Project Management Principles

Chapter 2
Strategy, Governance, Ethics and Organizational Context

Bachelors Program in Construction Technology
Project Management Principles   •   Bachelor

Strategy, Governance, Ethics and Organizational Context

Introduction

Construction projects do not exist in isolation. A hospital extension, housing development, transport interchange, or industrial facility is an instrument through which an organization seeks to achieve strategic benefits. The project may increase capacity, reduce operating cost, improve safety, comply with regulation, create public value, or strengthen competitive position. Project management therefore involves more than controlling time, cost, scope, quality, and risk. It also requires understanding why the project exists, who has authority over it, how decisions are governed, and what ethical and legal standards apply.

This chapter examines the relationship between organizational strategy and projects; compares functional, matrix, and projectized organizational structures; and explains governance, accountability, stage-gate assurance, professional ethics, anti-corruption principles, and regulatory compliance in construction. These subjects provide the institutional foundation for later study of planning, procurement, cost, risk, quality, and delivery control.

Learning Objectives

By the end of this chapter, students should be able to:

  1. Explain how projects contribute to organizational strategy and benefits realization.
  2. Compare functional, matrix, and projectized organizational structures.
  3. Distinguish project governance from project management and describe key governance roles.
  4. Apply stage-gate assurance to construction decision-making.
  5. Identify ethical dilemmas, conflicts of interest, corruption risks, and appropriate responses.
  6. Explain the importance of regulatory compliance, records, transparency, and accountability.
  7. Evaluate organizational arrangements in a practical construction scenario.

1. Projects, Strategy and Benefits

1.1 Strategy and strategic alignment

Strategy is the organized pattern of choices through which an organization pursues its purpose over time. It concerns direction, priorities, resources, capabilities, stakeholders, and the environment in which the organization operates. A project is temporary, but its outputs are normally intended to create enduring change. Strategic alignment exists when the project’s objectives and expected outcomes support approved organizational priorities.

For example, a contractor may invest in a digital construction platform to reduce rework and improve productivity. A local authority may construct a flood-protection scheme to protect communities and maintain economic activity. A university may build laboratories to support a research strategy. In each case, the physical asset is an output, but the strategic value lies in what the asset enables.

A useful hierarchy is:

  • Organizational strategy: the long-term direction and priorities.
  • Portfolio: a group of projects, programmes, and operational activities managed to achieve strategic objectives.
  • Programme: related projects and activities coordinated to obtain benefits not available from managing them separately.
  • Project: a temporary undertaking that creates a unique product, service, or result.
  • Output: the tangible or intangible deliverable produced by the project.
  • Outcome: the change resulting from using the output.
  • Benefit: a measurable improvement valued by a stakeholder.

A new railway station is an output. Improved accessibility and reduced journey time are outcomes. Increased employment access or regional economic growth may be benefits. The project team can directly control delivery of the station, but benefits may depend on operators, users, government policy, and conditions outside the project’s authority.

1.2 The benefits chain

A benefits chain links investment to value:

Strategic objective → project output → operational capability → outcome → benefit → organizational value.

This chain prevents a common error: treating completion as proof of success. A building delivered on time and within budget may still fail if it is unsuitable, unaffordable to operate, poorly used, or disconnected from the organization’s purpose.

Benefits management should identify:

  • the benefit and its owner;
  • the baseline against which improvement will be measured;
  • the timing of expected realization;
  • dependencies and assumptions;
  • measures or indicators;
  • risks that could prevent realization; and
  • the point at which responsibility transfers from the project to operations.

Benefits are often classified as financial, operational, social, environmental, strategic, or compliance-related. Some are tangible and readily measured; others, such as community confidence or architectural quality, require qualitative assessment. A balanced benefits assessment is preferable to judging every project solely by financial return.

1.3 Investment appraisal and strategic selection

Organizations normally compare proposed projects before committing scarce resources. Common criteria include strategic contribution, legal necessity, affordability, risk exposure, technical feasibility, sustainability, stakeholder value, and expected benefits.

