PMP People — Leading Projects Practice Question
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?
⚠ Common exam trap
The trap here is that candidates often jump to requesting additional funds or using management reserve without first performing the required analysis, confusing a symptom (cost overrun) with a solution, and ignoring the PMBOK's emphasis on root cause analysis before any 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
✓
Analyze the cost variance, determine the corrective actions, and submit a change request if necessary
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.
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 funds from the sponsor without further analysis
Why it's wrong here
Requesting additional funds without prior analysis is a reactive and unprofessional approach that bypasses the fundamental "Control Costs" process. A project manager's responsibility is to first investigate the root causes of the 15% budget overrun, analyze the cost variance, and identify potential corrective actions. Presenting a problem without understanding its origins or proposing solutions demonstrates a lack of proactive management and fails to leverage earned value management techniques to inform decision-making.
- ✓
Analyze the cost variance, determine the corrective actions, and submit a change request if necessary
Why this is correct
This option correctly outlines the PMP's responsibilities when facing a significant cost variance. The "Control Costs" process mandates analyzing performance data, determining the magnitude and impact of the variance, and identifying the underlying causes. Based on this analysis, the project manager should develop and propose appropriate corrective or preventive actions. If these actions necessitate changes to the cost, schedule, or scope baselines, a formal change request must be submitted through the "Perform Integrated Change Control" process for review and approval.
- ✗
Ask the team to reduce scope to cut costs immediately
Why it's wrong here
Arbitrarily asking the team to reduce scope to cut costs immediately is a severe deviation from proper project governance and integrated change control. Scope is a critical project baseline, and any modification requires a formal change request, thorough impact analysis, and approval from the change control board or sponsor. Such an unauthorized action risks compromising project objectives, stakeholder expectations, and the overall quality or utility of the project deliverables, potentially leading to project failure or rework.
- ✗
Use the management reserve without notifying the sponsor
Why it's wrong here
Management reserves are specifically held for unknown-unknown risks and are typically under the control of the sponsor or senior management, not the project manager's direct discretion. Using these funds without proper notification, justification, and formal approval constitutes a breach of financial governance and project control. While contingency reserves are for known-unknowns and often managed by the PM, accessing management reserves requires a formal process and explicit authorization, usually through a change request.
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Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This PMP practice question is part of Courseiva's free PMI certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the PMP exam.