- A project manager is reviewing the budget for a critical path activity and notices that the actual cost incurred is significantly higher than the planned value. What is the MOST likely immediate concern for the project manager?
- The Schedule Performance Index (SPI) will decrease.
- The Estimate at Completion (EAC) will likely increase.
- The Cost Performance Index (CPI) will improve over time.
- The project team is not following the cost management plan.
- Which of the following is a key output of the Estimate Costs process?
- Budget at Completion (BAC)
- Cost Management Plan
- Basis of Estimates
- Earned Value (EV)
- During a project execution, a stakeholder requests a significant scope change. What should the project manager do FIRST with regard to cost management?
- Update the project budget to reflect the change.
- Analyze the cost impact of the proposed change.
- Inform the stakeholder that the change cannot be accommodated due to budget constraints.
- Implement the change immediately and track the new costs.
- A project has a planned value (PV) of $500, an earned value (EV) of $450, and an actual cost (AC) of $550. What is the cost variance (CV) for this project?
- $100
- -$100
- $50
- -$50
- Which of the following tools and techniques is used in the Plan Cost Management process?
- Earned Value Analysis
- Funding Limit Reconciliation
- Expert Judgment
- Variance Analysis
- What is the primary purpose of the Control Costs process?
- To define how the project costs will be estimated, budgeted, managed, monitored, and controlled.
- To develop an approximation of the monetary resources needed to complete project activities.
- To monitor the status of the project budget, manage changes to the cost baseline, and inform stakeholders of authorized changes to the project costs.
- To establish the total budget for the project, which includes contingency reserves.
- Which of the following formulas is used to calculate the Cost Performance Index (CPI)?
- EV / PV
- EV / AC
- AC / PV
- (EV – AC) / EV
- A project manager is reviewing the performance reports and notices a consistent negative cost variance. What does this indicate?
- The project is ahead of schedule.
- The project is spending more than planned.
- The project is spending less than planned.
- The project is on budget.
- What is a contingency reserve typically used for in project cost management?
- To cover known risks that are included in the project scope and budget.
- To cover unforeseen risks or scope changes that may occur during the project.
- To manage the profit margin of the project.
- To allocate funds for future projects.
- Which of the following is NOT a typical input to the Determine Budget process?
- Basis of Estimates
- Scope Baseline
- Project Schedule
- Performance Reports
- What is the formula for calculating the Estimate to Complete (ETC) when the cost variance is considered atypical and future performance is expected to be similar to past performance?
- BAC – EV
- EAC – AC
- (BAC – EV) / CPI
- BAC / CPI
- Which cost management technique involves comparing actual project performance to planned performance and taking corrective action when necessary?
- Cost Budgeting
- Cost Estimating
- Earned Value Management
- Resource Planning
- What is the purpose of funding limit reconciliation?
- To ensure that the planned expenditures do not exceed the funding commitments.
- To allocate contingency reserves to specific project activities.
- To track the actual spending against the budget.
- To forecast the final project cost.
- Which of the following is an example of a direct cost?
- Project manager’s salary
- Rent for the office space
- Travel expenses for team members working on the project
- Utilities for the project office
- What is the difference between a rough order of magnitude (ROM) estimate and a definitive estimate?
- A ROM estimate is more accurate than a definitive estimate.
- A definitive estimate is typically developed earlier in the project lifecycle than a ROM estimate.
- A ROM estimate has a wider range of potential values than a definitive estimate.
- A definitive estimate is used for strategic decision-making, while a ROM estimate is used for detailed planning.
- Which of the following is a tool and technique used in the Estimate Costs process?
- Cost Aggregation
- Reserve Analysis
- Analogous Estimating
- Budget Updates
- What does a Cost Performance Index (CPI) of 0.8 indicate?
- The project is spending 80% of what was budgeted for the work performed.
- The project is spending 120% of what was budgeted for the work performed.
- The project is 80% complete in terms of cost.
- The project is 20% over budget.
- Which of the following is a key benefit of effective project cost management?
