The answer is to review the cost baseline and calculate the estimate at completion (EAC) to forecast the final cost, and then communicate transparently with the sponsor. When a project is over budget, the first technical step is to analyze the cost baseline against actual performance and compute the EAC, which uses earned value management (EVM) to predict the total cost at project completion based on current variances. This tests your understanding of the Control Costs process and the ethical responsibility of a project manager under the PMP exam’s People and Process domains. A common trap is jumping to request more funds or reduce scope without data—both violate the change control process and PMI’s code of ethics. Remember the mnemonic “Analyze First, Communicate Second”: always crunch the EAC numbers before escalating, and never hide a variance.
PMP People — Leading Projects Practice Question
This PMP practice question tests your understanding of people — leading projects. 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.
Your project is 50% complete, and you realize it is 15% over budget due to unforeseen material cost increases. The sponsor is concerned about the budget variance. Which TWO actions should you take?
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Present the variance and your corrective action plan to the sponsor
Option A is correct: reviewing the cost baseline and EAC is the first step. Option E is correct: communicating with the sponsor transparently. Option B is wrong because reducing scope without change control is not allowed. Option C is wrong because requesting more funds without analysis is premature. Option D is wrong because hiding the variance is unethical.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
✗
Request additional budget from the sponsor immediately
Why it's wrong here
Should first analyze and present options.
✓
Present the variance and your corrective action plan to the sponsor
Why this is correct
Transparency and proactive communication are key.
Related concept
Read the scenario before looking for a memorised answer.
✗
Use management reserve without informing the sponsor
Why it's wrong here
Management reserve use requires approval per the plan.
✗
Reduce the project scope to bring costs back in line
Why it's wrong here
Scope changes require change control; also may not be feasible.
✓
Review the cost baseline and calculate the estimate at completion (EAC) to forecast the final cost
Why this is correct
Understanding the forecast helps in decision-making.
Related concept
Read the scenario before looking for a memorised answer.
Common exam traps
Common exam trap: answer the scenario, not the keyword
Many certification questions include familiar terms but test a specific constraint. Read the exact wording before choosing an answer that is generally true but wrong for this case.
Detailed technical explanation
How to think about this question
This question should be treated as a scenario, not a definition check. Identify the problem, the constraint and the best action. Then compare each option against those facts.
KKey Concepts to Remember
Read the scenario before looking for a memorised answer.
Find the constraint that changes the correct option.
Eliminate answers that are true in general but not in this case.
Use explanations to understand the rule behind the answer.
TExam Day Tips
→Underline the problem statement mentally.
→Watch for words such as best, first, most likely and least administrative effort.
→Review why wrong options are wrong, not only why the correct option is correct.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
How this comes up in practice
A practitioner preparing for the PMP exam encounters this exact type of scenario on the job. The correct answer here is not the most general option — it is the best answer for the specific constraint described. Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option. Real exam questions reward reading the full scenario before eliminating options, because the constraint defines which answer fits.
Related glossary terms
Concepts from this question explained
These glossary pages explain the core terms tested in this PMP question in full detail.
Identify which PMP exam domain this question belongs to, then review the specific concept being tested. Practise related questions in that domain and focus on understanding why each wrong answer is tempting — not just why the correct answer is right.
People — Leading Projects — This question tests People — Leading Projects — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: Present the variance and your corrective action plan to the sponsor — Option A is correct: reviewing the cost baseline and EAC is the first step. Option E is correct: communicating with the sponsor transparently. Option B is wrong because reducing scope without change control is not allowed. Option C is wrong because requesting more funds without analysis is premature. Option D is wrong because hiding the variance is unethical.
What should I do if I get this PMP question wrong?
Identify which PMP exam domain this question belongs to, then review the specific concept being tested. Practise related questions in that domain and focus on understanding why each wrong answer is tempting — not just why the correct answer is right.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
About these practice questions
Courseiva creates original exam-style practice questions with explanations and wrong-answer analysis. It does not publish real exam questions, exam dumps, or protected exam content. Learn why practice questions differ from exam dumps →
These questions test the same concept from different angles. Work through them to make sure you can recognise it however the exam phrases it.
Variation 1. Your project is running 15% over budget at the midpoint. The cost variance is due to higher-than-expected material costs. What should you do?
easy
✓ A.Perform a variance analysis, update the cost forecast, and consider corrective actions such as finding cost savings
B.Reduce the project scope to bring costs back in line
C.Continue as planned since the project is only 15% over budget
D.Request additional funding from the sponsor immediately
Why A: Option D is correct because the PM must analyze the variance and forecast the impact before taking action. Option A is wrong because reducing scope without proper analysis may impact project objectives. Option B is wrong because asking for more budget without understanding the root cause is not justified. Option C is wrong because ignoring the variance could lead to further overruns.
