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Cost Part 1
Congratulations – you
have completed Cost-
Part 1.
You scored 60 points out of 100
points total.

D O W NLO A D T H E A N S W E R S H E E T

Your answers are shown

below:
1. Which of the following are all items
included in the cost management plan?

Rules for measuring team

performance, the level of accuracy
needed for estimates, and
specifications for how estimates
should be stated
Specifications for how estimates
should be stated, rules for
measuring cost performance, and
the level of accuracy needed for
estimates
The level of accuracy needed for
estimates, rules for measuring cost
performance, and specifications for
how duration estimates should be
stated
Specifications for how estimates
should be stated, the level of risk
needed for estimates, and rules for
measuring cost performance

2. How close to actual costs should a

de nitive budget estimate be?
 -5 percent to +10 percent
+10 percent to -25 percent
-75 percent to +25 percent
+/- 15 percent

3. Your organization is focused on choosing

projects that will help it achieve strategic
business advantages. You have been
assigned to manage a new project that
meets this criterion. There are already 25
key stakeholders that have been identi ed,
and some of them are resistant to the
changes that the project might mean to
their departments. You are looking to use
tools that will help you assess the value of
the project. Which of the following does
not assess the value a project brings to an
organization?

Net present value

Value analysis
Cost-benefit analysis
Needs assessment

4. You have just completed the initiating

processes of a small project and are moving
into project planning when a project
stakeholder asks you for the project’s
budget and cost baseline. What should you
tell her?

The project budget and baseline

will not be finalized and accepted
until the planning processes are
completed.
The project budget can be found in
the project charter, which has just
been completed.
The project management plan will
not contain the project’s budget and
baseline; this is a small project.
It is impossible to complete an
estimate before the project
management plan is created.

5. During project executing, a new project

manager is assigned to a project and nds
the activity cost estimates for the project
have rarely been accurate. Which of the
following was most likely not done?
 Obtaining a cost constraint from
management, perform a risk
assessment, and form a team
Obtaining a cost constraint from
management, create a work
breakdown structure, and develop a
project management plan
Forming a team, develop a project
management plan, and perform a
risk assessment
Forming a team, create a work
breakdown structure, and use
historical records from previous
projects

6. Your project has a medium amount of

risk and is not very well de ned. The
sponsor hands you a project charter and
asks you to con rm that the project can be
completed within the project cost budget.
What is the best method to handle this?

Provide an analogous estimate

based on past history.
Ask the team members to help
estimate the cost based on the
project charter.
Develop an estimate in the form of a
range of possible results.
Based on the information you
have, calculate a parametric
estimate.

7. You just completed a cost estimate on

the project, and you’re assuming there is a
15 percent chance you will exceed this
estimate. You are:

Below the mean

Above the mean
Below the median
Above the median

8. The replacement of the inventory

management and portion control system
for an international restaurant chain has
been prioritized as a key strategic objective
for the organization. Stakeholders are very
concerned about many aspects of the
project. They have shared these concerns
and ideas in risk identi cation workshops,
f il d
focus groups, emails, and surveys.
Identi ed risks are:

Both an input to and an output of

the Estimate Costs process
Not related to the Estimate Costs
process
An output of the Estimate Costs
process
An input to the Estimate Costs
process

9. A project manager has just been noti ed

of a cost increase by a seller. He looks at
the contract and determines that the seller
has the right to pass along this cost
increase. The project manager should rst
determine if:

There is a reserve to handle the

change.
The activity is on the critical path.
Another seller can provide it at the
original cost.
Another activity can save money.

10. You are having dif culty estimating the

cost of a project. Which of the following
best describes the most probable cause of
your dif culty?

Inadequate scope definition

Lack of company processes
Lack of historical records from
previous projects
Unavailability of desired
resources

11. You take over a project that is US

$100,000 over budget. You know the team
has completed US $500,000 worth of work.
Your sponsor has been calling all day
leaving messages while you were in
meetings asking for a quick update on the
project status. What will you tell him when
you return his call?

The SPI is 0.83.

The CPI is 0.83.
The SPI is 1.10.
The CPI is 0.90.
12. A project manager is nalizing a project
that has had repeated problems with cost
conformance. He is concerned about what
management will say. Senior managers
have talked about the problems multiple
times in their executive meetings, and it’s
been reported they feel their concerns
have not been addressed. Which of the
following types of information would be
best for the project manager to use to
evaluate performance?

The project budget

A list of complaints from senior
management
The last bar chart
The most recent CPI

13. The Plan Cost Management process

addresses all of the following except:

Corrective actions needed to bring

the project back on track
Specifications for how estimates will
be stated
Whether to use existing funds or
borrow money to finance the
project
How project risks will be
identified

14. Cost risk means:

There is a risk that project costs

could go higher than planned.
There are risks that will cost the
project money.
There is a risk that the cost of the
project will be lower than
planned.
The project is too risky from a cost
perspective.

