Chapter 7 Quiz Questions

Carla is developing the budget for a new park project. She has worked on similar projects before and is using parametric estimating to estimate costs. Her last park project budget was $250,000. What is an output of the Determine Budget process? A. Cost Baseline B. Cost Management Plan C. Basis of Estimates D. Cost Aggregation

Answer: A The Cost Baseline is the only answer that is an output of the Determine Budget Process. The Cost Management Plan is an output of Plan Cost Management. The Basis of Estimates is a project document that is used as an input to the Determine Budget Process. Cost Aggregation is not an input or an output, but is a Tool/Technique. (PMBOK 6th Ed., Section 7.3.3, page 254. See also Figure 7-6 page 248.)

Calculate the Estimate At Completion assuming your CPI stays the same A. EAC = $754,716.98 B. EAC = $666,666.67 C. EAC = $899,887.51 D. EAC = $449,943.76

Answer: A Used to forecast, the EAC is the expected total cost of completing all work expressed as the sum of the actual cost to date and the estimate to complete. In this case, we would use the formula EAC=BAC/CPI $800,000/$1.06 (PMBOK 6th Ed., Section 7.4.3.2, page 264. See also Table 7-1 Earned Value Calculations Summary Table page 267.)

Based on the information in the chart below, the project currently can be assessed as: A. Ahead of schedule and under budget B. Behind schedule and over budget C. Ahead of schedule and over budget D. Behind schedule and under budget

Answer: A The Earned Value is more than the Planned value, which means more work has been completed than planned. Actual Cost is less than planned, which means the project is currently under budget. (PMBOK 6th Ed., Section 7.4.2.2, page 261. See also Figure 7-12 page 264.)

What is the Cost Variance at this point in the project? A. CV = -$80,000 B. CV = $30,000 C. CV = -$130,000 D. CV = $450,000

Answer: B At this point in time, your actual costs are $450,000. Cost Variance is the amount of budget deficit or surplus at a given point in time, expressed as the difference between earned value and the actual cost. CV=EV-AC If EV = $480,000 and AC = $450,000, then EV-AC=$30,000 (PMBOK 6th Ed., Section 7.4.2.2, page 262 See also Table 7-1 Earned Value Calculations Summary Table page 267.)

What is the Cost Performance Index at this point in the project? A. CPI = .563 B. CPI = 1.778 C. CPI = 1.06 D. CPI = 1.2

Answer: C Cost performance index is a measure of the cost efficiency of budgeted resources expressed as the ration of earned value to actual cost. CPI=EV/AC If EV = $480,000 and AC = $450,000, then EV/PV=1.06 (PMBOK 6th Ed., Section 7.4.2.2, page 263. See also Table 7-1 Earned Value Calculations Summary Table page 267.)

What is the Schedule Variance at this point in the project? A. SV = -$180,000 B. SV = -$30,000 C. SV = $80,000 D. SV = $130,000

Answer: C Schedule Variance is a measure of schedule performance expressed as the difference between the earned value and the planned value, or SV = EV-PV If EV = $480,000 and PV = $400,000, then EV - PV = $80,000 (PMBOK 6th Ed., Section 7.4.2.2, page 262 See also Table 7-1 Earned Value Calculations Summary Table page 267.)

Use the following information for questions 6-14 You are 10 weeks into your renovation project and so far your team is 2 weeks ahead of schedule and you have spent $450,000. What are the Earned Value and Planned Value at this point in the project? A. EV = $450,000; PV $800,000 B. EV = $450,000; PV = $480,000 C. EV = $480,000; PV = $400,000 D. EV = $480,000; PV = $350,000

Answer: C The Earned Value is the measure of work performed expressed in terms of the budget authorized for that work. The team has completed 12 weeks worth of work, or 60% of the project. EV = 60% of $800,000 = $480,000. The Planned Value is the authorized budget assigned to scheduled work. The project is planned for 20 weeks and has completed 10 weeks, so the planned value is 20/10 or 50%. PV = 50% of $800,000 = $400,000 (PMBOK 6th Ed., Section 7.4.2.2, page 261 See also Table 7-1 Earned Value Calculations Summary Table page 267.)