Variation 2. During a project review, you discover that the project is 15% over budget at the midpoint. After analysis, you find that the cost overrun is due to underestimation of testing effort and one team member's inefficiency. Which TWO actions should you take to address the situation?
hard
A.Apply contingency reserves to cover the cost overrun
✓ B.Have a private conversation with the underperforming team member to understand challenges and provide support
✓ C.Review the estimate basis and use earned value management to forecast the final cost
D.Reduce the project scope to bring costs back in line
E.Immediately enroll the team member in an advanced testing training course
Why B: Options B and C are correct because reviewing the estimate and using EVM provides data-driven insight, and having a performance conversation with the team member addresses the human factor. Option A is incorrect because reducing scope without change control bypasses governance. Option D is incorrect because training may help but is not the immediate action; understanding causes first is key. Option E is incorrect because applying contingency without understanding root cause risks using reserves incorrectly.
Variation 3. Your project is halfway through its timeline and is running 15% over budget due to unexpected vendor price increases. The sponsor is concerned and asks you to cut costs by reducing the number of quality tests. What should you do?
medium
A.Increase testing in other areas to compensate for reduced quality risk
B.Inform the sponsor that quality cannot be compromised and continue as planned
C.Agree with the sponsor and reduce the number of tests to stay within budget
✓ D.Conduct an impact analysis and submit a change request to the change control board
Why D: Option D is correct because as a project manager, you must follow the formal change control process when a sponsor requests a change that impacts the project baseline. Reducing quality tests is a change that could affect scope, schedule, and risk; therefore, you should analyze the impact on quality, cost, and schedule, then submit a change request to the change control board (CCB) for approval. This aligns with the PMBOK Guide's guidance on managing changes through the integrated change control process, ensuring decisions are made with full awareness of trade-offs.
Variation 4. Your project is running 15% over budget at the midpoint. The variance is due to higher-than-expected costs for raw materials. The sponsor is concerned and wants to know how you will bring the project back on budget. What is the BEST response?
hard
A.Assure the sponsor that the team will work overtime to recover the cost overrun.
B.Reduce the scope of the project to align with the budget.
✓ C.Conduct a variance analysis to identify corrective actions and present options to the sponsor.
D.Submit a change request for additional budget to cover the variance.
Why C: The PM should perform a variance analysis, determine the root cause, and then explore options such as cost reduction, schedule compression, or submitting a change request if additional funding is needed. The PM should then communicate the analysis and proposed actions to the sponsor.
Variation 5. Your project is running 15% over budget at the midpoint. The team is motivated, but the sponsor is concerned. What should you do first?
medium
A.Immediately reduce team resources to cut costs
B.Request the team to work overtime without additional pay
✓ C.Conduct a variance analysis to identify the reasons for the overspend
D.Ask the sponsor for additional funding
Why C: Understanding the root cause of the variance is essential before taking corrective action. Option C involves analyzing the variance to determine if it's a trend or one-time issue.
Variation 6. Your project is running 15% over budget at the midpoint. The project sponsor asks you to reduce costs by cutting the quality assurance phase. As a servant leader, what is the BEST response?
medium
✓ A.Explain the risks of skipping QA and propose other cost-saving options, such as reducing scope or using less expensive resources
B.Agree to the sponsor's request to reduce costs, as the sponsor has authority over the budget
C.Update the risk register to reflect the sponsor's request and proceed without QA
D.Refuse to cut QA and continue with the current project plan
Why A: Option A is correct because, as a servant leader, your primary responsibility is to protect the project's value and stakeholder interests. Cutting the quality assurance phase introduces significant technical debt and risk of defects, which could lead to rework, schedule delays, and higher costs later. By explaining these risks and proposing alternatives like scope reduction or resource optimization, you demonstrate ethical leadership and a focus on long-term project success.
Variation 7. Your project is running 15% over budget at the midpoint. Upon review, you find that the cost overrun is due to an underestimation of hardware costs. The sponsor is concerned and asks for a plan to get back on track. What should you do first?
medium
A.Request additional funds from the sponsor without further analysis
✓ B.Analyze the cost variance, determine the corrective actions, and submit a change request if necessary
C.Ask the team to reduce scope to cut costs immediately
D.Use the management reserve without notifying the sponsor
Why B: Option B is correct because the first step in addressing a cost overrun is to analyze the variance to understand its root cause and impact, then determine corrective actions. The PMBOK Guide emphasizes that before any change request, you must perform a root cause analysis and evaluate options within the existing budget. Requesting additional funds (A) or using management reserve (D) without analysis violates the principle of first exhausting all other options and maintaining transparency.
Variation 8. Your project is running 15% over budget at the midpoint. The team is working hard, but you suspect the original estimates were too optimistic. What is the BEST action to take?
medium
A.Immediately submit a change request for additional budget
B.Ask the team to work overtime to get back on budget
C.Reduce the project scope to meet the original budget
✓ D.Review the cost performance index (CPI) and estimate at completion (EAC) to determine the extent of the overrun and decide on corrective actions
Why D: Option D is correct because the first step when facing a budget overrun is to analyze the cost performance index (CPI) and estimate at completion (EAC) to quantify the variance and forecast the final cost. This data-driven approach allows you to determine whether the overrun is a trend or an anomaly, and then decide on appropriate corrective actions such as rebaselining, scope reduction, or efficiency improvements. Without this analysis, any action (like requesting more budget or cutting scope) would be premature and could worsen the project's outcome.
Last reviewed: Jun 21, 2026
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