This MB-920 practice question tests your understanding of describe dynamics 365 project operations. Read the scenario carefully and evaluate each option against the stated constraints before committing to an answer. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
Which TWO of the following are valid project types in Dynamics 365 Project Operations? (Choose two.)
External
Why wrong: Not a valid project type.
Time and Material
Standard project type.
Internal
Why wrong: Not a valid project type.
Fixed Price
Standard project type.
Investment
Why wrong: Not a valid project type.
Answer choices
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
Time and Material
In Dynamics 365 Project Operations, 'Time and Material' (Option B) is a valid project type that invoices customers based on actual hours worked and expenses incurred, making it suitable for projects where scope is not fully defined. This type allows for flexible billing and is commonly used in consulting or agile engagements.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
For each option: why learners choose it and why it is or isn't the right answer here.
External
Why it's wrong here
Not a valid project type.
Time and Material
Why this is correct
Standard project type.
Related concept
Read the scenario before looking for a memorised answer.
Internal
Why it's wrong here
Not a valid project type.
Fixed Price
Why this is correct
Standard project type.
Related concept
Read the scenario before looking for a memorised answer.
Investment
Why it's wrong here
Not a valid project type.
Common exam traps
The trap here is that candidates may confuse project types with project categories or billing methods, leading them to select 'Internal' or 'Investment' as valid types, when in fact only 'Time and Material' and 'Fixed Price' are the standard project types in Dynamics 365 Project Operations.
Detailed technical explanation
In Dynamics 365 Project Operations, the two primary project types are 'Time and Material' and 'Fixed Price', which dictate how revenue is recognized and invoiced. Under the hood, 'Time and Material' projects use actuals-based billing with flexible revenue recognition, while 'Fixed Price' projects rely on milestone-based or progress-based billing, often requiring a billing schedule. This distinction is critical for compliance with revenue recognition standards like ASC 606, as the project type influences the accounting method applied to transactions.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
A startup's cloud architect reviews their monthly bill and notices costs are higher than expected for a long-running batch job. Switching from on-demand instances to Reserved Instances — or using Spot/Preemptible VMs — can reduce compute costs by up to 72 %. Questions like this test whether you understand the tradeoffs between commitment, flexibility, and cost across cloud pricing models.
What to study next
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FAQ
Describe Dynamics 365 Project Operations — This question tests Describe Dynamics 365 Project Operations — Read the scenario before looking for a memorised answer..
The correct answer is: Time and Material — In Dynamics 365 Project Operations, 'Time and Material' (Option B) is a valid project type that invoices customers based on actual hours worked and expenses incurred, making it suitable for projects where scope is not fully defined. This type allows for flexible billing and is commonly used in consulting or agile engagements.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
Read the scenario before looking for a memorised answer.
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Last reviewed: Jun 11, 2026
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