PMP Referenced Question 13: Estimating Costs for Urgent Funding Using Proven Team Performance
This PMP-style scenario examines the correct choice of estimation method for submitting a project for urgent funding. The scenario involves a proven Scrum team and a critical project that introduces new technology.
📘 Scenario
A new project needs to be submitted for urgent funding approval. The project, which will use a new technology, is vital to the organization. The entire Scrum team has worked together for over 3 years on multiple projects and delivered the previous project under the approved budget.
❓ Question
Which estimation technique should the project manager implement in this context?
- A. Definitive estimate
- B. Order of magnitude
- C. Budget estimate
- D. Story points
✅ Correct Answer: C. Budget estimate
- ⏱ A budget estimate is ideal when funding is needed quickly, but detailed specs are not finalized.
- 📉 Accuracy range: –10% to +25%, suitable for early approval with reasonable confidence.
- 🧠 The experienced team provides credibility for historical reference and realistic budgeting.
✔ Why Option C is Correct
The budget estimate strikes the right balance for this situation: it’s quick, informed by historical performance, and appropriate for submitting funding requests during early planning. PMI categorizes it as a mid-level estimate suitable for stakeholder decision-making.
🧮 Estimation Technique Comparison
| Technique | Purpose | Accuracy | When Used |
|---|---|---|---|
| Order of Magnitude | Conceptual, very early | –25% to +75% | Project proposal / idea phase |
| Budget Estimate | Funding decisions, business case | –10% to +25% | Planning, before detailed scope |
| Definitive Estimate | Execution planning | –5% to +10% | When scope and details are known |
| Story Points | Relative effort (Agile only) | Not a cost estimate | Sprint planning / velocity tracking |
✖ Why Other Options Are Incorrect
- A. Definitive estimate → Too detailed; requires complete scope and design, not suitable for urgent approval.
- B. Order of magnitude → Too rough (–25% to +75%) for a vital, high-priority project with an experienced team.
- D. Story points → Used for relative effort estimation in Agile delivery, not for cost-based funding decisions.
📌 Key Takeaway
For early-stage but high-visibility projects requiring fast funding, PMI recommends budget estimates — especially when historical performance data supports them.
PMP candidates must distinguish between estimation techniques based on timing, accuracy, and purpose. Budget estimates are ideal for early funding decisions when urgency and moderate accuracy are required.