project a vs project b

[bhuvanpanwar1983]

You are managing two projects from a single Business Unit and happy over the success of both the projects as both projects are regarding as strategically beneficial and have been finishes by over 85%. The project sponsor requested earned value data on these two concurrent projects from you and these both projects are equally important for the sponsor. You provide the following information to the sponsor:

Project A:
PV: $1,900,000
EV: $2,400,000
AC: $2,100,000

Project B:
PV: $2,100,000
EV: $1,600,000
AC: $1,700,000

After reviewing the data provided to him, the sponsor considers to shift some resources from project A to project B to speed up the second project which is currently behind schedule.
What is the most likely outcome of such a measure?

To increase cost efficiency - Changing team assignments during late course of a project typically increases cost efficiency.

To increase time efficiency - Changing team assignments during late course of a project typically increases time efficiency.

According to the law of diminishing returns, the consolidated cost variance of the two projects will decrease.

According to the law of diminishing returns, the consolidated cost variance of the two projects will increase.

[manishpn]

According to the law of diminishing returns, the consolidated cost variance of the two projects will increase.

Adding resource will add cost but not necessarily add to Earned value

[bhuvanpanwar1983]

Got it thanks - where in pmbok its more in detail,i can refer for more details.

[AM1969]

According to me the third option should be the answer.

[coolpmp69]

I also think 3rd option is correct.

Here is the calculation

CV = EV-AC
CV for Project A = $2,400,000 – $2,100,000 = $200,000 (under budget)
CV for project B = $1,600,000 – $1,700,000 = -$100,000 ( over budget)

So by shifting resources from Project A to B the consolidated cost variance of both the projects will decrease but this will help project B realign to its right schedule.

[manishpn]

you guys are assuming too many things and math is not needed at all.

look at law of diminishing returns will clear the air.

Mving resource out of project A does not mean you will achieve same EV growth at reduced cost, neither does it mean moving resource late into project B will increase productivity and efficiency to deliver better EV growth rate as compared to additional cost of resources.

[coolpmp69]

This question is from one of your free practice test and the correct answer is 3rd. option based on CV calculation.

[manishpn]

then it needs to be rectified. will check

[ujjal_show]

It should be rectified.

[911siddharth]

According to law of diminishing returns, the answer should be D but in Oliver and IZen mock exam, the correct answer is C. This is confusing.

[rameshsa@yahoo.com]

So what the right answer for this?

[sunildubai15]

Option C

[rameshsa@yahoo.com]

Ujjal or MAfuz ... which is C final answer?

[ujjal_show]

Certainly D, when manish was clarified in his 1st reply then where is the confusion?

[rameshsa@yahoo.com]

Thanks Ujjawal,

Answer is D) According to the law of diminishing returns, the consolidated cost variance of the two projects will increase.

Saket - Jyothi,
Please have this corrected in the question bank. please.

[chakrabortyanshu]

This has not been rectified yet in Izenbridge Simulation Exam.

[anil.sachdeva]

Guys,

It think you are mistaken. Correct answer is "C".

According to the law or diminishing returns, there will be no big advantage of moving resources to project B. It might happen that the project even doesn't finish with in schedule. Project A will also suffer as you are moving resources from it.

What does it mean? I think you are taking big cost variance as a negative thing. More CV and SV means EV is more and that is good for project. Probably we are thinking that Positive Cost variance is bad.

You know CV = EV-AC and SV = EV-PV

Now the question is just testing by the mentioning the "Law of diminishing returns".

So, according to the law, there will be no advantages (or less advantages) of applying more resources to project B.

That means earned value (EV) will be less. As per the formulae above, when EV is decreased, for sure CV and SV will decrease.

I hope, it clarifies the answer.

I am going to appear for the PMP exam soon. Please with me for the best.

Regards
Anil

[manishpn]

Guys,

It think you are mistaken. Correct answer is "C".

According to the law or diminishing returns, there will be no big advantage of moving resources to project B. It might happen that the project even doesn't finish with in schedule. Project A will also suffer as you are moving resources from it.

What does it mean? I think you are taking big cost variance as a negative thing. More CV and SV means EV is more and that is good for project. Probably we are thinking that Positive Cost variance is bad.

You know CV = EV-AC and SV = EV-PV

Now the question is just testing by the mentioning the "Law of diminishing returns".

So, according to the law, there will be no advantages (or less advantages) of applying more resources to project B.

That means earned value (EV) will be less. As per the formula above, when EV is decreased, for sure CV and SV will decrease.

I hope, it clarifies the answer.

I am going to appear for the PMP exam soon. Please with me for the best.

Regards
Anil

if EV is decreased how can variance decrease for sure unless AC and PV remain constant, when you move resource from project A to B , AC of one project will increase and other will decrease, we do not know for sure if EV will increase or decrease or remain same.

Any case wish you all the best for your exam

[anil.sachdeva]

That's the point manish. We have to chose the best option. According to the law of diminishing returns, the cost of Project A will decrease but at this level of project, it will not suffer EV too much. PV is already planned earlier, so it remains constant. For second project AC is increasing for sure so CV will decrease, so what I have learned, we have to take the best option. We are sure about one project that CV is decreasing, so we have to chose that option.

May be you do not agree, but that's how I am thinking.
Regards
Anil

[manishpn]

Thats now hoe law of diminishing return works.
But this has always been a debatable question .

Wish you all the best for your exam.

[anil.sachdeva]

Thats now hoe law of diminishing return works.
But this has always been a debatable question .

Wish you all the best for your exam.

Thanks Manish.

On this part, I am in total agreement with you that this question always been debatable.

Regards
Anil