then recommend action through governance. When strategy changes, the portfolio manager must evaluate the affected component against those objectives and present evidence to the governance body, which holds decision authority. Acting unilaterally or continuing automatically both violate that governance-based alignment process.

Answer

Immediately terminate the component to protect portfolio alignment.

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Continue funding the component because the sponsor has already committed the budget.

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Ask the project manager to revise the component's business case to match the new strategy.

Question 5

What is the primary function of the portfolio charter?

Accepted Answer

To establish the portfolio's strategic intent and governance.. The portfolio charter is the foundational document that formally authorizes the portfolio and articulates its strategic intent, scope, governance structure, and alignment with organizational strategy. It defines how the portfolio will be managed, who owns it, and what outcomes it must deliver. It is not an execution-level document.

Answer

To assign individual tasks to developers.

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To serve as a project management plan.

Answer

To document vendor invoices.

Question 6

You are conducting a portfolio risk review with your team. The portfolio board has asked you to identify inputs that are essential for effective portfolio risk management. Which two of the following are considered key inputs to the portfolio risk management process? (Choose two.)

Accepted Answer

Portfolio management plan. The portfolio management plan and portfolio risk register are essential inputs to portfolio risk management. The plan provides the governance framework and risk approach, while the register documents current risks and responses. Together, they enable systematic identification, analysis, and response planning.

Answer

Portfolio performance reports

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Individual project schedules

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Resource breakdown structure

Question 7

You are optimizing a portfolio and find that several components have low strategic value but high ROI. What is the recommended strategy for these components?

Accepted Answer

Evaluate for re-alignment, re-scoping, or termination.. Components with low strategic value but high ROI represent a misalignment between financial return and organizational strategy. The recommended approach is to evaluate them for re-alignment (to better fit strategy), re-scoping (to increase strategic value), or termination if they cannot be aligned. This balanced evaluation ensures that portfolio resources are optimized without prematurely discarding financially beneficial components.

Answer

Terminate these components immediately.

Answer

Continue funding to capitalize on the high ROI.

Answer

Transfer these components to a different portfolio.

Question 8

Midway through the fiscal year, a portfolio manager discovers that two executive sponsors who were classified as 'supportive' in the portfolio stakeholder register have stopped attending the quarterly portfolio value reviews. Their components are now the only ones with unresolved resource conflicts. Which interpretation BEST guides the portfolio manager's next engagement action?

Accepted Answer

The sponsors have likely reverted to a neutral or resistant engagement level, so the portfolio manager should re-engage them individually to understand the cause.. Engagement levels in the portfolio stakeholder register are dynamic, and behavior such as missing governance reviews is evidence of change. Since these sponsors own components with unresolved resource conflicts, the portfolio manager must re-engage them individually, diagnose the cause, and update the engagement approach so that portfolio decisions can proceed with adequate sponsor involvement.

Answer

The portfolio manager should ask the Portfolio Governance Board to replace the sponsors with more engaged executives.

Answer

The portfolio manager should document the attendance gap in the portfolio status report and continue with the existing engagement plan.

Answer

The sponsors are no longer key stakeholders and should be removed from the portfolio stakeholder register.

Question 9

You are managing a portfolio for a large construction firm. The strategic plan includes a goal to increase sustainability by reducing carbon emissions by 30% over five years. A proposed portfolio component is a new bridge construction project that uses traditional methods with high carbon emissions but promises high profitability. The project sponsor argues that profitability should take precedence. How should you handle this conflict?

Accepted Answer

Escalate the conflict to the executive committee with an analysis of the trade-offs between profitability and sustainability.. The correct action is to escalate the conflict to the executive committee with a trade-off analysis. This situation involves competing strategic objectives—profitability and sustainability—that cannot be resolved solely at the portfolio level. By providing a thorough analysis of the implications, the portfolio manager enables senior leadership to make a decision that balances strategic priorities and maintains portfolio alignment.

