Cost Management 1

1. Which of the following is an example of parametric estimate

Attempted answer : Staff Days Correct answer : Lines of Code

Comment : Reference : PMBOK 3rd Edition,7.1.2

2. A measure of cost performance on a project Schedule variance Cost variance EAC EV

Attempted answer : EV Correct answer : Cost variance

Comment : Cost variance equals earned value minus the actual cost 3. A management methodology for integrating scope, schedule & resources and also to objectively measure the performance is EV

EVT EVM EMV

Attempted answer : EVT Correct answer : EVM

Comment : Reference : PMBoK Guide, 3rd Edition -Glossary, page 359 4. The value of work performed expressed in terms of the approved budget to that work for an activity or WBS component is . EV EVT EVM EMV

Attempted answer : EVT Correct answer : EV

Comment : EV means earned value

5. A schedule network analysis technique that modifies the project schedule to account for limited resources is . Critical path Critical chain PERT GERT

Attempted answer : Critical chain

Correct answer : Critical chain

Comment : Reference : PMBoK Guide, 3rd Edition -Glossary, page 357

6. A project manager is aggregating the estimated costs of individual schedule activities or work packages to establish a total cost baseline for measuring project performance. He is involved in which process Cost Estimating Cost Control Cost budgeting Bottom Up Estimate

Attempted answer : Cost budgeting Correct answer : Cost budgeting

Comment : Reference : PMBOK 3rd Edition,7.2

7. If a project has BCWP=2, BCWS=6, ACWP=5, it means Productivity is less than planned CPI and SPI are both greater than one CP is +ve and SP is -ve Project is ahead of the schedule, but over budget

Attempted answer : Productivity is less than planned Correct answer : Productivity is less than planned

Comment : CPI=BCWP/ACWP = 2/5 <1, hence productivity is less than planned Reference : Refer to the notes on the website

8. Earned Value is Budgeted amount for the work actually completed on the schedule activity Budgeted cost for the work scheduled to be completed on the schedule activity Total cost incurred in achieving the work on schedule activity Total cost at the project completion

Attempted answer : Budgeted amount for the work actually completed on the schedule activity Correct answer : Budgeted amount for the work actually completed on the schedule activity

Comment : Reference : PMBOK 3rd Edition, Page 173

9. A parametric model should be scalable, this means that It should estimate installation cost It can be changed easily It works for large as well as for small projects It is easy to calculate the estimations

Attempted answer : It is easy to calculate the estimations Correct answer : It works for large as well as for small projects

Comment : Reference :

10. Which of the following is not needed to come up with the cost baseline Project Scope Statement Activity List WBS Activity Cost Estimates

Attempted answer : Project Scope Statement Correct answer : Activity List

Comment : Activity list is not needed for cost baseline Reference :

11. Contingency reserves are used for Known unknown Known known Unknown unknown Sunk Cost

Attempted answer : Known unknown Correct answer : Known unknown

Comment : "Known unknown" means anticipated, but not certain events Reference : PMBOK 3rd Edition,[Link]

12. Salary of a General Manager is Direct Cost Indirect Cost Sunk Cost Variable Cost

Attempted answer : Direct Cost Correct answer : Indirect Cost

Comment : Reference :

13. If the EV=$40,000, PV=$30,000, AC=$45,000 and BAC is $80,000. Project is half done after 1 year. What would be the cost estimate at completion? $80,000 $90,000 $100,000 Data is not sufficient

Attempted answer : $90,000 Correct answer : $90,000

Comment : Use the formula EAC = AC + ((BAC - EV) / CPI) and CPI = EV / AC Reference :

14. In bottom-up cost estimating, accuracy is enhanced With smaller work items By using accurate historical information If previous projects are similar in fact, not just in appearance If the individuals or groups preparing the estimates are fully qualified

Attempted answer : With smaller work items Correct answer : With smaller work items

Comment : Reference :