15. You are a project manager working on a

project that requires 100 items to be
tested, spaced evenly over ve weeks. You
have just begun week three, with an overall
budget of US $10,000. To date, you have
spent US $2,000 with 40 items tested
successfully. What does the cost variance
(CV) tell you in this circumstance?
 The project is $2,000 under
budget.
The project is proceeding at 100
percent of the expected rate.
The project is getting $2 of work for
every dollar spent.
The project is on budget.

16. The success of your new project

requires several of your people to work in a
foreign country for six months. The team
informs you that in this country a payment
is required to obtain visas. The payment for
the visas is high. The economy has recently
become volatile. Some stakeholders
question the need for the project and the
bene ts it will produce. Leadership has told
you that this project is aligned with the
organization’s direction for the year. What
should you do?

Include the payment in the

project budget.
Do not send your people.
Cancel the project.
Do not pay and see what
happens.

17. Your company is in competition to win a

major project for the government of a
country. Your contacts in that country
inform you that you must make a large
payment to the foreign minister to be
considered for the project. What should
you do?

Inform your company’s

management, and ask for
direction.
Make the payment.
Do not make the payment.
Have the local contact make the
payment.

18. Which of the following is an advantage

of bottom-up estimates?

They are less costly to create.

They are more accurate.
Overall project costs will be
d
 capped.
They require good project definition
before estimating begins.

19. The product your project team is

working on is a replacement of a device the
company launched a couple of years ago.
That device did not meet market
projections for sales, even though it was
revolutionary in its capabilities. The reason
it did not meet projections was that the life
cycle costing was not fully considered and
analyzed during the device development.
When the original device was offered to
the market, it had initial success until a
trade publication analyzed the life cycle
costs and determined they were
unreasonably high. Sales lagged due to the
negative reports. Internal tests showed
that the trade publication was correct. This
time the team is taking life cycle costs into
consideration as they develop the product.
The main focus of life cycle costing is to:

Consider operations and

maintenance costs in making
project decisions.
Estimate the cost of operations and
maintenance.
Consider installation costs when
planning the project costs.
Estimate installation costs.

20. You are leading a project to introduce a

new healthcare appointment scheduling
application. As you are creating plans
detailing how the team will respond to
possible events that may impact the
project, you and the team determine the
amount of cost contingency reserve
needed. The cost contingency reserve
should be:

Maintained by management to
cover cost overruns
Added to the costs of the project
to account for risks
Added to each activity to provide the
customer with a shorter critical
path
Hidden to prevent management
f di ll i h
 from disallowing the reserve

21. Your company is undergoing a change

in ownership and the new owners are
looking at the total cost of a new product.
Which of the following would best provide
that information?

Life cycle cost

Earned value
Estimate at completion
Net present value

22. Your organization is hoping to meet its

strategic objective to grow the business by
expanding into foreign markets. Since
working with international sellers is new to
you as a project manager, you are
researching potential issues others have
encountered on international projects. You
have learned of situations where issues
have arisen due to illegal payments. Which
of the following payments on an
international project is unacceptable?

Payment for a “foreign workers

application license” required in the
country
Payment for police protection
Offering to pay the country
officials for not awarding the
project to a particular company
Payment for mail service

23. A project has a team member assigned

to the project full time. What is the most
likely effect on the project if that resource
completes her activity sooner than
planned?

Wasted cost
Changes to the risk response
plan
A subsequent activity will be
delayed
Lower quality deliverables

24. If earned value (EV) = 350, actual cost

(AC) = 400, and planned value (PV) = 325,
what is the cost variance (CV)?

350
 350
400
-75
-50

25. You are managing a project to

implement new customer relationship
management (CRM) software. The project
is very important to the sales team, who
are anxious that everything should go well
with the transfer of data to the new
system. They have been very unhappy with
the current system, which was put in place
just three years ago. They were told during
the previous conversion that all of the data
would be transferred. Despite three
attempts to migrate the data, only a small
portion of the critical data transferred
successfully; the rest was either entered
manually or remained accessible only
through hard copy. The costs due to failure
and rework were high on the last project.
The project sponsors have asked you to
assess the feasibility of meeting the
objectives and cost constraints. Why
should you use analogous estimating?

It gains buy-in from the team

because the team creates the
estimates.
It provides a basis for monitoring
and controlling and performance
measurement.
It is faster.
It is more accurate than bottom-up
estimating.

26. Your manager is worried about the

project schedule. There is a critical
deliverable due to the federal government
in two weeks. If you miss the deliverable,
you could lose the entire contract. To help
reduce the manager’s stress, you show him
the earned value calculations you just
completed. They show your cost
performance index (CPI) is 1.25, your
actual cost (AC) is US $400 million, and
your planned value (PV) is US $490 million.
Should your manager be comfortable?