Using your current CPI and SPI data, calculate the Estimate At Completion. A. EAC = $725,157.23 B. EAC = $622,955.98 C. EAC = $701,572.33 D. EAC = $605,345.91

Answer: C Used to forecast, the EAC is the expected total cost of completing all work expressed as the sum of the actual cost to date and the estimate to complete. In this case, we would use the formula AC + [(BAC-EV)/(CPI*SPI)] $450,000 + [($800,000-$480,000)/(1.2*1.06)] = $701,572.33 (PMBOK 6th Ed., Section 7.4.3.2, page 264. See also Table 7-1 Earned Value Calculations Summary Table page 267.)

A water main break causes a delay in the work on your project, but no additional delays are expected. Calculate the Estimate At Completion assuming future work will be accomplished at the planned rate. A. EAC = $800,000 B. EAC = $750,000 C. EAC = $770,000 D. EAC = $850,000

Answer: C Used to forecast, the EAC is the expected total cost of completing all work expressed as the sum of the actual cost to date and the estimate to complete. In this case, we would use the formula EAC=AC+BAC-EV $450,000+$800,000-$480,000 = $770,000 (PMBOK 6th Ed., Section 7.4.3.2, page 264. See also Table 7-1 Earned Value Calculations Summary Table page 267.)

You have been asked to assume project management responsibilities midway through a project. The sponsor has asked for an assessment of the project's performance to this point. You determine that the project's CPI is 1.2. What is the current financial status of the project? A. The project is running over budget B. The project is ahead of schedule C. The project is running under budget D. The project is running exactly on budget

Answer: C A CPI of 1.0 means the project is exactly on budget. A CPI greater than 1.0 means the project is running under planned cost. A CPI less than 1.0 means the project is running over planned cost. (PMBOK 6th Ed., Section 7.4.2.2, page 263. See also Table 7-1 Earned Value Calculations Summary Table, page 267.)

What is the Schedule Performance Index at this point in the project? A. SPI = .889 B. SPI = .834 C. SPI = 1.06 D. SPI = 1.2

Answer: D Schedule performance index is a measure of schedule efficiency expressed as the ration of earned value to planned value. SPI=EV/PV If EV = $480,000 and PV = $400,000, then EV/PV=1.2 (PMBOK 6th Ed., Section 7.4.2.2, page 263. See also Table 7-1 Earned Value Calculations Summary Table page 267.)

Your company has been awarded a contract to renovate an elementary school. The renovation is expected to be completed in 20 weeks with labor costs totaling $375,000; material costs totaling $250,000; contingency reserves totaling $100,000; management reserves totaling $50,000 and contract fee of $75,000. What is the BAC for this project? A. $600,000 B. $150,000 C. $700,000 D. $800,000

Answer: D The sum of all budgets established for the work to be performed. The BAC does not include Management Reserves. $375,000 + $250,000 + $100,000 + $75,000 = $800,000 (PMBOK 6th Ed., Section 7.4.2.2, page 261. See also Figure 7-9 page 248.)

You are a project manager for a manufacturing company responsible for the design phase of a new product. Your budget has limited reserves and the team has been assigned to you. The project has a non-negotiable deadline that must be met in order for the product to move to the next phase. You are determining the cost estimates for your budget. Which estimating method is the most accurate? A. PERT (Three-Point) Estimate B. Analogous Estimating C. Parametric Estimating D. Bottom-up Estimating

Answer: D Though it is the most time-consuming, Bottom-up estimating is also the most accurate because the cost of individual work packages or activities is estimated to the greatest level of specified detail. (PMBOK 6th Ed., Section 7.4.2.4, page 244.)

Increased import tariffs have caused one of your suppliers to cease operations. You find a local supplier, but material costs are now more than originally planned. You determine that the bottom-up estimate to completion is $445,000. Calculate the Estimate At Completion with this new data. A. EAC = $845,000 B. EAC = $795,000 C. EAC = $925,000 D. EAC = $895,000

Answer: D Used to forecast, the EAC is the expected total cost of completing all work expressed as the sum of the actual cost to date and the estimate to complete. In this case, we would use the formula EAC=AC + Bottom-up EAC $450,000 + $445,000 = $895,000 (PMBOK 6th Ed., Section 7.4.3.2, page 264. See also Table 7-1 Earned Value Calculations Summary Table page 267.)