According to the PMBOK® Guide and the Standard for Project Management, the determination of project viability occurs during the pre-initiation phase. This evaluation is essential to justify the investment of organizational resources.
Why Choice C is correct: Cost-benefit analysis (CBA) is a financial analysis tool used to determine the economic feasibility of a project. It compares the total expected costs of the project against the total expected benefits (tangible and intangible).
Go/No-Go Decision: If the benefits significantly outweigh the costs (yielding a positive Net Present Value or a favorable Benefit-Cost Ratio), the project is deemed viable.
Business Case: This analysis is a primary component of the Business Case, the document used by sponsors to authorize the project charter.
Objective Comparison: It allows organizations to compare multiple potential projects and select the one that provides the highest value for the investment.
Analysis of other options:
A (Cost of quality): COQ refers to the total cost of conformance (prevention and appraisal) and nonconformance (internal and external failures). This is a tool used during the Plan Quality Management and Control Quality processes after a project has already started; it is not a project-level viability tool.
B (Lessons learned): While looking at past projects can inform the planning of a new one, lessons learned provide historical context rather than a direct financial or strategic justification for a specific " go/no-go " decision on a current business case.
D (Benchmarking): Benchmarking involves comparing your organization ' s practices or products against those of leaders in the industry. While it might highlight a need for a project, it doesn ' t analyze whether a specific project is financially viable for your specific organization.
Key Concept: The Project Management Institute (PMI) emphasizes that project managers must understand the business value of their projects. The Cost-benefit analysis (Choice C) is the fundamental economic tool that translates a project idea into a measurable business decision, ensuring that only projects that contribute to the organization ' s bottom line or strategic goals are initiated.
