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PMP Practice: Monitor budget variations and work with governance process

Question 3 of 5 in Plan and Manage Budget and Resources

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Bayani Villanueva-Cruz is managing an agile project at Photon Drift Inc, a mobile app development company building a health tracking application. During the fourth sprint retrospective, the team reports they are consistently delivering only 60% of planned story points. After investigating, Bayani discovers the team is spending significant time refactoring poorly written code from earlier sprints to support new features. The product owner is pressuring the team to maintain velocity to stay within the fixed budget approved by executives. The team's burn rate shows they will exceed budget by 25% if current trends continue. The product owner has already been informed of the technical debt issue two sprints ago but prioritized new features instead. Which approach would be MOST effective for addressing the budget variance?
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Correct answer: Work with the product owner to allocate a percentage of each upcoming sprint to technical debt reduction, demonstrating how this investment will restore sustainable velocity and protect the remaining budget

Explanation

In an agile environment, sustainable velocity is essential for predictable delivery and budget management. The scenario reveals that technical debt is the root cause of reduced velocity, and the product owner has already been informed but chose to defer the issue. The closing fact that the product owner was informed two sprints ago means collaboration is now required rather than just raising awareness. The most effective approach is to work collaboratively with the product owner to explicitly budget sprint capacity for technical debt reduction, showing the connection between code quality and sustainable velocity. This treats technical debt as a necessary investment rather than 'waste,' and demonstrates how paying down this debt will actually protect the remaining budget by restoring the team's delivery capacity. The servant leadership approach focuses on removing impediments and educating stakeholders on the long-term cost of technical shortcuts. By quantifying the velocity impact and budget risk, the project manager helps the product owner make an informed prioritization decision that balances short-term feature delivery with long-term sustainability.

**Why not A:** Asking team members to work additional hours to complete both technical debt reduction and planned features is unsustainable and violates the agile principle of sustainable pace. Overworking the team would likely increase defects and accelerate burnout, worsening the very problems causing the velocity decline.

**Why not B:** Removing the lowest-performing team member is a punitive action that does not address the root cause of technical debt. Redistributing salary to extend the timeline ignores the fact that the team needs all its members working on quality code. This approach damages team morale and psychological safety without solving the underlying problem.

**Why not D:** Escalating to executive sponsors for additional funding treats the budget symptom without addressing the root cause. More money would sustain the current unsustainable pace rather than fixing the technical debt that is degrading velocity. The product owner, who was already informed two sprints ago, needs to be actively engaged in the solution rather than bypassed.

Key Concept

This question covers Monitor budget variations and work with governance process under Plan and Manage Budget and Resources (Process).

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