As the project manager of a large project, you have just completed the Estimate Costs process. As you begin the Determine Budget process, which of the following would you require as inputs to the process from the Estimate Costs process?
Select one
A.
B.
C.
D.
Answer and explanation:
Activity cost estimates are quantitative assessments of the probable costs required to complete project work. The basis of estimates consists of additional details supporting the cost estimate. These include documentation of the basis for the estimate, documentation of all assumptions, documentation of any known constraints and indication of the range of possible estimates. These are produced during the estimate costs process and form inputs to the develop budget process.
Question 2 - ID: 341510
How would you calculate your EAC if the ETC work is performed at the budgeted rate?
Select one
A.
B.
C.
D.
Answer and explanation:
If the remaining project work is expected to be performed at the budgeted rate, then the formula for EAC is AC + (BAC – EV), where AC is the actual cost, BAC is the budget at completion, and EV is the earned value.
Question 3 - ID: 391509
Bill is the project manager of a software project that was originally estimated to be completed in 12 months. Two months into the project, it is discovered that the original estimating assumptions were fundamentally flawed. The Estimate at Completion (EAC) in such a project will be:
Select one
A.
B.
C.
D.
Answer and explanation:
The correct response is: EAC = AC + bottom-up ETC, where ac stands for the actual cost and etc stands for the estimate to complete. ETC based on a new estimate must be used because the original assumptions were fundamentally flawed.
Question 4 - ID: 831440
Which of the following indicates the required cost performance in order to complete the project on budget?
Select one
A.
B.
C.
D.
Answer and explanation:
The to-complete performance index (TCPI) indicates the required cost performance in order to complete the project on budget.
Question 5 - ID: 711875
Variance Analysis is an important tool used in the Control Costs process. Which of the following statements regarding variances is correct?
Select one
A.
B.
C.
D.
Answer and explanation:
Variances assess the magnitude of variation from the original cost baseline. The percentage range of acceptable variances will tend to decrease as more work is accomplished and the project nears completion.
Question 6 - ID: 371830
Jackie is the project manager of a large project. During the Determine Budget process, she identifies that contingency reserves need to be set up for unplanned but potentially necessary changes that could result from realized risks identified in the risk register. Which of the following is true about reserves?
Select one
A.
B.
C.
D.
Answer and explanation:
Management reserves are not a part of the project cost baseline but will be included in the total budget for the project.
Question 7 - ID: 171352
Which of these are not inputs to the Determine Budget process?
Select one
A.
B.
C.
D.
Answer and explanation:
The cost baseline and the requirements traceability matrix are not inputs to the determine budget process. The other choices are valid inputs.
Question 8 - ID: 441402
The cost estimates for a project are in the range of +/- 5 %. What phase is the project likely to be in?
Select one
A.
B.
C.
D.
Answer and explanation:
The project is likely to be in a closing phase since the range of estimates is quite narrow. Early in the project, there is less cost information available and the range of estimates is much higher. As the project progresses, the degree of accuracy improves.
Question 9 - ID: 471346
Your project is midway through a delivery schedule. As the project manager, you want to determine how much work remains. Which is the most accurate way to determine the remaining work the project team must carry out?
Select one
A.
B.
C.
D.
Answer and explanation:
Although the Earned Value technique of determining the balance work in the project is quick and straightforward, it is not as valuable or accurate as the Manual Forecasting of the remaining work by the project team. However, manual forecasting is more time-consuming.
Question 10 - ID: 541361
The Earned Value Management methodology can be used to:
Select one
A.
B.
C.
D.
Answer and explanation:
The earned value management methodology can be used to forecast future performance based on current performance.
Question 11 - ID: 921500
A project manager is performing Reserve Analysis as a technique in one of the project management processes he is currently working on. Which of the following is likely to be that process?
Select one
A.
B.
C.
D.