For projects with cash flows, a simple net present value model may support comparison:

NPV = ∑[t=0 to n] CFt ÷ (1 + r)t

Here, CFt is the net cash flow in period t, r is the discount rate per period, and n is the final period. The cash flows and discount rate must use consistent periods and monetary units. The model assumes that estimated cash flows and the selected discount rate are sufficiently credible for the decision; it does not capture every social, legal, strategic, or ethical consideration.

For example, if an investment requires £1,000,000 immediately and produces £600,000 at the end of each of the next two years, with a discount rate of 10% per year:

NPV = -1,000,000 + 600,000/(1.10) + 600,000/(1.10)2

NPV ≈ £41,322.

The positive result indicates that the estimated financial inflows exceed the discounted investment at the selected rate. It does not prove that the project should proceed: planning permission, safety, environmental effects, strategic fit, and uncertainty must also be assessed.

1.4 Strategic drift and project continuation

Projects can become misaligned because assumptions change. Demand may fall, technology may advance, regulation may tighten, or costs may rise. Governance should therefore include periodic review of the business case. Continuing a project merely because substantial money has already been spent is the sunk-cost fallacy. Decisions should be based on future costs, future benefits, current risks, and available alternatives.

2. Organizational Structures and Their Consequences

Organizational structure determines reporting relationships, authority, resource allocation, communication, and accountability. No structure is universally best. Its suitability depends on project complexity, organizational maturity, number of concurrent projects, specialist resource requirements, and the stability of the operating environment.

2.1 Functional structure

In a functional structure, employees are grouped by discipline, such as estimating, design, procurement, commercial management, construction operations, finance, or human resources. A functional manager controls specialist resources and normally has substantial authority over work priorities.

Strengths include:

  • efficient development of technical expertise;
  • clear professional supervision;
  • stable career paths and resource utilization;
  • consistent functional procedures; and
  • effective support for repetitive or routine work.

Limitations include:

  • barriers between departments;
  • slow cross-functional decisions;
  • competing departmental priorities;
  • weak ownership of whole-project outcomes; and
  • difficulty coordinating complex interfaces.

A project manager in a strongly functional organization may act mainly as a coordinator. Success depends heavily on negotiation with functional managers, because the project manager may not control personnel, budgets, or technical decisions.

2.2 Matrix structure

A matrix combines functional departments with project-based coordination. Personnel may report both to a functional manager and to a project manager. Matrix structures vary in strength:

  • In a weak matrix, the functional manager retains most authority and the project manager resembles a coordinator.
  • In a balanced matrix, authority is shared and responsibilities must be explicitly agreed.
  • In a strong matrix, the project manager has greater control over budget, priorities, and integration, although functional departments remain important.

Strengths include flexible use of scarce specialists, improved project integration, and the ability to support many projects without duplicating every function.

Limitations include dual reporting, role ambiguity, conflict over priorities, additional coordination effort, and the possibility that staff receive incompatible instructions. A responsibility assignment matrix, such as a RACI model, can clarify who is Responsible, Accountable, Consulted, and Informed for significant activities. RACI is a communication aid, not a substitute for a formal delegation of authority.

2.3 Projectized structure

In a projectized structure, the project is the dominant organizational unit. A project manager generally has substantial authority over budget, resources, priorities, and integration. Staff may be dedicated to the project for its duration.

Strengths include:

  • strong focus on project objectives;
  • rapid communication and decision-making;
  • clear project accountability;
  • effective integration of diverse disciplines; and
  • suitability for large, unique, high-risk work.

Limitations include duplication of specialist capability, higher overhead, uncertainty for staff after project completion, and possible underuse of expertise between projects.

