PMP People — Leading Projects Practice Question
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?
⚠ Common exam trap
The trap here is that candidates often jump to a reactive solution (like requesting more budget or cutting scope) without first performing the quantitative analysis (CPI and EAC) that is required by the PMBOK Guide's 'Control Costs' process to validate the extent of the variance and determine the most appropriate corrective action.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Review the cost performance index (CPI) and estimate at completion (EAC) to determine the extent of the overrun and decide on corrective actions
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.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Immediately submit a change request for additional budget
Why it's wrong here
Immediately submitting a change request for additional budget without proper analysis is premature and unprofessional. A project manager's initial responsibility is to conduct a thorough root cause analysis of the budget variance using performance data. Only after understanding the true extent and reasons for the overrun should a formal change request be considered, ensuring it is justified and addresses the underlying issues through the integrated change control process.
- ✗
Ask the team to work overtime to get back on budget
Why it's wrong here
Asking the team to work overtime to compensate for a budget overrun is a reactive and often counterproductive strategy. While it might seem to save costs initially, prolonged overtime typically leads to decreased productivity, increased errors, and team burnout, ultimately escalating overall project costs and risks. This approach fails to address the fundamental causes of the budget variance, such as inaccurate estimates or scope creep, and can negatively impact team morale and quality.
- ✗
Reduce the project scope to meet the original budget
Why it's wrong here
Unilaterally reducing project scope to meet the original budget is an inappropriate and potentially damaging initial response. Any modification to the project scope baseline requires adherence to the integrated change control process, involving thorough impact analysis, stakeholder consultation, and formal approval. Such a drastic measure without proper evaluation can lead to unmet business objectives, stakeholder dissatisfaction, and a project delivering significantly reduced value.
- ✓
Review the cost performance index (CPI) and estimate at completion (EAC) to determine the extent of the overrun and decide on corrective actions
Why this is correct
The most appropriate first step is to leverage Earned Value Management (EVM) tools for an objective assessment of the project's financial performance. Calculating the Cost Performance Index (CPI) provides a critical efficiency ratio, indicating cost efficiency, while the Estimate at Completion (EAC) forecasts the total project cost based on current performance trends. This data-driven analysis is essential for accurately understanding the magnitude of the overrun, identifying its root causes, and formulating effective, evidence-based corrective or preventive actions.
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