Certified Business Analysis Professional CBAP · Free Practice Question Medium
Question 26
After a new module of the solution was purchased and integrated, the solution users realized it was not delivering the expected functionality. It was meant to automate a very tedious step of a business process, but it turns out that such functionality was not included in the module. After some analysis, you learn that there was a misunderstanding regarding the features included in the module, so it was never intended to have the expected feature. As a business analyst, you recommend retiring the module and finding alternative ways to achieve the expected functionality, such as through a custom-made integration. The project sponsor is hesitant to retire the newly purchased system and insists on using it anyway, even though it is not delivering the expected value. The sponsor shows signs of not understanding which financial concept?
- A Accounting
- B Opportunity cost
- C Alternative cost
- D Sunk cost
Reveal correct answer
Correct answer: D
Explanation
sunk cost: describes the money and effort already committed to an initiative. The psychological impact of sunk costs may make it difficult for stakeholders to objectively assess the rationale for replacement or elimination, as they may feel reluctant to "waste" the effort or money already invested. As this investment cannot be recovered, it is effectively irrelevant when considering future action. Decisions should be based on the future investment required and the future benefits that can be gained. BABOK 8.5 Recommend Actions to Increase Solution ValueDiscussion
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