Scaled Agile Framework (SAFe) Lean Portfolio Management Practice Exam

What is one problem caused by project cost accounting?

1. Overstated project profits

2. Delays

3. Reduced stakeholder engagement

4. Inconsistent project metrics

The correct answer is: Delays

Project cost accounting primarily focuses on the financial aspects of projects, tracking costs and managing budgets. While it's possible that project cost accounting can contribute to various issues, such as delays, the most pervasive problem specifically attributed to this method is the likelihood of overstating project profits. Under project cost accounting, there is often an emphasis on meeting budgetary constraints rather than delivering real value, which can result in manipulated figures that inflate profits. The nature of cost accounting can lead to decisions based on budget adherence rather than true performance or value delivery, leading teams to prioritize cost control over innovative practices or stakeholder satisfaction. This focus can prevent genuinely beneficial changes from being implemented, resulting in a lack of engagement from stakeholders who might feel that their needs are being overlooked in favor of financial metrics. While delays, reduced stakeholder engagement, and inconsistent project metrics could all be concerns in various project management approaches, the principal issue arising from project cost accounting tends to revolve around the manipulation of financial outcomes and resultant misrepresentations, which propagates the problem of overstating project profits.