PMI Scheduling Professional Certification (PMI-SP) Practice Exam

What does the law of diminishing returns refer to in project management?

1. The outcome when all project resources are exhausted

2. The effect of increasing one factor while other factors remain fixed

3. The decrease in productivity over consecutive project phases

4. The relationship between resource allocation and activity duration

The correct answer is: The effect of increasing one factor while other factors remain fixed

The law of diminishing returns in project management refers to the effect of increasing one factor of production while keeping other factors constant, which leads to a decrease in the additional output gained from that increase. In a project context, this means that if you continue to add resources, such as people or equipment, to a project without changing other variables, the benefit gained from those additional resources will eventually decline. For example, if a project team adds more workers to a task that has a fixed number of tools or workspace, those additional workers may initially increase productivity. However, as more workers are added, they may start to interfere with each other, leading to inefficiencies and ultimately resulting in a smaller increase in output or a decrease in overall productivity. This concept is crucial for project managers to understand, as it helps them make informed decisions about resource allocation and scheduling to maximize efficiency and output throughout the project lifecycle.