Answer

Reject the project outright because it does not meet the sustainability goal.

Answer

Approve the project with a condition that the sponsor finds a way to offset carbon emissions later.

Answer

Recommend the project for approval because profitability is a key strategic objective.

Question 10

Which document is used to track the progress of a portfolio against its strategic objectives?

Accepted Answer

Portfolio performance report.. The Portfolio Performance Report is the document that consolidates portfolio-level metrics, progress against strategic objectives, and benefit realization status. It is the primary artifact for tracking how the portfolio as a whole is performing against its strategic goals. Other options are operational or HR documents unrelated to portfolio strategy tracking.

Answer

Vendor contract list.

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Project status memo.

Answer

Employee evaluation form.

Question 11

You are managing a portfolio of IT projects for a healthcare company. A new regulatory requirement mandates that all patient data must be encrypted at rest within 12 months. Your current portfolio includes several projects that handle patient data but have no encryption components. You need to adjust the portfolio to ensure compliance. What is the most appropriate action?

Accepted Answer

Initiate a new portfolio component to implement encryption across all affected systems and re-prioritize existing components accordingly. The portfolio manager must align the portfolio with the new regulatory requirement. Initiating a dedicated compliance component and re-prioritizing existing work ensures a coordinated, portfolio-level response. This approach addresses the mandate efficiently, allocates resources appropriately, and maintains strategic alignment, whereas isolated project changes or avoidance strategies fail to meet the compliance need.

Answer

Direct each project manager to add encryption tasks to their existing project schedules without changing the portfolio

Answer

Outsource all patient data handling to a third-party vendor that already has encryption in place

Answer

Request an extension to the regulatory deadline to allow the current portfolio to continue unchanged

Question 12

You are the portfolio manager for a technology company. The portfolio governance board has established a policy that all components must undergo a benefit realization review 12 months after completion. A component that was completed 14 months ago has not yet undergone this review. The component manager claims that the benefits are still being realized and requests an extension. The governance board asks you to handle this situation. What should you do?

Accepted Answer

Schedule the benefit realization review immediately and present the findings to the governance board, including any reasons for delay.. The portfolio manager should schedule the benefit realization review immediately and report findings to the governance board, including any reasons for delay. This ensures compliance with governance policies and provides the board with the information needed to assess benefit realization. It also maintains accountability and transparency, which are critical for effective portfolio governance.

Answer

Delegate the review to the component manager to save time.

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Grant the extension because the component manager is responsible for benefit realization.

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Close the component without a review since the benefits are still being realized.

Question 13

When a portfolio risk occurs and impacts the strategic goals, this event is now classified as:

Accepted Answer

A portfolio issue.. Once a risk occurs, it is officially recorded as an issue.

Answer

An external audit finding.

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A project failure.

Answer

A new risk.

Question 14

You are the portfolio manager for a retail company. The CEO announces a new strategic objective to increase online sales to 40% of total revenue within two years. Currently, online sales are 15%. The portfolio includes several store expansion projects and a few small e-commerce initiatives. Which action should you take FIRST to align the portfolio with this objective?

Accepted Answer

Perform a strategic alignment assessment of all components to determine their contribution to the online sales objective and identify gaps.. A strategic alignment assessment is the essential first step because it objectively evaluates how each component contributes to the new online sales objective. It identifies which store expansion projects may still support omnichannel goals, which e-commerce initiatives should be accelerated, and what new components are needed. This data-driven approach enables informed rebalancing, ensuring resources are allocated to the most impactful initiatives and gaps are addressed, rather than making abrupt cancellations or proportional increases.

Answer

Immediately cancel all store expansion projects to reallocate funding to e-commerce.

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Increase the budget for all existing e-commerce initiatives proportionally to their current spend.

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Ask the e-commerce project managers to revise their business cases to show they can deliver the 40% target.

Question 15

A stakeholder group believes the portfolio's benefits are overstated. What is your best response?