15. in a construction project, management has asked the project manager to track the internal labor cost separately from the external cost. This is an example of Multiple cost baseline EV Total Project Cost Project Funding

Attempted answer : Multiple cost baseline Correct answer : Multiple cost baseline

Comment : Many large projects have multiple cost baselines to measure different aspects of project performance Reference : PMBOK 3rd Edition,7.2.3

16. If a project has EV=3 and AC=5, and PV=7, it means

CPI and SPI are both greater than one Indicates cost overrun of the estimates Schedule variance is positive Project is ahead of the schedule, but over budget

Attempted answer : Indicates cost overrun of the estimates Correct answer : Indicates cost overrun of the estimates

Comment : CPI=EV/AC = 2/5 <1, hence productivity is less than planned Reference : Refer to the cost notes on the website

17. Estimated Costs to be used at the discretion of the Project Manager to deal with anticipated, but not certain events is called Management Reserve Contingency Reserve Total Project Cost Cost of Quality

Attempted answer : Contingency Reserve Correct answer : Contingency Reserve

Comment : Reference :

18. As per the Table shown, which task is MOST over budget?

Task 1 Task 2 Task 3 Task 4

Attempted answer : Correct answer : Task 2

Comment : EV-AC=-2000 which is highest of the 5 tasks Reference :

Task Task Task Task

1 2 3 4

Attempted answer : Correct answer : Task 4 Comment : Both SV and CV are positive in Task 4. Calculate CV using formula BCWP - ACWP and SV = BCWP - BCWS Reference :

19. As per the Table shown, which task is ahead of schedule and under cost?

Task 1 Task 2 Task 3 Task 4

Attempted answer : Correct answer : Task 4

Comment : Both SV and CV are positive in Task 4. Calculate CV using formula BCWP ACWP and SV = BCWP - BCWS Reference :

20. As per the Table shown,which task is on schedule with a cost variance of $0?

Task Task Task Task Attempted answer : Correct answer : Task 3 Comment : calculate CV using formula BCWP - ACWP Reference :

1 2 3 4

20. As per the Table shown,which task is on schedule with a cost variance of $0? Task 1 Task 2 Task 3 Task 4

Attempted answer : Correct answer : Task 3

Comment : calculate CV using formula BCWP - ACWP Reference :

Task Task Task Task Attempted answer : Correct answer : Task 2 Comment : SV = BCWP - BCWS Reference :

1 2 3 5

21. As per the Table shown,which task has the greatest schedule variance? Task 1 Task 2 Task 3 Task 5

Attempted answer : Correct answer : Task 2

Comment : SV = BCWP - BCWS Reference :

22. Performance measurement baseline (PMB) DOES NOT include which cost? Management Reserve Distributed Cost Undistributed Cost None of the above

Attempted answer : Management Reserve Correct answer : Management Reserve

Comment : Reference : Refer to the notes on the website

23. Comparing planned performance to actual performance is known as PV Work Performance Information Earned value technique EAC

Attempted answer : Earned value technique Correct answer : Earned value technique

Comment : Reference : PMBOK 3rd Edition, Page 176

24. For a construction project in US, 2 Laborers are employed @ $25 an hour, inclusive of overhead. Deployment of third labor for 30 hrs. @ $30/ hr. the PV for the week (of 40 hours) is 3200 2900 3000 Data is insufficient

Attempted answer : 3200 Correct answer : 2900

Comment : 40 Hr * $25/ Hr. *2 = $ 2000, 30 Hr * $30 / Hr. * 1 = $ 900 and BCWS or Panned Value is = $ 2000 + $ 900 Reference :

25. Which of the following is not an input of cost estimating process Risk Register WBS Activity Cost Estimate Supporting Detail Staffing Management Plan

Attempted answer : Staffing Management Plan Correct answer : Activity Cost Estimate Supporting Detail

Comment : Activity Cost Estimate Supporting detail is an output of Cost Estimating Process Reference : PMBOK 3rd Edition, Page 163-164