Project Management Professional (PMP) — Question 63

A new project manager was assigned to a project during implementation. The project manager realized that new tax policies are creating a risk for a cost overrun by 25%. The project manager updated the risk register and kept the project running as normal. The CEO has announced that the project could be cancelled since the acceptable cost overrun is only 20%. The project manager was quite surprised as this was new information.
What should the project manager have done to avoid this?

Answer options

• A. Implemented the communications management plan properly.
• B. Implemented the stakeholder engagement plan correctly.
• C. Provided a proper risk response.
• D. Ensured the risk tolerance of the company was properly updated.

Correct answer: D

Explanation

The correct answer is D because understanding the company's risk tolerance is crucial for effective project management, especially when new risks arise. If the project manager had ensured that the risk tolerance was updated, they may have been aware of the CEO's limits on cost overruns, thus avoiding surprises. The other options, while important, do not directly address the issue of understanding the company's risk threshold in relation to the project.