Cost Management Quiz

In the process of control costs, the project manager compares the project management plan with what other information? ​ - Work performance data ​ - Project funding requirements ​ - Project documents ​ - Work performance reports

Work performance data: In almost all monitoring and controlling processes, the project manager compares the project plan with the work performance data to determine if the project is on track.

While working on a multinational project with a budget of $90,000, the team has completed the design aspect of the project. You have calculated that the AC is $30,000 and the EV is $32,000. What is the EAC of this project? ​ - $89,000 ​ - $92,804 ​ - $89,807 ​ - $84,906

$84,906: To find out the EAC, you will need the BAC and CPI. You currently have the BAC, which is $90,000. The CPI is equal to EV/AC = $32,000/$30,000 = $1.06. So, the EAC is equal to $90,000/$1.06 = $84,906.

When developing the cost management plan, what tool or technique includes reviewing the different funding options that can be used to fund the project? ​ - Meetings ​ - Data Analysis ​ - Expert Judgment ​ - External Funding

Data Analysis: Data analysis includes alternative analysis, which includes reviewing strategic funding options. Meetings and expert judgment do not examine different funding options. External funding is not a valid tool.

Earned Value Management (EVM) would NOT be very beneficial in which situation? ​ - To measure a project's progress against the project scope, cost, and schedule baselines ​ - To forecast future performance and the project's completion date and final cost ​ - To provide schedule and budget variances during the project ​ - To develop the project cost baseline

To develop the project cost baseline: Earned value analysis provides a means by which to determine cost and schedule variances, not to develop the project cost baseline.

The project manager is currently evaluating how well the project is meeting the project budget. What earned value formula will be needed to determine if a project is on or over budget? ​ - PV ​ - AC ​ - SV ​ - SPI

AC: To determine if a project is on or over budget, you will need to calculate the CV or CPI, both of which use the AC value.

The project manager has worked with an expert project team to estimate the project's cost. The project manager is very confident that the project will end at that budget. Where should the project manager document his or her confidence level of the cost estimate? ​ - Cost baseline ​ - Cost management plan ​ - Risk register ​ - Basis of estimates

Basis of estimates: The basis of the estimates will have an indication of the confidence level of the final estimate. No other choice will document the confidence level of an estimate.

While working on a game design project, the project sponsor has asked the project manager that to ensure that his estimates are very precise. What estimating technique should the project manager use? ​ - Analogous estimating ​ - Bottom-up estimating ​ - Three-point estimating ​ - Accuracy estimating

Bottom-up estimating: Bottom-up estimating is when work packages are broken down and then rolled back up to form an overall cost estimate. This can lead to a very precise estimate, although it requires the most amount of work. Analogous estimating is a quick estimate that is based on previous projects. Three-point estimating uses the PERT formula and may or may not be accurate . Accuracy estimating is a made-up term.

When determining the budget for a project, what tool should the project manager use to[KM1] sum the cost of each work package to form the entire project budget? ​ - Data analysis ​ - Decision making ​ - Cost aggregation ​ - WBS aggregation-

Cost aggregation: Cost aggregation is when you take the work packages and aggregate their individual cost to find the entire project budget. Data analysis does not contain any cost segregation, and neither does decision making. WBS aggregation is a made-up term.

Cost estimates for activities generally include the cost for labor, materials, equipment, services, and facilities. Which of the following statements is false regarding costs estimates? ​ - Cost estimates are progressively elaborated ​ - Cost estimates are best done by the project team ​ - Cost estimates also includes the operational cost of the product ​ - Cost estimates also include the contingency costs

Cost estimates also includes the operational cost of the product: Cost estimates for project activities should not include the operational costs of the product, since those costs cover operations and not a project. All other choices are true.

While working on a multinational project, the project manager has decided to represent the project budget in American dollars, even though the project will span nine different countries. This will make the budget uniform and easier for the stakeholders to understand. Where will the project manager document the units of measurement for the budget? ​ - Cost management plan ​ - Funding management plan ​ - Units of measurement plan ​ - Currency format plan

Cost management plan: The cost management plan can establish the units of measurement which would include the currency format. All other choices are fake plans.

Which one of the following is FALSE about TCPI? ​ - TCPI calculates the performance that must be achieved in order to meet financial or schedule goals. ​ - TCPI usually determines the status on the remaining work with respect to the funds remaining. ​ - If the cumulative CPI falls below the baseline plan, all future work must be performed at the TCPI to achieve the planned BAC. ​ - If the cumulative CPI falls below the baseline plan, all future work must be performed below the TCPI to achieve the planned BAC.