- Increased team morale
- Improved stakeholder satisfaction
- Reduced project risks
- Enhanced communication
- What is the total planned value of the work scheduled to be completed by a specific date called?
- Earned Value (EV)
- Actual Cost (AC)
- Budget at Completion (BAC)
- Planned Value (PV)
- Which of the following is NOT a type of cost typically included in a project budget?
- Direct Costs
- Indirect Costs
- Sunk Costs
- Fixed Costs
- A project manager is asked to provide a cost estimate quickly based on historical data from similar projects. Which estimating technique is MOST likely being used?
- Bottom-up estimating
- Parametric estimating
- Analogous estimating
- Three-point estimating
- What is the formula for calculating the Schedule Performance Index (SPI)?
- EV / AC
- EV / PV
- AC / PV
- (EV – PV) / PV
- Which of the following is a key input to the Control Costs process?
- Project Management Plan
- Project Charter
- Stakeholder Register
- Risk Register
- What is the purpose of a cost management plan?
- To define the project scope and deliverables.
- To outline how the project team will be organized and managed.
- To describe how project costs will be planned, structured, and controlled.
- To document the project’s high-level information and objectives.
- Which of the following is a potential output of the Control Costs process?
- Project Schedule
- Quality Reports
- Budget Forecasts
- Risk Management Plan
- What is the formula for calculating the variance at completion (VAC)?
- BAC – EAC
- EV – AC
- PV – AC
- BAC – PV
- Which cost estimating technique involves estimating the cost of individual work packages and then summing them to get a total project cost?
- Analogous estimating
- Parametric estimating
- Bottom-up estimating
- Three-point estimating
- What is the expected range of accuracy for a budgetary estimate?
- -5% to +10%
- -10% to +25%
- -25% to +75%
- -50% to +100%
- Which of the following is an example of an indirect cost?
- Raw materials used in production
- Salaries of project team members directly working on tasks
- Corporate overhead allocated to the project
- Travel expenses for a consultant working on a specific deliverable
- What is the purpose of reserve analysis in cost management?
- To determine the total funding required for the project.
- To establish contingency and management reserves.
- To track the actual costs incurred on the project.
- To forecast the final project cost based on past performance.
- A project has a Budget at Completion (BAC) of $1,000,000. After 50% of the planned work is completed, the Earned Value (EV) is $450,000 and the Actual Cost (AC) is $550,000. What is the Cost Variance (CV)?
- $100,000
- -$100,000
- $50,000
- -$50,000
- Which of the following is a tool used for data analysis in the Control Costs process?
- Expert Judgment
- Meetings
- Trend Analysis
- Cost Management Plan
- What is the formula for calculating the Estimate at Completion (EAC) when the current variances are seen as typical and future performance is expected to be similar?
- BAC + (AC – EV)
- BAC – CV
- AC + (BAC – EV)
- BAC / CPI
- Which of the following is NOT a characteristic of a well-defined cost baseline?
- It is time-phased.
- It includes contingency reserves.
- It is used for monitoring and controlling project costs.
- It is established early in the project lifecycle.
- What is the purpose of management reserves in project cost management?
- To cover known risks identified during planning.
- To cover unforeseen work within the project scope.
- To cover scope changes that are approved by the change control board.
- To cover unknown risks and unforeseen work outside the original scope.
- Which of the following is a key input to the Estimate Costs process?
- Project Budget
- Risk Register
- Performance Reports
- Stakeholder Register
- What does a Schedule Performance Index (SPI) of 1.1 indicate?
- The project is 10% behind schedule.
- The project is 10% ahead of schedule.
- The project is on schedule.
- The project is 110% over budget.
- Which of the following is a primary goal of project cost management?
- To maximize the project team’s efficiency.
- To ensure the project is completed on time.
- To complete the project within the approved budget.
- To meet all stakeholder expectations.
- What is the process of aggregating the estimated costs of individual work packages or activities to establish an overall cost baseline?
- Estimate Costs
- Determine Budget
- Control Costs
- Plan Cost Management
- Which of the following is a potential cause of cost overruns on a project?
