FPM WEEK 7 - Scenario

A reserve specifically for unexpected exchange rate fluctuations. It helps manage cost variability when projects operate in multiple international locations with fluctuating exchange rates.

The process of adjusting the cost baseline by re-evaluating indirect cost estimates and submitting a change request for approval. This ensures the project's budget accurately reflects the actual indirect cost requirements.

Exploring alternative equipment providers or sharing agreements to find a cost-effective solution when renting specialized equipment exceeds the task's budget.

Using historical data to validate the parameters used in parametric estimating and provide supporting documentation. This addresses stakeholder concerns about the accuracy of the estimates.

The use of the management reserve to address unexpected risks that require immediate funding. This utilizes a predefined safety net for unforeseen events that fall outside the scope of known risks.

Assigning story points based on the complexity and effort required for each task. Using relative estimation with the Fibonacci sequence allows prioritizing tasks effectively in a sprint backlog.

Prioritizing requirements and trading off lower-value items to manage the cost baseline when new requirements increase the scope of a project with a fixed budget.

Validating assumptions with stakeholders and updating cost estimates based on the collected information when using historical data for cost estimation.

Performing a cost-benefit analysis and assessing risks before selecting a subcontractor offering significantly lower rates. This balances cost saving with project success.

Providing EVM training to the team and integrating it into the cost control process when the sponsor insists on using EVM, even if the team is unfamiliar with the concepts.

Using a risk-adjusted method to allocate contingency reserves based on the probability and impact of each risk. This ensures effective risk management and prioritizes high-risk tasks.

Using resource leveling to balance workloads and optimize resource utilization when a virtual team faces challenges due to overlapping resource assignments leading to cost overruns.

Reviewing the supplier's contract terms and enforcing the agreed fixed price when a supplier requests additional funding due to unforeseen material costs in a fixed-price contract.

Using resource leveling to adjust the workload across projects when a critical resource is consistently overallocated due to commitments on multiple projects.

Using the pessimistic estimate and allocating a contingency reserve to cover variability when a key deliverable has a highly variable cost due to unpredictable market conditions.

Facilitating a value engineering session to identify cost-saving opportunities when a sponsor insists on reducing the project budget while maintaining all deliverables.

Providing a rough order of magnitude (ROM) estimate and refining it later when a sponsor asks for a high-level estimate but the team is preparing a bottom-up cost estimate.

Identifying areas to reduce costs without compromising scope when the Cost Performance Index (CPI) indicates the project is over budget.

Evaluating the impact of the request on the budget and negotiating a fair agreement when a high-value resource requests additional compensation midway through the project.

Implementing detailed cost tracking with regular audits to ensure compliance when working on a research project funded by a government grant requiring strict cost reporting and evidence of expense alignment with project objectives.

Using three-point estimating to provide a range of forecasts and communicate uncertainties when a sponsor requests a cost forecast for the next quarter but some activities have uncertain costs due to dependencies on external vendors.

Allocating contingency reserves based on quantitative risk analysis to reflect significant risk events which could drastically increase costs in a project.

Negotiating with the supplier to lock in costs or seek alternative suppliers when a critical supplier's costs have increased significantly, impacting the project budget.

Analyzing the root cause of the variance and implementing corrective actions when the Estimate at Completion (EAC) is higher than the original budget during cost monitoring.

Highlighting significant variances and explaining their root causes, linking them to project risks when presenting a variance report to the sponsor which shows both positive and negative variances.

Adjusting the estimates to account for scope differences and validating assumptions when using analogous estimating, and a team member questions its accuracy due to differences in project scope.

Investigating the cause of the discrepancy to ensure accurate cost tracking when noticing team members are consistently logging fewer hours than planned during cost monitoring.

Conducting a cost-benefit analysis to assess the trade-off between cost and quality when a key stakeholder insists on using the lowest bidder for a critical project task, raising concerns about quality.

Reviewing resource utilization and indirect cost allocations for inefficiencies when the project burn rate exceeds the planned rate, but there are no significant variances in deliverable completion.

Locking in material prices through long-term contracts with suppliers when project has fixed labor costs but flexible material costs and material prices are rising due to market conditions.

Analyzing the root cause of the cost overrun and adjusting the task schedule or resource allocation when the EV (Earned Value) for a critical task is lower than the PV (Planned Value), but the AC (Actual Cost) is significantly higher.

Allocating additional funds from the contingency reserve for training and extended timelines when a project team has underestimated the learning curve for using a new technology, leading to increased labor costs.

Evaluating and optimizing overhead allocations to reduce the cost burden when a cost breakdown for a key deliverable reveals that overhead costs are disproportionately high.

Applying crashing to reduce the duration of the critical task and reallocate resources when a team identifies a task requiring higher-than-expected resource effort, but reallocating resources risks delaying another critical task.

Evaluating the feasibility of the new features and their alignment with project objectives before reallocating funds when a project is running under budget, and the sponsor suggests reallocating surplus funds to add new features.

Negotiating milestone adjustments with the contractor to align payments with revised timelines when a contractor responsible for a critical component has delayed delivery, and their payment is tied to milestones.

Address schedule delays while maintaining cost efficiency by reallocating resources when the project currently has a CPI of 1.1 and an SPI of 0.9.

Access the management reserve to address unforeseen risks when the project team has used all contingency reserves for known risks, but additional costs are arising due to unforeseen risks.

Conduct a detailed cost-benefit analysis to determine if automation will yield long-term savings when a sponsor demands cost reductions on a resource-intensive phase, and the team suggests automating a repetitive task, but the upfront costs are high.

Negotiate a bulk discount or long-term contract with the contractors when a project requires hiring temporary contractors for peak workloads, and the hourly rates are much higher than initially budgeted.

Renegotiate the contract terms to account for external delays when a fixed-price contract includes cost penalties for late delivery, and a vendor informs the project manager that delays are unavoidable due to supply chain disruptions.

Revisit the estimating methodology and include contingency for future tasks when a project team's cost estimates are consistently lower than the actuals for completed tasks.

Request additional funds through a formal change request when a project requires purchasing specialized software and the licensing costs exceed the initial budget allocation.

Use resource smoothing to balance workloads while maintaining cost efficiency when a resource optimization plan reduces costs by consolidating roles, but the workload increases for critical team members, leading to burnout risks.

Provide a detailed report explaining how the reserve was used and remaining risks when a project is on track for cost and schedule, but the management reserve has been partially used and the sponsor requests a report on reserve utilization.

Evaluate the risks of advance payment and propose a partial advance payment as a compromise when a contractor offers a discount if the project pays in advance for services, which reduces costs but increases financial risk.

Request a change control process to adjust the budget formally when a cost performance review shows that one high-value task is consistently under budget, and the sponsor suggests reallocating these funds to another phase.

The project is ahead of schedule but over budget; focus on reducing future costs when a project nearing completion shows an SPI (Schedule Performance Index) of 1.05 and a CPI (Cost Performance Index) of 0.95.

Conduct a detailed cost-benefit analysis and present the findings to the sponsor when a sponsor demands cost reductions on a resource-heavy phase of the project, and the project manager identifies that automating a process will require significant upfront costs but long-term savings.

Reassess remaining tasks and implement cost-saving measures where possible when a project has completed 40% and EAC (Estimate at Completion) forecasts show the total cost to exceed the budget.