Accepted Answer

Invite them to review the benefit realization models and the underlying assumptions.. The correct response is to invite the stakeholder group to review the benefit realization models and underlying assumptions. This aligns with PfMP best practices for stakeholder engagement and transparency, as it addresses their concerns through collaborative examination of the data and logic driving benefit projections. By involving them, you either validate the benefits with their input or identify legitimate flaws, fostering trust and improving the portfolio's credibility.

Answer

Ignore their concerns as they are not experts.

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Remove them from the list of stakeholders who receive reports.

Answer

Update the benefits document to reflect lower expectations immediately.

Question 16

Which document is essential for defining the 'Portfolio Governance' structure?

Accepted Answer

The Portfolio Management Plan.. The Portfolio Management Plan is the governing document that defines the portfolio governance structure, including decision-making bodies, roles, responsibilities, and the processes for how the portfolio is managed, monitored, and controlled. It establishes the framework within which portfolio governance operates, making it the essential document for defining that structure.

Answer

The Project Manager Handbook.

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The Organizational Chart.

Answer

The Portfolio Strategic Plan.

Question 17

You are managing a portfolio that includes a project with a high-profile, controversial component. A local community group has raised concerns about environmental impact. The project sponsor wants to proceed without addressing these concerns, arguing that the portfolio's strategic goals outweigh local objections. As the portfolio manager, what should you do?

Accepted Answer

Escalate the issue to the Portfolio Governance Board, presenting both the sponsor's position and the community concerns.. Escalating to the Portfolio Governance Board is the correct action because it involves a strategic conflict between portfolio objectives and stakeholder concerns. The board has the authority to weigh risks, benefits, and stakeholder impact, and to make a decision that aligns with organizational strategy. This approach ensures that the issue is handled at the appropriate level and that all relevant factors are considered.

Answer

Support the sponsor's decision and proceed, but document the community concerns in the risk register.

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Organize a public hearing to allow the community to voice their concerns directly to the project team.

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Commission an independent environmental impact assessment and share the results with the community.

Question 18

You are preparing a report on portfolio value for a diverse group of stakeholders. How should you approach the content?

Accepted Answer

Tailor the report sections to address the specific strategic and financial interests of each stakeholder group.. Portfolio value reporting must address the diverse interests of stakeholders, which may include financial returns, strategic alignment, risk exposure, and resource utilization. Tailoring report sections to specific stakeholder groups ensures relevance and supports informed decision-making. The PMI Portfolio Management Standard emphasizes that communication should be adapted to stakeholder needs, not one-size-fits-all.

Answer

Focus only on financial metrics.

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Keep the report exactly the same for everyone to ensure consistency.

Answer

Use highly technical language to demonstrate expertise.

Question 19

What is the purpose of the 'Portfolio Dashboard'?

Accepted Answer

To visualize portfolio performance and status to stakeholders.. The Portfolio Dashboard is a consolidated reporting and visualization tool that aggregates performance data across all portfolio components—projects, programs, and operational activities—so executives and stakeholders can see status, alignment to strategy, and overall health at a glance. Its core purpose is communication and decision support: it presents metrics such as benefit realization, budget consumption, risk exposure, and resource utilization in a single view. It does not manage schedules or replace governing documents; it reports on them.

Answer

To manage individual project schedules.

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To act as a project management tool for team members.

Answer

To replace the Portfolio Management Plan.

Question 20

You want to improve resource efficiency in the portfolio. Which practice is best?

Accepted Answer

Implement centralized resource planning and leveling.. Centralized resource planning and leveling gives the portfolio office visibility across all projects, enabling it to resolve overallocation, smooth demand against supply, and assign scarce specialists where they deliver the most value. This portfolio-level view is the core mechanism for improving resource efficiency across competing initiatives.

Answer

Allow project managers to hire whoever they want.

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Assign all resources to all projects simultaneously.

Answer

Only use full-time employees.