No, your CPI is too high.

 He needs more data.
Yes, your SPI is 1.05.
Yes, your SV is $10 million.

27. Although the stakeholders thought

there was enough money in the budget,
halfway through the project the cost
performance index (CPI) is 0.7. To
determine the root cause, several
stakeholders audit the project and discover
the project cost budget was estimated
analogously. Although the activity
estimates add up to the project estimate,
the stakeholders think something was
missing in how the estimate was
completed. Which of the following
describes what was missing?

Estimated costs should be used to

measure CPI.
SPI should be used, not CPI.
Past history was not taken into
account.
Bottom-up estimating should
have been used.

28. You are working with a multicounty

project team developing a new drilling
device for the oil and gas industries. Some
events have had unanticipated impacts on
the project. One is that the cost of testing
was signi cantly less than expected based
on the three-point estimate. There were
also several con icts and issues with the
team that had to be resolved. The
leadership in your publicly held company
has to do a presentation to the
shareholders and needs data to present.
After analyzing the status of your project,
you determine the earned value (EV) is
lower than the actual cost (AC) and the
planned value (PV). What should you tell
the leadership to expect as an outcome if
this trend continues?

The project will finish over

budget.
The actual cost will be lower than
planned.
The estimate at completion will be
lower than planned.
 o e t a p a ed
The project will finish ahead of the
original schedule estimate.

29. You’ve recently been assigned to

manage a marketing project to brand a
sustainable development program. Even
though you are just starting your efforts,
the sponsors are concerned about the
likelihood of reaching the planned
milestones during the project. They are
wondering how you will go about
estimating. Analogous estimating:

Uses bottom-up estimating

techniques
Calculates estimates using actual
detailed historical costs
Uses top-down estimating
techniques
Is used most frequently during
project executing

30. You’ve been assigned to a software

development project to create new
functionality for your company, a nancial
institution. Execution of this project will be
done using a new software development
methodology, new documentation
techniques, and new tools. This approach is
a test run for the organization, and if it’s
successful, it will be implemented on other
projects. You and everyone involved are
inexperienced with the methodology,
techniques, and tools. In light of this new
approach, what’s the best thing to do?

Revise the project estimate to

account for the cost of training
team members.
Hire resources from the outside with
experience in the methodology,
tools, and techniques to meet the
schedule baseline.
Revise the schedule to account for
the decreased effectiveness of
inexperienced resources.
Request proper training be provided
and paid for by the functional
manager(s).

31. You are managing a new oil puri cation

31. You are managing a new oil puri cation
project in a foreign country. A person
informs you that you will have to pay him a
“transfer fee” for the permit to move heavy
equipment through the city. What is the
rst thing you should do?

Negotiate openly with the city

officials.
Do not pay the fee.
Make sure the person is really a
government official.
Pay the fee, but only to the
city.

32. Your sponsor has been concerned

about a seller performing work on time and
at the required quality level, as there have
been challenges with this seller on past
projects. It’s very dif cult for you to know
all the details of how the seller will perform
the work, but your procurement statement
of work and the contract are aligned. The
seller submits an invoice that is outside the
funding limit reconciliation completed
during project planning. What is the least
likely cause?

An activity has taken longer to

complete than planned.
Equipment was received earlier
than planned.
The critical path was fast tracked
during project planning.
There was a cost increase to the
successor activity of a critical path
activity.

33. All the following are components of

cost management except:

Analogous estimating
Estimating activity resources
Earned value management
Funding limit reconciliation

34. An organization’s project management

of ce (PMO) has established new
procedures to help prevent variance from
the performance measurement baseline for
all projects. Each project manager in the
organization has been charged with
o ga at o as bee c a ged t
planning and taking action to in uence the
factors that cause changes and sharing
their ideas with the group. The information
they have gathered is in an organizational
database and recommendations have been
made on how project managers should
in uence the factors that cause change.
Which of the following is the least effective
way to in uence the factors that create
changes to the cost baseline?

Explain to those requesting changes

the impact of changes to the
project.
Notify all stakeholders that no more
changes will be allowed.
Review the project scope with the
functional manager responsible for
the greatest number of requested
changes.
Eliminate the scope causing the
most changes.

35. The project management team was

instrumental in planning the corporate
headquarters renovation project. The
project is part of the organization’s
celebration of its 10-year anniversary and
the planned announcement of new
industry-leading work by the R&D division.
The planned announcement is a closely
guarded secret, as the organization does
not want the competition to attempt to
steal secrets or de ect media attention.
The stakeholders have expressed concerns
that they don’t understand why some of
the work is happening and that the work
will not be complete before the
celebration. Some have expressed
concerns about the fact that alternative
plans had to be used for some of the
efforts. Your sponsors have asked you to
review the communications plan. The
project is over budget to date. Which of the
following is not a reason this could have
occurred?