2.4 Comparative overview

FeatureFunctionalMatrixProjectized
Primary authorityFunctional managerShared or variableProject manager
Resource allocationDepartmentalNegotiated/sharedProject-based
Project manager roleCoordinator to limited managerCoordinator to strong managerStrong integrator and manager
Technical specializationHigh within departmentsHigh with cross-functional accessMay require dedicated specialists
Decision speedOften slower across departmentsVariableOften faster
Main riskSilosDual authority and conflictDuplication and post-project uncertainty
Suitable contextRoutine and specialist workMultiple concurrent projectsMajor, complex, dedicated projects

Construction organizations frequently use hybrid arrangements. A main contractor may be projectized at site level while retaining functional commercial, safety, design, and procurement departments at corporate level. The important issue is not the label but whether authority, interfaces, escalation routes, and accountability are understood.

3. Governance and Accountability

3.1 Governance compared with management

Governance is the framework through which an organization directs, oversees, controls, and accounts for its activities. Project management is the application of knowledge, methods, skills, and leadership to deliver the project. Governance asks whether the right project is authorized, whether authority is properly exercised, and whether the organization is receiving reliable assurance. Management asks how approved work will be planned and delivered.

Governance should establish:

  • decision rights and delegated authority;
  • alignment with strategy and the business case;
  • oversight of risk, safety, quality, cost, and performance;
  • independent assurance where appropriate;
  • reporting and escalation requirements;
  • ethical and legal expectations; and
  • arrangements for closure and benefits transition.

3.2 Typical governance roles

Roles differ between jurisdictions and organizations, but a sound arrangement commonly includes:

  • Sponsor: owns the business case, secures organizational support, champions the project, and makes or escalates major decisions.
  • Project board or steering committee: provides direction, authorizes stages, resolves escalated issues, and tests continued viability.
  • Project manager: integrates delivery, manages authorized scope and resources, reports performance, and escalates matters beyond delegated authority.
  • Design authority or technical lead: protects technical integrity, standards, interfaces, and design decisions.
  • Commercial or contract manager: manages contractual obligations, change, payment, claims, and commercial risk.
  • Assurance function: independently examines whether governance, controls, and delivery practices are adequate.
  • Users and operators: define operational needs and confirm that the completed asset is usable and maintainable.

Accountability cannot be delegated away merely by assigning tasks. A person may delegate responsibility for performing an activity while retaining accountability for the result. Effective governance therefore records who may decide, who must advise, who executes, and who verifies.

3.3 Control information and escalation

Governance depends on timely, accurate information. Reports should distinguish facts, estimates, assumptions, decisions, emerging risks, and unresolved issues. A report that hides uncertainty is more dangerous than one that communicates an unfavorable forecast.

Escalation thresholds may relate to cost variance, schedule delay, safety events, quality failure, legal exposure, scope change, or risk exposure. Thresholds should be agreed in advance. Escalation is not evidence of failure; it is a control mechanism that allows the appropriate authority to act before a problem becomes irreversible.

4. Stage-Gate Assurance

4.1 The logic of staged decisions

A stage-gate model divides project development into phases separated by formal decision points. At each gate, authorized decision-makers review evidence and choose whether to:

  • proceed;
  • proceed subject to conditions;
  • request further information;
  • pause; or
  • terminate.

A typical construction lifecycle may include strategic need, concept and options, developed design, procurement, construction, commissioning, and post-occupancy evaluation. The precise names vary, but the principle is consistent: commitment should increase as uncertainty reduces, and decisions should be evidence-based.

4.2 Gate evidence

Evidence at a gate may include:

  • updated business case and benefits profile;
  • scope definition and requirements;
  • cost plan and funding confirmation;
  • schedule and critical interfaces;
  • risk register and opportunity assessment;
  • design maturity and buildability review;
  • safety, environmental, planning, and statutory approvals;
  • procurement strategy and contract readiness;
  • stakeholder consultation;
  • quality and information-management arrangements; and
  • independent assurance findings.

A gate review is not merely a meeting to approve progress. It is a challenge to assumptions and a test of whether proceeding remains responsible.

