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Question 319

A financial institution engaged in mortgage lending has embarked on a business process improvement initiative to eliminate the activities that hinder growth to ultimately improve the success rate of its mortgage business. As a benchmark for identification, the institution is keen on improving any business process that has less than a 75% success rate. The institution has appointed a business analyst (BA) to review the business transactions for the processes of origination, payments, and closures, as well as identify opportunities for improvements and recommend solutions.

The BA has collected the following information over the last three months pertaining to these business processes:

"¢ All the business processes are at their maximum capacity in terms of the current number of transactions.

"¢ Each business process has a certain number of rejects and the reasons for rejection include documentation, verification, collateral, and funding. Funding rejects occur when the bank's customers have failed to make payment of their mortgage processing fee or mortgage closure payment.

The BA has also recommended the use of documentation checklists as a solution to eliminate the documentation rejects.

If the financial institution always works at full capacity month to month and the new success rate continues to remain the same after implementing the BA's recommendation, what is the average number of successes per month for the mortgage closure process, if the current process capability were increased by 50%?

    Correct Answer: C

    To determine the average number of successes per month for the mortgage closure process after increasing the current process capability by 50%, we start by calculating the new number of transactions. The original number of transactions per three months is 30. Increasing this number by 50% results in 30 + 15 = 45 transactions over three months. Given that the success rate remains at 80%, the expected number of successful transactions out of 45 is 45 * 0.80 = 36. To find the average number of successes per month, divide this by 3 months, resulting in 36 / 3 = 12 successes per month.

Discussion
Kakashi_SenseiOption: C

50% of 30= 15. New Total = 45. 80% success rate = 36. 36/3 months is 12. Ans should be 12.

rhsdeal

The question says "the "NEW SUCCESS RATE" continues to remain the same after implementing the BA's recommendation, should be 90% see question 372.

786NB786Option: C

Look at it from a different perspective. The first thing to keep in mind is this information in the chart has been collected over 3 months so any quantity will reflect that. The business works at full capacity month to month ie. they cannot process any more transactions, and for mortgage closures, they are processing 30 total (this is a capability). The current success rate on mortgage closures is 80% (24 closures of 30) - again this for 3 months. The new success rate remains the same after implementing the BAs recommendation (80%). What is the average number of successes per month for the mortgage closure process (only that process) if the current process capability were (was -bad grammar) increased by 50%? You increase the number of Transactions for mortgage closures from 30 to 45 (capability) keeping the same 80% success rate. Previously we processed 30 at 80% success = 24 closures. Now we process 45 at 80% success = 36 closures for 3 months. You take that and divide by 3 and you have... 12 Monthly Closures.

OmojesunOption: C

The answer is 12

Nandu2023Option: C

1. The BA has collected the following information over the last three months 2. current process capability were increased by 50% => 30 + (30/2) =45 3. new success rate continues to remain the same after implementing the BA's recommendation = 80% Total success = 80% of 45 = 36 So, per month = 36 / 3 =12

mdadewaleOption: B

The BA has collected the following information over the last three months pertaining to these business processes For 3 months total success is 24+3 (Includes BA recommendation) Therefore, for one-month 27/3 = 9 Increased by 50% = 9+4.5 = 13.5 = approx. 14

siliconvalleykamOption: C

Answer is 12 the below explanation is correct

WolfedaleOption: C

(30+(30*50%))*80% / 3 months

Pank_HDOption: B

B is correct. Capacity is increased by 50% (of 30=15) i.e. new capacity is 45. Now average of 10% is Funding rejects i.e. ~4.5 rejects. Thus total successes 40.5 over 3 months. Which is 13.5 (~14) successes PM

MAB14Option: B

The BA has collected the following information over the last three months pertaining to these business processes For 3 months total success is 24+3 (Includes BA recommendation) Therefore, for one-month 27/3 = 9 Increased by 50% = 9+4.5 = 13.5 = approx. 14

OlivierPaudex

This is the best answer. After implementing BA recommendations means you have 27 success (24+3), not 24.

OlivierPaudex

Or you could also say 30 - 3 = 27. 27 / 3 = 9. 9 + 50% = 13.5 (approximately 14)

IdberryOption: C

Ans. C. 50% increase on mortgage closure process which was 30=45, at 30 No of transaction there was 24 total success, At 45 number of transactions there will be X total success, hence 45x24/30= 36 and this was for 3 months, therefore on monthly basis, it will be 36/3 = 12 average successes per month.

Georgian1994Option: B

B is the correct answer. Before increasing by 50%, we need to eliminate all document rejects as per BA's recommendation. Therefore, we have 30 + (30*0.5) with a success rate of 90% ( by eliminating document rejects) for a period of 3 months. Final formula is 45 (new process capability ) * 0.9 (new success rate) / 3 (number of months) = 13.5

RabbitsfootOption: C

Calculate the monthly totals (BA reflected totals of the last 3 months) For the mortgage closure process: - Total transactions per month: 30 / 3 = 10 - Total documentation rejects per month: 3 / 3 = 1 - Total funding rejects per month: 3 / 3 = 1 - Total rejects per month: 1 + 1 = 2 - Total successes per month: 10 - 2 = 8 - Success rate per month: (8 / 10) * 100 = 80%

Rabbitsfoot

Assuming the institution always operates at full capacity and the new success rate remains constant after implementing the BA's recommendation, the new process capability is increased by 50%. New total successes per month = 8 * 1.5 = 12 Therefore, the average number of successes per month for the mortgage closure process, considering the three-month period, would be 12.

786NB786Option: A

Also, just because they implemented the BAs suggestion, don't assume it affected any change or improvement. We can draw that conclusion by the same success rate of 80%. Thus his suggestion and implementation made no improvement on Mortgage closure success.

SavvyBAOption: A

Tricky question. "capability" is inclusive of number of transactions and error rate reduction. Therefore, using the numbers collected, break it into a month (30/3=10, 10*1.5 (50% increase) = 15, monthly errors reduced from 1 per month on each column to .5 per month, bringing it to 1 total error = 14.

SavvyBA

I missed the part about eliminating documentation error elimination. So actually, we'd just have 45 total transactions - 3 errors = 42 successes/3 months = 14/month.

RishabJaiswal

There is a lot of ambiguity in the question, after following the BA's recommendation the document rejects would be zero and the success rate would go up to 90% but the question says what if the success rate remains the same? (it's confusing bc if you follow the recommendation the success rate will go up to 90% but if it stay the same it will 80%)

TochToch

Emphasis is on "New Success Rate" not Old/existing success rate

kevinhahahaOption: C

the new success rate continues to remain the same, so 12 success case per month, 26/45 =80%, keep the same success rate.