Work was delayed.

More work than planned was
accomplished.
Work was done inefficiently
 Work was done inefficiently.
There was a cost increase from the
supplier.

36. Payment for any decision made or

encouraged by a foreign of cial with
respect to whether a company will be
awarded a project is best described as:

A sunk cost
A common practice
A progress fee
A bribe

37. You’re involving the business analyst,

the designers and engineers, the quality
and testing experts, and the
representatives from the business in
planning, and are reviewing the key
information available to help make the best
decisions for the project. Which of the
following information about the project
would never be available during project
planning?

Cost performance index

Internal rate of return
Budget at completion
Benefit-cost ratio

38. The customer responsible for

overseeing your project asks you to
provide a written cost estimate that is 30
percent higher than your estimate of the
project’s cost. He explains that the
budgeting process requires managers to
estimate pessimistically to ensure enough
money is allocated for projects. What is the
best way to handle this?

Create one cost baseline for budget

allocation and a second one for the
actual project management plan.
Add the 30 percent as a lump
sum contingency fund to handle
project risks.
Add the 30 percent to your cost
estimate by spreading it evenly
across all project activities.
Ask for information on risks that
would cause your estimate to be too
low.
 o

39. You have been working with the subject

matter experts to estimate the activity
durations and costs on the project. All of
the following are outputs of the Estimate
Costs process except:

An indication of the range of

possible costs for the project
The prevention of inappropriate
changes being included in the
cost baseline
An understanding of the cost risk in
the work that has been estimated
Documentation of any assumptions
made during the Estimate Costs
process

40. You are in the middle of project

executing and nd you are running out of
money due to unanticipated changes. What
is the best thing to do?

Ask for a change to the project

budget.
Use resources that do not charge
against the project.
Crash or fast track the project.
Reevaluate the risk analysis and
contingency funding.

41. The organization that you work for

supports the achievement of its strategic
objectives by empowering project
managers and teams. The project managers
have the authority to structure their teams,
plans, and work however they deem
necessary to best achieve results. They are
responsible for controlling the schedule
and the budget, and for providing the
steering committee and other departments
of the organizations with forecasts. Which
part of the cost budget would these project
managers not have control over?

Contingency reserves
Cost baseline
Management reserves
Control account estimates

42. For each activity on your project, you

42. For each activity on your project, you
have worked with designers, engineers,
technical experts, and consultants to come
up with details on the resources needed to
complete the activity. For some of the
activities the lists are quite long, as you
need raw and nished materials,
equipment, and people. You have a limited
amount of warehousing available, so you
have to coordinate the deliveries and work
so that the materials and equipment are
delivered as close to the start of an activity
as possible. You and the project
management team have identi ed the
amount of time and money needed for each
of the activities, which you have then
aggregated and analyzed with their help.
These efforts will eventually result in the
creation of a cost baseline for the project.
In which process is the cost baseline
developed?

Control Costs
Estimate Activity Resources
Estimate Costs
Determine Budget

43. Your assistant project manager does

the monthly earned value management
(EVM) analysis, but has fallen ill before
completing it this month. She has provided
you with the following information: cost
performance index (CPI) = 1.10, actual cost
(AC) = US $800 million, and planned value
(PV) = US $890 million. How is the project
going?

There is enough money to

support an offsite team outing.
Both the schedule and the budget
are better than planned.
The schedule is behind by 10
days.
You have no real concerns about
either schedule or budget.

44. To-complete performance index (TCPI)

is represented by which of the following?

A measure of the value of work

completed compared to the actual
cost or progress
 cost or progress
A measure of progress achieved
compared to progress planned
AC + (BAC – EV)
(BAC – EV)/(BAC – AC)

45. You are working on the performance

reporting for the project you are managing.
Schedule performance is the top
constraint. As you are gathering the data,
you need information for the formulas that
you will be reporting on. Which of the
following represents the value of work
actually completed?

Planned value
Estimate to complete
Actual cost
Earned value

46. Your cost forecast shows you will have

a cost overrun at the end of the project.
Which of the following should you do?

Decrease scope.
Meet with the sponsor to find out
what work can be done sooner.
Cut quality.
Eliminate risks in estimates and
reestimate.

47. A project manager is analyzing the

project to nd ways to decrease costs. It
would be best if the project manager looks
at:

Direct costs and variable costs

Fixed costs and indirect costs
Indirect costs and direct costs
Variable costs and fixed costs

48. One common way to compute estimate

at completion (EAC) is to take the budget at
completion (BAC) and:

Divide by cumulative CPI.

Multiply by SPI.
Multiply by CPI.
Divide by SPI.

49. While managing a project in another

country, you are asked to make a
cou t y, you a e as ed to a e a
“facilitating” payment so the country
of cials will issue a work order. What
should you do?

Make the payment.