4.3 Assurance independence and proportionality

Assurance should be sufficiently independent from the team whose work is being assessed. Independence does not mean ignorance of project realities; reviewers need relevant competence and access to evidence. Assurance should also be proportionate. A small, low-risk refurbishment does not require the same governance burden as a complex hospital, bridge, or major public infrastructure programme.

Stage gates can fail when they become ceremonial, when optimistic information is rewarded, when decisions are made without documented criteria, or when approval is granted before critical evidence is available. Conditions attached to a gate should have owners, deadlines, and verification arrangements.

5. Professional Ethics in Construction

Ethics concerns principles of right conduct and professional responsibility. Construction decisions affect workers, occupants, communities, public money, the environment, and future generations. Technical competence alone is insufficient if decisions are dishonest, reckless, discriminatory, or negligent.

5.1 Core ethical principles

Important principles include:

  • Integrity: act honestly and avoid misleading conduct.
  • Objectivity: base decisions on relevant evidence rather than personal advantage.
  • Competence: accept work only when suitably qualified or properly supervised.
  • Duty of care: take reasonable steps to prevent foreseeable harm.
  • Confidentiality: protect legitimate confidential information while recognizing duties to disclose serious wrongdoing or danger.
  • Fairness: treat parties consistently and avoid improper discrimination.
  • Sustainability: consider environmental and social consequences over the asset life.
  • Accountability: maintain records and accept responsibility for professional decisions.

Ethical practice may require challenging a senior person, refusing an unsafe instruction, disclosing a conflict, or reporting suspected fraud. Such actions can be professionally difficult, particularly where employment or commercial relationships are involved. Organizations should provide protected reporting channels and prohibit retaliation.

5.2 Ethical decision framework

When facing an ethical dilemma, a practitioner can:

  1. Clarify the facts and distinguish evidence from rumor.
  2. Identify affected stakeholders and potential harms.
  3. Check law, contract, professional codes, organizational policy, and delegated authority.
  4. Identify conflicts of interest and disclose them.
  5. Consider alternative actions and their consequences.
  6. Seek confidential advice from an appropriate competent source.
  7. Select and document the defensible course of action.
  8. Escalate or report where safety, legality, or public interest requires it.
  9. Review the outcome and protect relevant records.

This framework does not replace professional judgment. Legal compliance is a minimum standard; an action can be legal yet still unethical, for example when it exploits an information imbalance or conceals a foreseeable safety concern.

6. Anti-Corruption and Conflicts of Interest

Corruption is the misuse of entrusted power for private or improper benefit. It includes bribery, kickbacks, extortion, fraud, collusion, bid rigging, improper gifts, favoritism, and concealment of conflicts. Construction is vulnerable because projects involve large sums, complex subcontracting, technical discretion, variations, urgent decisions, and relationships between public and private organizations.

6.1 Common risk points

Risk can arise during:

  • land acquisition and planning approvals;
  • tender specification and bidder prequalification;
  • evaluation of bids;
  • appointment of consultants and subcontractors;
  • measurement and certification of work;
  • valuation of variations and claims;
  • inspection, testing, and acceptance;
  • payment and release of retention; and
  • disposal or reuse of materials and equipment.

6.2 Preventive controls

Effective controls include transparent procurement rules, segregation of duties, competitive tendering where appropriate, documented evaluation criteria, approval limits, supplier due diligence, gifts and hospitality registers, declarations of interest, audit trails, rotation or review of sensitive duties, payment verification, whistleblowing channels, and sanctions for misconduct.

Segregation of duties reduces the risk that one person can initiate, approve, receive, and pay for the same transaction. It is a control principle, not an absolute requirement; small organizations may need compensating review controls.

A gift is not automatically corrupt, but its timing, value, purpose, transparency, and influence on judgment matter. Gifts offered during tender evaluation or contract award create a significant appearance and risk of impropriety and should normally be declined and recorded.