Answer and explanation:
Many cost estimators include reserves (also called contingency allowances) as costs in their schedule activity cost estimates. Contingency reserves are estimated costs to be used at the discretion of the project manager to deal with anticipated but not certain events. These events are "known unknowns" and are part of the project scope and cost baselines.
Question 12 - ID: 231351
You are a senior project manager working for RETAMART, a retail shopping network that sells various consumer products. As part of the expansion plan approved by the board of directors, you are a project manager for a new plant. Due to transportation problems, the project has experienced delays; the Schedule Performance Index (SPI) is at 0.6 and the Cost Performance Index (CPI) is at 0.7. However, you expect some improvements over the next few weeks, which may increase the SPI to 1.1 and the CPI to 0.9. Which of the following statements is true if your anticipated changes materialize?
Select one
A.
B.
C.
D.
Answer and explanation:
The cost performance index below 1 indicates that the project is over budget, and the schedule performance index above 1 indicates that the project is ahead of schedule. If all of your anticipated changes happen to be true, the project will be overspent but ahead of schedule because the schedule performance index will be greater than 1.
Question 13 - ID: 481102
What does a Cost Performance Index (CPI) of more than 1.0 indicate?
Select one
A.
B.
C.
D.
Answer and explanation:
The CPI is calculated as the earned value divided by the Actual Cost. An index of greater than one indicates that you have spent less than you forecasted to this point.
Question 14 - ID: 441867
The Actual Cost (AC) is the total cost actually incurred and recorded in accomplishing work performed for an activity or work breakdown structure component. What is the upper limit for the AC?
Select one
A.
B.
C.
D.
Answer and explanation:
There is no limit to the actual cost (AC). Whatever is spent to achieve the earned value (EV) is measured as the actual cost.
Question 15 - ID: 691349
Funding requirements for a project are usually in incremental amounts that are not continuous. These increments appear as a step function in the graph depicting Cash flow, Cost baseline and Funding. Any gap at the end of the project between the funds allocated and the cost baseline represents:
Select one
A.
B.
C.
D.
Answer and explanation:
Management reserves are included in the project's total funds, but they are not included in the project's cost performance baseline.
Question 16 - ID: 411752
In the earned value management technique, the cost performance baseline is:
Select one
A.
B.
C.
D.
Answer and explanation:
The cost performance baseline is an authorized time-phased budget at completion (BAC). It is used to measure, monitor, and control overall cost performance on the project. In the earned value management technique, the cost performance baseline is referred to as the performance measurement baseline (PMB).
Question 17 - ID: 441702
20 percent of the work was completed in a project. At this stage, the project manager determined that the budget at completion (BAC) was no longer viable and developed a forecasted estimate at completion (EAC). What index can the project manager use to look at the calculated projection of cost performance that must be achieved on the remaining work?
Select one
A.
B.
C.
D.
Answer and explanation:
The to-complete performance index (TCPI) is the calculated projection of cost performance that must be achieved on the remaining work to meet a specified goal such as the bac or eac. It is defined as the work remaining divided by the funds remaining.
Question 18 - ID: 911486
The accuracy of estimates of the cost of a project will _________ over the life of a project.
Select one
A.
B.
C.
D.
Answer and explanation:
The accuracy of a project estimate will improve as the project progresses through the project lifecycle. In the initiation phase, a project could have a rough order of magnitude estimate in the range of -25% to +75%. Later, as more information becomes known, estimates could narrow to a range of -5% to +10%.
Question 19 - ID: 551081
While analyzing a project, the project manager calculated the ratio of the Earned Value (EV) to the Actual Costs (AC) and obtained a value of 1.2. The project manager decided this was an unfavorable condition for the project and decided to take corrective action. What is your view?
Select one
A.
B.
C.
D.
Answer and explanation:
The project manager is not correct. Cost performance index (CPI) is the ratio of EV to AC. A value greater than one represents a favorable condition for the project. The project manager has misinterpreted the situation.