Seek legal advice on whether
such a payment is a bribe.
Ask the person for proof the
payment is required.
Do not pay and see what
happens.

50. The approximate resource costs

necessary for completing project activities
are compiled during which project
management process?

Estimate Costs
Funding Limit Reconciliation
Cost Aggregation
Forecasting

51. The customer starts to have cash ow

problems because other projects are being
completed early. The customer noti es the
project manager that there will be limits on
when funds will be available for the project.
The project CPI is currently 1.02, and the
estimate to complete is US $927,000. If the
project manager performs funding limit
reconciliation, there will also most likely be
a change to the:

Number of change requests

Project schedule
Cost baseline
Resources assigned

52. A de nitive estimate is in a range from:

-30 percent to +40 percent from

actual
-10 percent to +25 percent from
actual
-25 percent to +75 percent from
actual
-10 percent to +10 percent from
actual

53. You are tracking your project using

earned value management (EVM) and nd
you are behind schedule but under budget.
Your variances show schedule variance
(SV) = -US $50 million, cost variance (CV) =
$100 million, and your actual costs are US
$500 million. What are the CPI, PV, and
SPI?

1.20, $650 million, 0.92

1.20, -$100 million, 0.92
0.92, $550 million, 1.20
0.92, $650 million, 1.08

54. While reviewing project performance,

the project manager determines that the
schedule variance is -500. What is the best
thing to do?

Let the sponsor know.

Determine the cost variance.
Look for activities that can be done
in parallel.
Move resources from the project to
one that is not failing.

55. You are going to be nalizing a time-

phased spending plan for the project. You
will need several things before you can
start the process. All of the following are
inputs to the process except:

Basis of estimates and project

scope statement
Cost management plan and project
schedule
Project funding requirements and
funding limit reconciliation
Activity cost estimates and work
breakdown structure

56. In analyzing problems that have

occurred during testing, the team
discovered that cause-and-effect
diagramming is helpful in identifying the
best place to focus their efforts. Their
coordination of the interrelationships of
the deliverables has improved, and the
team has discovered ef ciencies that have
been shared with other projects and the
organization for process improvement.
This has made a difference in how well the
project is aligning to the performance
measurement baseline. Stakeholders are
anticipating that control efforts and
reporting on future projects will be easier.
Earned value analysis is the basis for:

Integrating the project components

into a whole
Performance reporting
Ishikawa diagrams
Planning control

57. You have always been asked by your

management to cut your project cost
estimates by 10 percent after you
submitted them. The scope of your new
project is unclear, and there are over 30
stakeholders. Management expects a 25
percent reduction in downtime as a result
of the project. Which of the following is the
best course of action in this situation?

Provide an accurate estimate of

the actual costs and be able to
support your estimate.
Reduce the estimate and note the
change in the risk response plan.
Meet with the team to identify where
you can find 10 percent savings.
Replan to achieve a 35 percent
improvement in downtime.

58. During project executing of an SAP

implementation project, the forecasted
remaining hours exceed planned remaining
hours. Consequently, the project will take
on a negative cost variance for the
additional hours. The project manager has
been asked to explain what has occurred
and what will be done to keep to the
budget. Which calculation is the project
manager likely to use as a measurement
tool to analyze this information?

EV-PV
BAC/CPI
EV-AC
EV/PV

59. Which type of cost is team training?

NPV
I di
 Indirect
Fixed
Direct

60. An estimate at completion (EAC) is an

output of which of the following?

Control Costs
Project performance review
Performance measurement
analysis
Variance management

61. A large, complex construction project in

a foreign country requires the movement
of heavy equipment through crowded city
streets. The of cials in the city know that
you have a large, complicated project and
that staying on schedule and within budget
is important to your company. You have
coordinated moving equipment in other
countries for other projects without
problems. To ensure the equipment is
transported successfully, your contact in
the country informs you that you will have
to pay the local police a fee for
coordinating traf c. What should you do?

Eliminate the work.

Do not pay the fee because it is a
bribe.
Do not pay the fee if it is not part of
the project estimate.
Pay the fee.

62. A project manager has completed a

detailed WBS and cost estimates for each
work package. To create a cost baseline
from this data, the project manager will:

Roll up work package estimates into

a project total and add management
reserves.
Use the highest level of the WBS to
estimate analogously.
Gain expert opinions of the project
total costs.
Add the work package and risk
contingency reserve estimates.

