2.4 Justification Theme (chapter 6) MSP-PRACTITIONER-5TH-EDITION Practice Questions (Page 4)

Questions 16–20

1. 16expert · hard

   A programme has identified two risks: a regulatory risk that new legislation will increase compliance costs, and a market risk that a competitor will launch a similar product. The risks are assessed as having a 30% and 40% probability, with impacts of £1 million and £2 million respectively. The risk manager notes that if the regulatory risk materializes, the competitor's product launch becomes more likely. What is the most appropriate way to assess the combined effect of these risks on the business case?

   • ASum the expected monetary values (0.3 × £1m + 0.4 × £2m = £1.1m) and add this to the contingency.
   • BIgnore the correlation and treat the risks as separate because they are in different categories.
   • CTreat the risks as correlated and model the combined impact, which may be higher than the sum of the individual expected values.
   • DTake the maximum impact of the two risks (£2m) as the combined effect, since only one risk can materialize at a time.
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2. 17application · medium

   A programme is mid-way through its delivery phase. The Programme Manager notices that the actual spend on a workstream is consistently 10% above the budgeted amount, but the overall programme spend is within tolerance. The financial plan includes a contingency fund for risks. What should the Programme Manager do?

   • AImmediately release contingency funds to the workstream to cover the overspend.
   • BInvestigate the cause of the variance and update the forecast to reflect the current trend, while considering whether the contingency is still adequate.
   • CReduce the budget for other workstreams to offset the overspend and keep the total within tolerance.
   • DReport the variance to the SRO and ask for a revised business case.
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4. 18expert · hard

   A programme's justification approach includes a business case that is updated only at the end of each tranche. The programme is in a rapidly changing market, and the SRO is concerned that the business case may become outdated between tranches. What is the most effective way to ensure the justification approach remains fit for purpose?

   • ARely on the financial plan to capture changes, and update the business case only if the financial plan changes significantly.
   • BDelegate the business case updates to the Programme Manager, as they are responsible for day-to-day management.
   • CReview and update the business case at key decision points, such as when significant risks materialize or when the market changes, in addition to the tranche reviews.
   • DKeep the business case unchanged between tranches to provide stability and avoid constant re-justification.
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5. 19foundation · easy

   What is a disbenefit in the context of the justification theme?

   • AA cost that exceeds the budget
   • BA risk that has a high probability of occurring
   • CA negative outcome that is a direct consequence of the programme
   • DA benefit that is difficult to measure
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6. 20application · medium

   A programme's financial plan includes a budget of £10 million, with a contingency of £1 million. The programme is in its second year, and the actual spend is £6 million, which is £1 million over the forecast for this point. The Programme Manager identifies that the overspend is due to a delay in a dependency that has increased costs. What should the Programme Manager do?

   • ARequest additional funding from the SRO to cover the overspend, as the contingency is for future risks only.
   • BReduce the scope of the programme to bring costs back within the original budget.
   • CReport the overspend as a variance and wait for the next board meeting to decide.
   • DUse the contingency to cover the overspend, but first assess whether the risk that caused the delay is still active and whether the contingency is still adequate.
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