Tutorial (6)

Cost Management

1. One common way to compute estimate at completion (EAC) is to take the budget at
completion (BAC) and:

A. Divide by SPI.
B. Multiply by SPI.
C. Multiply by CPI.
D. Divide by CPI.

2. Estimate at completion (EAC) is a periodic evaluation of:

A. The cost of work completed.

B. The value of work performed.
C. The anticipated total cost at project completion.
D. What it will cost to finish the job.

3. If earned value (EV) = 350, actual cost (AC) = 400, planned value (PV) = 325, what is cost
variance (CV)?

A. 350
B. -75
C. 400
D. -50

4. Analogous estimating:

A. Uses bottom-up estimating techniques.

B. Is used most frequently during the executing processes of the project.
C. Uses top-down estimating techniques.
D. Uses actual detailed historical costs.

5. All of the following are outputs of the Estimate Costs process EXCEPT:

A. An understanding of the cost risk in the work that has been estimated.
B. The prevention of inappropriate changes from being included in the cost baseline.
C. An indication of the range of possible costs for the project.
D. Documentation of any assumptions made during the Estimate Costs process.

6. A project manager is finalizing a project that has had problems with cost performance.
Which of the following information would be best for the project manager to use to evaluate
performance?

A. Cost Performance Index.

B. A list of complaints from senior management.
C. The last Bar Chart.

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 D. The project budget.

7. A cost performance index (CPI) of 0.89 means:

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

8. A schedule performance index (SPI) of 0.76 means:

A. You are over budget.

B. You are ahead of schedule.
C. You are only progressing at 76 percent of the rate originally planned.
D. You are only progressing at 24 percent of the rate originally planned.

9. Which of the following is NOT needed in order to come up with a project estimate?

A. A WBS.
B. A network diagram.
C. Risks.
D. A change control system.

10. A rough order of magnitude estimate is made during which project management process
group?

A. Planning.
B. Closing.
C. Executing.
D. Initiating.

11. A cost baseline is an output of which cost management process?

A. Estimate Activity Resources.

B. Estimate Costs.
C. Determine Budget.
D. Control Costs.

12. The costumer asks you to provide a cost estimate that is 30% higher than your estimate of
the project cost. He explain that the budgeting process require managers to estimate
pessimistically to ensure enough money is allocated for projects. What is the best way to
handle this?

A. Add 30% as a lump sum contingency to handle project risk.

B. Add 30% to your project cost estimates by spreading it across all project activities.
C. Create one cost baseline for budget allocation and second one for the actual project
management plan.
D. Ask the customer for information on change and risk that would make your
estimate to be too low.

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 13. You are having a difficulty in estimating the cost of the project. Which of the following
BEST describe the most probable cause of your difficulty?

A. Inadequate scope definition.

B. Rareness of desired resources.
C. Lack of historical records from previous project.
D. Lack of company processes.

14. Who has the cost risk in a fixed price (FP) contract?

A. The team.
B. The buyer.
C. The seller.
D. Management.

15. The customer starts to have cash flow problems. The customer notifies the project manger
that there will be limits on when fund will be available for the project. The CPI is currently
1.02 and the estimate to complete is US $927,000.0. If the project manager performs funding
limit reconciliation, there will also MOST likely be a change in the:

A. Project communication plan.

B. Number of change request.
C. Cost baseline.
D. Project schedule.

16. The cost contingency reserve should be:

A. Hidden to prevent management from disallowing the reserve.

B. Added to each activity to provide the customer with a shorter critical path.
C. Maintained by management to cover cost overruns.
D. Added to the base costs of the project to account for risks.

17. The seller tells you that your activities have resulted in an increase in their costs. You
should:

A. Recommend a change to the project costs.

B. Have a meeting with management to find out what to do.
C. Ask the seller for supporting information.
D. Deny any wrongdoing.

18. Your cost forecast shows that you will have a cost overrun at the end of the project. Which
of the following should you do?

A. Eliminate risks in estimates and re-estimate.

B. Meet with the sponsor to find out what work can be done sooner.
C. Cut quality.
D. Decrease scope.

19. Which estimating method tends to be most costly for creating project cost estimate?

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 A. Bottom - up.
B. Analogous.
C. Top - Down.
D. 50/50.

20. Half way during the executing process of your project, a team member alerts you to a
potential cost overrun in a specific deliverable. What do you do first?

A. Determine the projected actual cost.

B. Implement the change control process to tack the change.
C. Inform the costumer.
D. Determine the cause of the overrun.

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