63. A de nitive estimate is:

 A level of estimating that can be
achieved without the team’s help
Within a range of -10 percent to +25
percent of actual
Created during the initiating process
group
The most expensive to create

64. You’re managing a project to develop a

new mobile application for the inventory-
tracking-and-control system of a
restaurant franchise organization.
Schedule is the highest-priority constraint
for the leadership team, but the franchise
owners are most concerned about cost and
the quality of the application. If there are
bugs and errors in the system, they will pay
higher costs on waste or lost sales. But
investing a lot of effort into delivering great
functionality could be expensive. It was
decided that an adaptive approach to the
project life cycle would likely be the best
way to balance the competing priorities
and deliver a working, cost-effective
application. The franchise decision team
has been meeting with the development
team. The groups feel good about the
project’s progress, but they are hearing
concerns from other stakeholders about
what the impact will be to the bottom line
and whether the system will be ready for
launch. These concerns were anticipated in
planning, and will be managed with cost
performance measurement. Cost
performance measurement is best done
through which of the following?

Calculating earned value, and

using the indexes and other
calculations to report past
performance and forecast future
performance
Focusing on the amount expended
last month and what will be
expended the following month
Asking for a percent complete from
each team member and reporting
that in the monthly progress
report
Using the 50/50 rule and making
sure the life cycle cost is less than
 sure the life cycle cost is less than
the project cost

65. Which of the following de nes things

the project manager needs to do regarding
cost?

Periodically recalculate the

estimate to complete, increase
estimates by eliminating risks,
and reestimate when changes are
requested.
Never recalculate the estimate to
complete, never just accept
constraints from management, and
only use historical records for
accurate estimates.
Never just accept constraints from
management, periodically
recalculate the estimate to complete,
and meet any agreed-upon
estimates.
Meet any agreed-upon estimates,
estimate larger-sized work
components, and accept constraints
from management.

66. During the conceptual phase of a

pipeline project, the project engineer
estimates the following. The cost of the
materials is most likely US $100,000,
optimistically US $90,000, and
pessimistically US $120,000. The cost for
labor is most likely US $80,000,
optimistically US $70,000, and
pessimistically US $100,000. The cost for
equipment is most likely US $60,000,
optimistically US $50,000, and
pessimistically US $70,000. The cost for
construction management fees is most
likely US $30,000, optimistically US
$20,000, and pessimistically US $40,000.
What is the probability of the project
coming in under US $270,000?

Less than 50 percent

Exactly 50 percent
Zero
Over 50 percent

67. During which project management

process group are budget forecasts
process group are budget forecasts
created?

Initiating
Monitoring and controlling
Planning
Executing

68. The project manager is working on a

high-pro le project where completing the
project within budget is critical. The project
manager is new, but well-trained, and is
excited to see that the project is spending
less than budgeted. As a result, the project
manager was planning to take a holiday
when a more senior project manager
warned him that he has some important
work to do on the project. Why would the
senior project manager give such a warning
on this project?

Team meetings should be

scheduled every week and a holiday
would mean that one team meeting
would have to be cancelled.
The project manager should look
at how the cost performance
compares to the schedule
performance.
A project that is under budget may
also have contracts that need to be
managed.
The project manager needs to
create a project control system to
make sure there are no problems in
the future.

69. A project team budgeted US $3,000 for

the work performed and has spent US
$4,000 to date. If they budgeted US $5,000
for the work scheduled, what is the cost
variance (CV)?

($2,000)
$2,000
($1,000)
$1,000

70. A project has run into cost dif culties.

The project scope must be completed, but
at less cost. The project manager should:
 Change the depreciation method
for the equipment used on the
project.
Recover some sunk costs.
Evaluate benefit-cost ratios.
Perform a value analysis.

71. Which of the following is an example of

a parametric estimate?

Bottom-up
Learning bend
Dollars per module
CPM

72. It’s important in your risk-adverse

organization that you are prepared to deal
appropriately with problems that may
occur in the development of new consumer
products for the occupational health and
safety market for various industries. You
are responsible for managing the project
baselines, and you’ve helped create plans
that give a clear picture to the team of what
they should do if these problems occur.
There have recently been some leadership
changes, and you have been asked to
present information about your project and
what you are doing with these plans. What
is most likely to happen to the allocation of
funds for the plans that you created if they
are not needed?

They are used to provide

recognition and rewards for
efficient work by team
members.
They are used on the current project
at the project manager’s
discretion.
They are deleted from the project
budget.
They are reallocated within the
project by senior management.

73. Monitoring cost expended to date in

order to detect variances from the plan
occurs during:

The creation of the cost change

control system
 Recommending corrective
actions
Project performance reviews
Updating the cost baseline

74. Your manager has asked you for a cost

baseline for the project, but it is early in the
project management process and there is
very little project information. In this
circumstance, what is the best way to
estimate this project?

Provide a rough order of

magnitude estimate.
Calculate an estimate using the
schedule model.
Ask the team for estimates of each
activity.
Extrapolate from historical data.

75. During project planning, one of the

electrical engineers informs the project
manager that the life cycle cost of the new
heating and air conditioning system is
higher than the life cycle cost of another
heating and air conditioning system. What
should the project manager do?

Select the product with the lower life

cycle cost.
Select the product with the lowest
maintenance cost to life cycle cost
ratio.
Select the product with the best life
cycle cost to earned value ratio.
Determine if there is room in the
project budget for the additional
costs.