7. Regulatory Compliance and the Public Interest

Construction operates within a network of legal and regulatory requirements. Exact rules depend on jurisdiction, but common areas include planning and land use, building regulations, occupational health and safety, environmental protection, labor and employment, accessibility, fire safety, procurement, contract and payment law, licensing, taxation, data protection, and anti-corruption law.

Compliance is not a single document or end-of-project inspection. It is a managed process involving identification, interpretation, assignment, evidence, monitoring, and close-out. A compliance register can record each obligation, responsible person, required evidence, due date, status, and escalation route.

7.1 Hierarchy of requirements

Project teams should distinguish among:

  • legislation and regulations, which are legally binding;
  • permits, approvals, and conditions imposed by authorities;
  • contractual requirements, which bind the parties under the contract;
  • recognized standards and codes, which may be mandatory when incorporated into law or contract;
  • organizational policies and procedures; and
  • good-practice guidance, which may inform but not itself create a legal obligation.

Where requirements conflict, the team should not improvise. The conflict should be analyzed by competent legal, technical, and regulatory advisers, and the decision should be recorded.

7.2 Evidence and assurance

Evidence may include approved drawings, inspection and test records, competence certificates, permits, material traceability, risk assessments, environmental monitoring, training records, commissioning results, and signed handover documents. If compliance cannot be demonstrated, the organization may face enforcement, delay, rework, claims, injury, reputational damage, or inability to occupy or operate the asset.

Compliance also has a human dimension. A project can technically meet a minimum code while producing an unsafe or exclusionary result if the design ignores actual users. Professional judgment should therefore consider the purpose behind requirements, not only their literal wording.

8. Illustrative Case: Riverside Community Health Centre

Background

A regional public authority proposes a £38 million health centre on a constrained urban site. The project is intended to consolidate services, improve access, reduce energy use, and support local employment. The organization uses a matrix structure: design and commercial specialists report to functional directors, while a project director coordinates delivery.

Problem

At the developed-design gate, the project is forecast to exceed the approved budget by £4 million. The sponsor proposes reducing ventilation capacity and removing an accessibility feature to recover cost. A bidder’s representative has also offered hospitality to a procurement evaluator. Meanwhile, the planning authority has requested additional flood-risk evidence.

Analysis

The budget pressure is a strategic and governance issue, not merely a cost-control issue. Reducing ventilation may undermine infection control and operational benefits; removing accessibility features may conflict with legal duties and the project’s public purpose. The hospitality creates a conflict-of-interest risk and must be declared and handled under procurement rules. The unresolved flood evidence means that planning and environmental approval are not yet assured.

The project board should require an updated options appraisal rather than approve an undocumented scope reduction. Alternatives may include redesign, phasing, value engineering that preserves critical performance, revised funding, or a change in service model. Each option should be tested against whole-life cost, safety, accessibility, carbon, programme, and benefits.

The evaluator should record and report the hospitality, decline or return it according to policy, and be removed from the evaluation if impartiality could reasonably be questioned. The flood-risk evidence should be assigned to a competent lead, with a clear decision date and independent review where appropriate.

Approach and outcome

The board places a conditional hold at the gate. The design team develops three alternatives, including one that reduces floor area rather than safety systems. A clinical user group confirms operational requirements. An independent cost consultant reviews the estimate, and the authority completes the flood assessment. The preferred option costs £1.5 million more than the original budget but preserves clinical performance and accessibility; funding is approved after the benefits case is updated. Procurement proceeds with a revised evaluation team and documented declarations.

Learning points

  1. Strategic benefits should guide cost decisions; not every cost reduction is value creation.
  2. Gate approval should depend on evidence, not optimism or sunk cost.
  3. Governance integrates safety, accessibility, ethics, planning, finance, and delivery.
  4. Conflicts of interest must be declared and managed before they affect decisions.
  5. A matrix structure requires explicit authority and escalation arrangements.

