A non-profit utility company has 900 employees, a majority of whom are hourly employees and must track their time using a paper based process. A few years ago, the Director of Human Resources purchased a software system to eliminate the current paper-based time reporting process. No requirements specific to the utility company were defined prior to the purchase. A team was formed to implement the software. During implementation process, the team discovered the software lacked functionality and was not robust enough to support the general ledger requirements The company stopped the effort and incurred a 1500.000 USD loss on the cost of the software.
This year, the Director of Finance requested that a team investigate the current paper-based time reporting process and recommend solutions. The Director of Finance feels that the Director of Human Resources must be involved as a critical stakeholder The Director of Human Resources is still bitter about the last effort because the process stopped.
During a design review meeting to discuss the future state, all stakeholders are in agreement except the Director of Human Resources. Who makes the final decision?
The governance approach defines the roles and responsibilities of the stakeholders involved in the business analysis activities, including who has the authority to make decisions and approve deliverables. In this case, the Director of Human Resources is not the decision maker, but one of the stakeholders who needs to be consulted and informed. The final decision should be made by those who have the decision-making authority as per the governance approach, which may include the sponsor, the Director of Finance, or other senior managers.Reference:
CBAP / CCBA Certified Business Analysis Study Guide, 2nd Edition, Chapter 2: Business Analysis Planning and Monitoring, page 67
BABOK Guide, Version 3, Section 2.4: Governance, page 29
Your organization is trying to determine which one of two opportunities they will pursue. The Project A is worth
$235,987 and Project B is worth $567,000 but carries significant risk. The organization elects to purse Project B and not Project A.
What is the opportunity cost in this scenario?
Opportunity cost is the value of the next best alternative that is forgone as a result of making a decision1. In this scenario, the opportunity cost of choosing Project B over Project A is the value of Project A, which is $235,987. This means that by pursuing Project B, the organization is giving up the potential benefit of earning $235,987 from Project A. The risk of Project B is not relevant for calculating the opportunity cost, as it only affects the expected return of Project B, not the value of Project A. The difference between the values of Project B and Project A ($331,013) is not the opportunity cost, as it does not reflect the value of the forgone alternative.The value of Project B ($567,000) is not the opportunity cost, as it is the value of the chosen alternative, not the forgone one.Reference:1: Opportunity Cost: Definition, Calculation Formula, and Examples1
Enterprise analysis provides many things for an organization.
All of the following are tasks included in enterprise analysis except for which one?
Enterprise analysis is a knowledge area that covers the activities of identifying and defining business needs and opportunities, and determining feasible solutions to meet the organizational goals and objectives. Enterprise analysis includes the following tasks: define business need, assess capability gaps, determine solution approach, define solution scope, and define business case. Solution performance assessment is not a task of enterprise analysis, but rather a task of solution evaluation, which is another knowledge area that covers the activities of measuring and validating the value delivered by a solution.Reference:BABOK Guide v3, page 25;CBAP / CCBA Certified Business Analysis Study Guide, page 69.
There are just three inputs to the assess proposed solution process.
Which of the following is NOT one of the inputs for the assess proposed solution process?
Decision analysis is not an input, but a technique that can be used to assess proposed solutions. Decision analysis involves evaluating the feasibility, benefits, risks, and impacts of various solution options and selecting the best one based on predefined criteria and stakeholder preferences. The inputs for the assess proposed solution process are requirements, assumptions and constraints, and solution options. Requirements are the desired capabilities and conditions of the solution. Assumptions and constraints are the factors that affect the solution design and implementation. Solution options are the alternative ways to meet the requirements within the assumptions and constraints.Reference:
BABOK Guide, p. 121-122
CBAP / CCBA Certified Business Analysis Study Guide, p. 295-296
Certified Business Analysis Professional (CBAP) | Coursera, Course 2, Week 4, Video: ''Assess Proposed Solution''
You are the business analyst for the TGH Organization and are determining if you should buy or build a solution for your company. You have determined that you can create the in-house solution for $78,000 with a monthly support cost of $8,765. A vendor can create the solution for $61,000 with a monthly support cost of $7,990.
How long will it take your company to break even if you choose the internal solution versus the vendor's solution?
To calculate the break-even point, we need to compare the total costs of the internal solution and the vendor's solution over time. The internal solution has a higher initial cost ($78,000) and a higher monthly cost ($8,765) than the vendor's solution ($61,000 and $7,990 respectively). Therefore, the internal solution will take longer to break even with the vendor's solution. The formula for the break-even point is:
Break-even point = (Initial cost difference) / (Monthly cost difference)
Plugging in the numbers, we get:
Break-even point = ($78,000 - $61,000) / ($8,765 - $7,990) Break-even point = $17,000 / $775 Break-even point = 21.94 months
Rounding up to the nearest whole month, we get 22 months as the break-even point.Reference: This question is based on the concept of financial feasibility analysis, which is part of the business analysis planning and monitoring knowledge area in the BABOK Guide. Financial feasibility analysis is the process of comparing the costs and benefits of different solutions to determine the optimal one for the organization. One of the techniques for financial feasibility analysis is break-even analysis, which calculates the point in time when the costs of a solution equal the benefits of the solution. You can find more information about financial feasibility analysis and break-even analysis in the following sources:
BABOK Guide, section 3.4.5.5, pages 76-77
CBAP / CCBA Certified Business Analysis Study Guide, chapter 3, pages 85-86
Certified Business Analysis Professional (CBAP) | Coursera, course 2, week 3, video 3.3
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