76. Which estimating method tends to be

most costly for creating a project cost
estimate?

Analogous
Parametric
Bottom-up
50/50

77. A project manager is working with

management to create the project
estimate. During the initiating process
group, what level of accuracy should the
estimate have?

-10 percent to +10 percent

-25 percent to +75 percent
-35 percent to +75 percent
-10 percent to +25 percent

78. A cost performance index (CPI) of 0.89

means:

The project is progressing at 89

percent of the rate planned.
At this time, we expect the total
project to cost 89 percent more than
planned.
The project is getting 89 cents
out of every dollar invested.
When the project is completed, we
will have spent 89 percent more than
planned.

79. You are communicating with the

project sponsors and working to make sure
all ve of them understand the variability
of the project. You have estimated the
project cost to be US $850K within
-25/+75 percent of actual. This is a:

Parametric estimate
Rough order of magnitude
estimate
Budget estimate
Definitive estimate

80. Your project is going reasonably well

and is ahead of the cost projections when
one of the local of cials informs you he will
make sure the project work stops unless
you pay him US $50. What is the best thing
to do?

Make the payment.

Offer to pay more than the
requested amount to get more
support from the official in the
future.
Offer to pay a smaller amount to
discourage future requests for larger
amounts.
Do not make the payment.
81. There is confusion among some of the
stakeholders about how the cost forecasts
will be calculated on the project. They also
have concerns about whether enough
money has been set aside to cover the cost
of risk responses. You are planning to share
information in the upcoming team meeting
and in reports to stakeholders to clear up
the confusion. You are referencing the
stakeholder and communications
management plans to determine how best
to communicate with the stakeholders. You
will explain that the difference between
the cost baseline and the cost budget can
be best described as:

The management reserves

The contingency reserves
The cost account
The project cost estimate

82. Recommended corrective actions

result from which of the following?

Bottom-up estimating
Control Costs
Cost aggregation
Reserve analysis

83. The nance department requires that

you keep them updated on the costs being
spent on the capital project you are leading.
You were required to submit a funding
plan, and monthly forecasts are necessary
so that any changes to the funding plan can
be requested in advance and evaluated.
Exceeding the budget limit is unacceptable,
as it will impact the stock value. You have
successfully implemented processes and
practices to anticipate funding changes and
evaluate them to minimize problems and
increase the ef cient use of funds. You
have employed a variety of reporting and
analysis techniques to meet the nance
department requirements. One such
technique is to calculate EAC, which is a
periodic evaluation of:

The cost of work completed

What it will cost to finish the
project
 project
The anticipated total cost at project
completion
The value of work performed

84. The previous cost performance index

was 1.1. The most recent calculation is at
.89. The schedule variance is positive, but a
critical path activity is trending to take
longer than estimated, and there is
inserted wait time between this activity
and its successor activity. As discussed at
the team meeting, the possibility that this
activity would take longer than estimated
had been identi ed in planning along with
suggested responses. The team agrees that
the suggested responses are still valid. You
are analyzing this change before issuing the
status report. All of the following are
relevant for analyzing a cost overrun
except:

Lag
Labor rates
Resources used
Communications management
plan

85. The best method to control costs is to:

Estimate during project executing

and then manage each activity to the
budget.
Estimate at the beginning of the
project and then check costs against
the baseline.
Estimate during planning and
then reestimate before each
activity begins.
Estimate during project initiating and
have management confirm the
estimates.

86. Company ABC is evaluating three

consulting companies to nd a consultant
to perform professional services. They
request information on how the three
consulting companies allocate fringe
bene ts to their clients. What type of cost
is Company ABC asking about?

Direct
 Direct
Indirect
Fixed
Variable

87. A sustainable development project has

been assigned to you. The project work will
be completed in several countries. The
sponsors are asking how you will account
for costs. Many of the anticipated costs are
from different sources than what the
funding organization is used to paying. The
discussion has become heated on some
issues. There’s one issue that has come up
several times that must be clari ed:
payment for routine government action by
a foreign of cial is:

Allowed only if they process the

project schedule
Not payable upon violation of
government law
A bribe
Allowed

88. The call center has a legacy application

that served the organization’s purposes
through the years. Because of the
limitations and costs of the system, the
organization is considering whether
organizational strategic objectives would
be better served by continuing to enhance
the legacy application and the supporting
system or by converting to a con gurable
software/hardware solution. Either way,
some of the stakeholder requirements will
not be met. Schedule and risk are the most
important constraints for the project
sponsor and key stakeholders. As the
project progresses, you will engage in a
process using aggregation, reserve
analysis, and expert judgment. These are
tools of which process?

