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Hello everyone! Here is this week's free PMP exam sample question from the PM Exam Simulator.
You are the project manager for a large telecommunications project in a country which has an unstable economy. You cannot use common financial techniques to predict the future costs of materials but you are required to provide an estimate for each work package now so that the budget can be developed and approved. What technique can you rely on to help you in this situation?
A. Expert Judgment
B. Reserve Analysis
C. Parametric Estimating
D. Analogous Estimating
HINT: You have not executed any projects in this country before and you have no idea what future project costs may be.
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Answer and Explanation:
The correct answer is B.
Expert judgment, parametric estimating and analogous estimating will not help you in this situation of high uncertainty. To accommodate the risk created by uncertainty, you must build reserves into your estimates using reserve analysis.
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