Module 3 Challenge (Project Planning: Putting It All Together) Answers 2025

Question 1

As a project manager, you notice that some of your inventory is arriving damaged, and it isn’t the vendor’s fault. What is this known as in budget planning?

• Low-quality product

• Surprise expense

• Expected issues

• Reserve inventory

🔹 Explanation: Damaged inventory that wasn’t anticipated creates an unplanned cost — a surprise expense that should be covered by contingencies or reserves.

Question 2

Imagine you create a budget and add it to a spreadsheet. You include the estimated costs for contractors who are working on the project based on the expected number of hours they work. What column should you enter this cost in your spreadsheet?

• Limit cost

• Planned cost

• Minimal cost

• Actual cost

🔹 Explanation: Estimated/forecasted amounts belong in the planned cost column. The actual cost column is used later for real expenditures.

Question 3

Is it effective project management for a project to be under budget?

• Yes, this is a sign of excellent project management.

• No, this is a sign of unsatisfactory project management.

• Maybe, but only if the stakeholders change the schedule.

✅ Correct Answer: Yes, this is a sign of excellent project management.

🔹 Explanation:
If a project comes in under budget while still meeting its scope, quality, and timeline, this is a strong indicator of effective management. The goal is to maximize value while minimizing costs — being under budget demonstrates good resource control.

Question 4

Which of the following are steps in the procurement process? (Select all that apply.)

• Initiating

• Contract writing

• Analyzing

• Controlling

🔹 Explanation: Procurement typically includes initiating/plan procurement, developing contracts (contract writing) and administering/controlling contracts. “Analyzing” is not usually listed as a standalone procurement phase here.

Question 5

Which section of the statement of work (SoW) includes the desired outcomes of the entire project?

• Major milestones

• Scope

• Purpose

• Deliverables

🔹 Explanation: The SoW’s purpose section explains the project’s objectives and desired outcomes at a high level.

Question 6

Which activity ensures ethical procurement in the initiating phase of a project?

• Audit each task and cost

• Review government regulations and policies

• Execute quality control

• Focus on the day-to-day relationships with vendors

🔹 Explanation: Reviewing applicable regulations and policies during initiation helps ensure procurement is compliant and ethically managed from the start.

Question 7

Which of the following do you consider a direct cost in your budget?

• Administrative costs

• Material costs

• Insurance

• Utilities

🔹 Explanation: Direct costs are those directly attributable to the project deliverable (e.g., materials). Administrative, insurance, and utilities are generally indirect/overhead.

Question 8

At what phase in the procurement process would a project manager make payments, set up logistics, and ensure service agreements are being met?

• Completing

• Initiating

• Controlling

• Selecting

🔹 Explanation: The controlling/administering phase covers contract performance activities: making payments, logistics, and ensuring suppliers meet agreements.

Question 9

When budgeting a project, you should consider additional expenses such as warranties, supplies, add-ons, and upgrades. Which budgeting term refers to this concept?

• Bottom-up approach

• Top-down approach

• Total cost of ownership

• Baseline your project

🔹 Explanation: Total cost of ownership (TCO) accounts for all ongoing and ancillary costs associated with the asset or project, not just initial purchase price.

Question 10

A project manager predicts the cost of a project for the upcoming quarter. What is this prediction known as?

• Planned Expense

• Forecast

• Material Expense

• Schedule

🔹 Explanation: A forecast is an estimate or prediction of future costs (or other metrics) over a specified period.