Determine Schedule
Determine Budget
Control Schedule
Quantitative Risk Analysis

89. The project budget is proving to be

inaccurate. The SPI is 1.1. The team has had
negative deviation from the activity
attributes, and the sponsor has inserted
herself on the change control board. What
is the best thing for the project manager to
do?

Encourage the sponsor to remove

herself from the change control
board.
Recompute the project schedule.
Reestimate the activity
attributes.
Calculate the cost performance
index.

90. Your company wants to assign a

resource to your project and asks you to
bill that resource to the customer. This
concerns you because you get a bonus for
maximizing billings to the customer. What
is the best thing to do?

Remind the appropriate members of

the billing organization that monetary
compensation is not worth
compromising the integrity of the
individual or the organization.
Maximize customer billings in any
ethical manner possible.
Ask for the customer’s approval
before adding the resource to the
project scope.
Ask for clarification of the intent
of adding the resource.

91. The project management team is busy

breaking down deliverables, and the
procurement department has started
looking for possible sellers to help produce
the deliverables. There are departmental
concerns that the project could go over
budget because the scope will be iterated
and the planning and development will be
done in increments. At a recent company
gathering, the sponsor asked questions of
the project manager and the project
management team about how changes in
scope will affect the estimates. The
sponsor wanted to know how the project
estimates could be relied upon, given that
they were planning to iterate the scope.
The project manager reassured them that
the team has the right tools with which to
provide accurate estimates and that they
will utilize those tools throughout the
project. Which of the following is not
needed in order to come up with a project
estimate?

Change requests
A WBS
A network diagram
Risks

92. A management team is trying to decide

if it will continue working on a project that
has spent US $500,000. The original
estimate for work completed to date was
US $200,000. The difference between the
actual cost and the original estimate, is
a(n):

Customer cost
Example of how bad the schedule
was
Direct cost
Sunk cost

93. The network expansion project you just

took over is said to be doing pretty well.
The previous project manager only used
variances to report the current project
status. In the last report, you nd SV = US
$50,000, CV = US $10,000, PV = US
$500,000. You know the rate of spending
and schedule progress are important as
well. Based on the details you have been
given, what are the SPI and CPI?

0.91, 0.98
1.11, 0.98
0.90, 1.02
1.10, 1.02

94. What would be the best explanation for

the following: Both the cost variance and
schedule variance are negative, but the
cost variance is lower than the schedule
variance.

The project overspent due to

increased costs and yet
 completed some activities
faster.
The project underspent, because
costs were lower than planned and
activities were easier to complete
than planned.
The project underspent because all
work was not completed, but
overspent for work that was
done.
The project activities took longer
than expected, but costs were
lower.

95. A project manager discovers a work

package has been completed for
substantially less cost than planned. Which
of the following is not among the rst
things to consider doing?

Make sure all the work was

done.
Make sure all project processes
were followed.
Identify ways to increase the
result.
Make sure the right resources were
used.

96. To ensure the success of your new

international project, it would be best to
have several project team members work
on site for six months. The project
management team informs you that, in this
country, a payment is required to obtain
visas for foreign workers that stay over
three months at a time. The cost of the
visas is high. The economy has recently
become volatile. Some stakeholders
question the need for the project and the
bene ts it will produce. Leadership has told
you that this project is aligned with the
organization’s direction for the year. But
cost and risk are the primary constraints.
What is the least effective of the following
choices if you are trying to reduce cost
concerns?

Do not pay and see what

happens.
Include the payment in the project
 budget.
Outsource the work.
Send people for short periods that
would not require a visa.

97. While visiting the country where a new

branch of ce is being built, you are told you
must pay a US $5,000 fee to the
government permit of cer to obtain the
facility permit required by law to start
construction. The construction company
tells you this is standard practice and is
required by law. If you don’t pay the fee, the
project could be delayed, which would cost
your company money. You have not worked
in the country before. You do not speak the
of cial language of the country and are
communicating in a shared third language.
What should you do?

Pay the fee.

Have the construction company pay
the fee.
Refuse to pay the fee.
Have the customer pay the fee.

98. What does estimate at completion

(EAC) mean?

Each anticipated cost for the

project
Anticipated total cost at project
completion
Estimated average cost at project
completion
Anticipated expenses at project
completion

99. In which parts of the cost management

process is earned value (EV) used?

Performance measurement and

variance management planning
Creating the cost baseline and
the cost control system
Forecasting and project
performance reviews
Reserve analysis and cost
aggregation

100. Your work on a current project has

i l d d ll b ti ith li d
included collaboration with quali ed
professionals to re ne estimates and to
evaluate the uncertainties and concerns
expressed by various stakeholders. It is
important that the costs of the project be
planned out and kept within a range of +/- 3
percent, because of corporate
requirements. It is necessary that you
regularly report how much more the
project will cost. Calculating estimate to
complete (ETC) is done in:

Project planning
Project monitoring and
controlling
Project executing
Project initiating
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