- Accurate initial cost estimates.
- Effective change control processes.
- Unforeseen risks and issues.
- Proactive risk management.
- A project manager is using a statistical relationship between historical data and project variables to estimate costs. Which estimating technique is being used?
- Analogous estimating
- Bottom-up estimating
- Parametric estimating
- Three-point estimating
- What is the formula for calculating the To-Complete Performance Index (TCPI) based on the Budget at Completion (BAC)?
- (BAC – EV) / (BAC – AC)
- (BAC – AC) / (BAC – EV)
- BAC / EV
- BAC / AC
- Which of the following is a key output of the Determine Budget process?
- Cost Estimates
- Cost Management Plan
- Cost Baseline
- Performance Reports
- What is the purpose of variance analysis in project cost management?
- To identify the root causes of cost deviations.
- To develop the initial project budget.
- To track the actual costs incurred.
- To forecast the final project cost.
- Which of the following is NOT a typical element of a cost management plan?
- Units of measure
- Levels of precision
- Rules for performance measurement
- Project schedule network diagram
- What is the expected range of accuracy for a definitive estimate?
- -5% to +10%
- -10% to +25%
- -25% to +75%
- -50% to +100%
- Which of the following is a characteristic of sunk costs?
- They are future costs that can be avoided.
- They are costs that have already been incurred and cannot be recovered.
- They are costs that vary with the level of production.
- They are fixed costs that remain constant regardless of production levels.
- What is the purpose of the To-Complete Performance Index (TCPI)?
- To measure the cost efficiency of the work completed to date.
- To project the final cost of the project based on current performance.
- To indicate the cost performance that must be achieved for the remaining work to meet a specific financial goal.
- To track the schedule performance of the project.
- Which of the following is a tool and technique used in the Control Costs process?
- Expert Judgment
- Funding Limit Reconciliation
- Cost Aggregation
- Reserve Analysis
- A project has a Budget at Completion (BAC) of $500,000. The Cost Performance Index (CPI) is 0.9 and the Schedule Performance Index (SPI) is 1.1. If the team continues to perform at the same cost efficiency, what is the Estimate at Completion (EAC)?
- $450,000
- $555,556
- $500,000
- $611,111
Answers
- The Estimate at Completion (EAC) will likely increase.
- Basis of Estimates
- Analyze the cost impact of the proposed change.
- -$100
- Expert Judgment
- To monitor the status of the project budget, manage changes to the cost baseline, and inform stakeholders of authorized changes to the project costs.
- EV / AC
- The project is spending more than planned.
- To cover unforeseen risks or scope changes that may occur during the project.
- Performance Reports
- (BAC – EV) / CPI
- Earned Value Management
- To ensure that the planned expenditures do not exceed the funding commitments.
- Travel expenses for team members working on the project
- A ROM estimate has a wider range of potential values than a definitive estimate.
- Analogous Estimating
- The project is spending 120% of what was budgeted for the work performed.
- Improved stakeholder satisfaction
- Planned Value (PV)
- Sunk Costs
- Analogous estimating
- EV / PV
- Project Management Plan
- To describe how project costs will be planned, structured, and controlled.
- Budget Forecasts
- BAC – EAC
- Bottom-up estimating
- -25% to +75%
- Corporate overhead allocated to the project
- To establish contingency and management reserves.
- -$100,000
- Trend Analysis
- AC + (BAC – EV)
- It includes contingency reserves.
- To cover unknown risks and unforeseen work outside the original scope.
- Risk Register
- The project is 10% ahead of schedule.
- To complete the project within the approved budget.
- Determine Budget
- Unforeseen risks and issues.
- Parametric estimating
- (BAC – EV) / (BAC – AC)
- Cost Baseline
- To identify the root causes of cost deviations.
- Project schedule network diagram
- -5% to +10%
- They are costs that have already been incurred and cannot be recovered.
- To indicate the cost performance that must be achieved for the remaining work to meet a specific financial goal.
- Trend Analysis
- $555,556