Question 20 - ID: 961069
Two efficiency indicators that reflect the cost and schedule performance of a project are:
Select one
A.
B.
C.
D.
Answer and explanation:
The cost performance index (CPI) and the schedule performance index (SPI) are two efficiency indicators that reflect the cost and schedule performance of the project.
Question 21 - ID: 931219
Although the business value is unique to each organization, each organization strives to attain business value for its activities. Which of the following does NOT create value for an organization?
Select one
A.
B.
C.
D.
Answer and explanation:
Effective management of ongoing operations, strategic alignment of project objectives, and, successful management of nonprofit businessrelated activities can all create value for an organization. However, escalation of commitment on projects involving significant sunk cost does not create any value for an organization.
Question 22 - ID: 541737
The Budget at Completion (BAC) for a project is $50,000. The Actual Costs (AC) to date are $10,000. The Earned Value (EV) is $7,000. At this stage, the project management team did a manual bottom-up summation of costs and forecast an Estimate to Complete (ETC) of $50,000. What is the Estimate at Completion (EAC) for the project?
Select one
A.
B.
C.
D.
Answer and explanation:
When a bottom-up manual forecasting has been done for the ETC, the calculation for EAC is EAC = AC + bottom-up ETC. Hence, EAC = 10,000 + 50,000 = $60,000. Note that the bac is no longer viable at this stage.
Question 23 - ID: 931996
Project costs are estimated for all project activities and are aggregated to establish a cost baseline. Which of the following statements about the cost baseline is not true?
Select one
A.
B.
C.
D.
Answer and explanation:
The project cost baseline includes all authorized budgets excluding management reserves. Management reserves are not included to measure the cost performance of a project.
Question 24 - ID: 981396
Breaking down project activities into smaller components in order to obtain a more accurate cost estimate and then aggregating the estimates of the lower-level components is:
Select one
A.
B.
C.
D.
Answer and explanation:
This is an example of bottom-up estimating. When an activity is complex and cannot be accurately estimated, it is broken down into smaller components for estimation. These individual component estimates are then summed up to obtain the cost estimate of the activity.
Question 25 - ID: 891605
You are a project manager who is in charge of an important project for your company. The project is 40 percent complete after three months and has cost $350,000. The budget for the project is $950,000 and is scheduled to last eight months. How is the project performing?
If you are managing changes to the project's cost baseline, which process are you using?
Select one
A.
B.
C.
D.
Answer and explanation:
Control costs is the process of managing the project's costs and the changes that threaten the bottom line.
Question 27 - ID: 121547
Which of the following estimating techniques will cost less but is also typically less accurate?
Select one
A.
B.
C.
D.
Answer and explanation:
Analogous cost estimating is typically less costly but also less accurate than other cost estimating techniques. It uses the actual cost of previous, similar projects as the basis for estimating the cost of the current project. It is more reliable when the previous projects are similar in fact and not just in appearance, and the persons estimating have the needed expertise.
Question 28 - ID: 461227
Analogous Cost Estimating is which of the following?
Select one
A.
B.
C.
D.
Answer and explanation:
Analogous cost estimating is usually deemed less accurate than other methods of estimation.
Question 29 - ID: 511846
As part of the Estimate Costs process, a project manager obtained access to certain commercially available databases to get resource cost rate information. Such published commercial information is considered what type of input?
Select one
A.
B.
C.
D.
Answer and explanation:
Such published commercial information is considered part of enterprise environmental factors that influence the estimate costs process.
Question 30 - ID: 401389
Megawatt is estimating the expected cost of a new ERP system deployment project using the actual costs of an earlier similar ERP system deployment project as the basis for the cost. This is what type of estimating?
Select one
A.
B.
C.
D.
Answer and explanation:
Analogous cost estimating involves using the actual cost of previous similar projects as the basis for estimating the cost of the current project. Analogous cost estimating is frequently used to estimate costs when there is a limited amount of detailed information about the project (e.g., in the early phases).
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