9. Contemporary Developments and Best Practice

Digital systems increasingly support governance through common data environments, approval workflows, automated audit trails, model-based design reviews, and dashboards. These tools improve traceability but do not guarantee truth. Poor data, unauthorized access, biased algorithms, or inappropriate automation can create new risks. AI-generated cost, schedule, or design suggestions should be treated as decision support and checked by competent professionals. The organization remains accountable for decisions made using technology.

Sustainability is also changing governance expectations. Organizations increasingly consider whole-life carbon, climate resilience, circular economy principles, modern methods of construction, social value, and supply-chain responsibility. These objectives should be expressed as measurable requirements and monitored through the project lifecycle rather than added as promotional language at completion.

Good practice includes:

  • align every project with an approved strategic need;
  • define outputs, outcomes, benefits, assumptions, and owners;
  • establish decision rights before delivery begins;
  • use proportionate, independent stage-gate assurance;
  • maintain reliable registers for risks, issues, decisions, changes, interests, and compliance;
  • encourage early escalation and protect those who raise concerns;
  • integrate safety, quality, environmental, ethical, and commercial controls;
  • verify supplier and subcontractor conduct; and
  • evaluate whether benefits were actually realized after handover.

Challenges and Limitations

Governance systems can become bureaucratic if every decision is escalated or every project receives identical controls. Conversely, excessive informality can conceal risk and weaken accountability. Strategic benefits may be uncertain, long-term, or influenced by external factors, making attribution difficult. Organizational structures may also change during a project, creating confusion about authority. Ethical codes cannot anticipate every dilemma, and compliance registers cannot replace professional competence. These limitations reinforce the need for proportionality, transparency, judgment, and continual review.

Chapter Summary

Projects are vehicles for implementing organizational strategy, but delivery of an output does not automatically create a benefit. Strategic alignment requires a clear connection among objectives, outputs, outcomes, benefits, and organizational value. Functional structures support specialization; matrix structures share authority across functions and projects; and projectized structures emphasize dedicated project control. Hybrid arrangements are common in construction.

Governance establishes direction, authority, oversight, assurance, and accountability, while project management organizes the work required to deliver approved objectives. Stage gates provide structured opportunities to test the business case, design maturity, risk, compliance, affordability, and readiness before increasing commitment. Ethical practice requires integrity, competence, fairness, independence, duty of care, sustainability, and willingness to challenge unsafe or improper conduct. Anti-corruption controls include transparent procurement, segregation of duties, declarations of interest, due diligence, accurate records, and protected reporting. Regulatory compliance must be planned, assigned, evidenced, and monitored throughout the lifecycle. Together, these principles create the institutional foundation for responsible construction project management.

Key Terms

Accountability: Obligation to answer for decisions, actions, and results.

Assurance: Independent or objective examination of whether controls and delivery arrangements are adequate.

Benefit: A measurable improvement valued by a stakeholder.

Business case: Evidence-based justification for investment and continued project support.

Conflict of interest: A situation in which personal or external interests could improperly influence professional judgment.

Corruption: Misuse of entrusted power for improper private or organizational benefit.

Governance: Direction, oversight, control, and accountability of organizational activity.

Matrix structure: An organization in which functional and project authorities coexist.

Output: A product, service, or result produced by a project.

Outcome: A change enabled by use of a project output.

Portfolio: A coordinated collection of projects, programmes, and other work supporting strategy.

Projectized structure: An organization in which projects are the dominant units of authority and resource coordination.

RACI: A responsibility model identifying Responsible, Accountable, Consulted, and Informed parties.

Regulatory compliance: Conformance with applicable law, regulations, permits, and mandated requirements.

Stage gate: A formal decision point at which evidence is reviewed before proceeding.

Strategic alignment: Consistency between project purpose and organizational priorities.

Sponsor: Senior person accountable for championing the project and its business case.

Sunk-cost fallacy: Continuing an activity because of past expenditure rather than evaluating future costs and benefits.

Review Questions

Short Answer Questions

  1. Distinguish an output, outcome, and benefit using a construction example.
  2. State two strengths and two limitations of a functional organizational structure.
  3. What is the difference between governance and project management?
  4. What decisions can be made at a stage gate?
  5. Why should conflicts of interest be declared?

Long Answer Questions

  1. Explain how a construction project can be aligned with organizational strategy from initiation through benefits realization.
  2. Compare functional, matrix, and projectized structures and recommend a suitable context for each.
  3. Discuss the roles of a sponsor, project board, project manager, and assurance function.
  4. Explain how ethical principles and anti-corruption controls protect construction project outcomes.
  5. Describe how a project team should establish and maintain regulatory compliance.

Analytical / Application Questions

  1. A hospital project is on budget but will not deliver the clinical capacity stated in its business case. Analyze whether it is successful and recommend governance action.
  2. In a matrix organization, the functional manager assigns a structural engineer to another urgent project while the project manager needs the engineer for a safety-critical review. Analyze the authority conflict and propose a resolution.
  3. A procurement evaluator receives expensive hospitality from a bidder two days before tender scoring. Apply an ethical and governance response, including immediate actions and preventive controls.

Multiple Choice Questions with Answers

Question 1

Which statement best describes a project benefit?

A. The building materials purchased for construction

B. The measurable improvement created through use of the project output

C. The temporary project team formed to deliver the work

D. The approved construction drawings

Correct Answer: B. The measurable improvement created through use of the project output

Question 2

In a functional organization, primary authority normally rests with the:

A. Project board

B. Project sponsor

C. Functional manager

D. Independent auditor

Correct Answer: C. Functional manager

Question 3

What is the principal purpose of a stage gate?

A. To guarantee that no project changes occur

B. To review evidence before authorizing continued commitment

C. To replace all project planning activities

D. To transfer accountability to the contractor

Correct Answer: B. To review evidence before authorizing continued commitment

Question 4

Which role normally owns and champions the project business case?

A. Project sponsor

B. Site supervisor

C. Quantity surveyor

D. Document controller

Correct Answer: A. Project sponsor

Question 5

Which situation is most clearly a conflict of interest?

A. A designer reviewing a drawing in their area of competence

B. A project manager using an approved risk register

C. An evaluator scoring a bid submitted by a close relative’s company

D. A contractor attending a scheduled coordination meeting

Correct Answer: C. An evaluator scoring a bid submitted by a close relative’s company

Question 6

Which control most directly reduces the risk that one person can authorize and pay for an improper transaction?

A. Segregation of duties

B. Reducing the number of records

C. Removing approval thresholds

D. Allowing verbal procurement decisions

Correct Answer: A. Segregation of duties

Question 7

A positive NPV, by itself, means that a project:

A. Must proceed regardless of safety risks

B. Has estimated discounted inflows greater than the investment at the selected rate

C. Will certainly produce its forecast benefits

D. Is legally compliant

Correct Answer: B. Has estimated discounted inflows greater than the investment at the selected rate

Question 8

In a balanced matrix structure, authority is generally:

A. Held exclusively by the functional manager

B. Held exclusively by the project manager

C. Shared between functional and project management

D. Transferred to external regulators

Correct Answer: C. Shared between functional and project management

Question 9

Which response is most appropriate when a project team discovers unresolved statutory approval requirements at a gate?

A. Proceed secretly and obtain approval after completion

B. Ignore the issue if the schedule is tight

C. Record, assign, assess, and resolve or condition the decision before proceeding

D. Delete the requirement from the compliance register

Correct Answer: C. Record, assign, assess, and resolve or condition the decision before proceeding

Question 10

Why is project completion not necessarily evidence of project success?

A. Projects never produce measurable outputs

B. Success also depends on outcomes, benefits, safety, and strategic value

C. Completion is unrelated to time and cost performance

D. Only contractors can define success

Correct Answer: B. Success also depends on outcomes, benefits, safety, and strategic value

Project Management Principles
Chapter 2 of 15