If the cumulative CPI falls below the baseline plan, all future work must be performed below the TCPI to achieve the planned BAC.: TCPI calculates the performance that must be achieved to meet financial or schedule goals and determines the status of the remaining work with respect to the remaining funds. If the cumulative CPI falls below the baseline plan, all future work must be performed at the TCPI to achieve the planned BAC.

When creating the cost baseline, the project manager uses an S-curve graph to represent the baseline. Which of the following statements is true about the S-curve? ​ - It is a time phase view of the cost baseline ​ - It is a time phase view of the project schedule ​ - It is a time phase view of the project scope ​ - It's used to create the project schedule

It is a time phase view of the cost baseline: The S-curve is a time phase view of the cost baseline, which typically shows the budget versus the actual spend on the project.

The project manager and the project team determined that the budget for the project will be $60,000. That includes the cost for all the activities and all uncertainties that may have taken place during the project. The project cost baseline is $60,000. The sponsor has determined that if there is a need for additional funds, he will add an additional $5,000. The additional $5,000 represents what? ​ - Contingency Reserves ​ - Risk Reserves ​ - Management Reserves ​ - Sponsor Reserves

Management Reserves: Management reserves are added to the cost baseline in case the project exceeds its budget. It is usually added by the company's management and is not under the manager's control. Contingency reserves are part of the cost baseline. Risks and sponsor reserves are made-up terms.

The budget manager has completed the earned value analysis for the project. He has concluded that the CPI of the project is .9. Which of the following statements best describes this project? ​ - Over budget by 10% ​ - Over budget by 90% ​ - On the budget by 10% ​ - Under budget by 90%

Over budget by 10%: The cost performance index (CPI) is a measurement of the cost efficiency of the budgeted resources. The number being one represents the project being on budget. A number below one illustrates the project being over budget. At .9, the project is 10% over budget.

While developing complex software, the project manager decided to bill the company by how many lines of codes it will take to write the software. What type of estimate best describes this scenario? ​ - Bottom-up estimating ​ - Analogous estimating ​ - Parametric estimating ​ - Three-point estimating

Parametric estimating: Parametric estimating uses mathematical models based on historical records from other projects. It utilizes the statistical relationship that exists between a series of historical data and a particular delineated list of other variables.

The project manager has just been told by the project sponsor that, due to a current recession in the stock market, the company will not be able to allocate all of the funds that the project will need for completion. What should the project manager do with this funding limit? ​ - Implemented change requests ​ - Reschedule the project work ​ - Close the project ​ - Seek external funding

Reschedule the project work: In the process of determining budget, the funding limit reconciliation tool is handled by rescheduling work. Implementing a change request may not help, since the organization will not have the money; closing the project will not resolve the funding problems; and seeking external funding may not be an option.

Early in the project's planning phase, the project team determined that the cost to install the server would be $15,000. This is a high-level estimate, and the team thinks it may cost up to $10,000 more. What kind of estimate is this? ​ - Definitive estimate ​ - Rough order of magnitude estimate ​ - Wide estimate ​ - Plan estimate

Rough order of magnitude estimate: A rough order of magnitude estimate has a range of -25% to +75%. A definitive estimate is generally within the range of -5% to +10%. Wide and plan estimates are not actual types of estimates.

The project manager has completed the process of determining budget. He has created the cost baseline, which will be added to the project management plan. The project manager is also aware of the project budget. What is the difference between the project budget and cost baseline? ​ - The cost baseline includes the contingency and management reserves ​ - The cost baseline only includes the management reserves ​ - The cost baseline includes the contingency reserves and the project budget includes the management reserves ​ - The cost baseline includes the management reserves and the project budget includes the contingency reserves -

The cost baseline includes the contingency reserves and the project budget includes the management reserves: The cost baseline includes the cost of all activities, plus the contingency reserves, and the management reserves includes the cost baseline, plus the management reserves.

The project manager has calculated the EV of the project to be $14,000 and the PV to be $16,000. The BAC is currently at $22,000. Which statement best describes this project? ​ - The project is ahead of schedule ​ - The project is on budget ​ - The project is over budget ​ - The project is behind schedule

The project is behind schedule: If you are to calculate this project's SV, you would have gotten a negative number. To calculate the SV, subtract PV from EV, which is $14,000-$16,000 = -$2,000. This project is behind schedule by $2,000 worth of work.

Which of the following statements would be considered false about a project that has an SPI of 1.2 and the CPI of .7? ​ - The project is being crashed to be completed faster. ​ - The project is being fast track to completed faster ​ - The project is ahead of schedule and over budget. ​ - A change request may be needed to correct the budget.

The project is being fast track to completed faster Of the choices, the only answer that maybe correct would be that the project is being fast track, , since fast tracking generally results in a shorter schedule but does not affect costs. All other choices are 100% true, since the project is over budget but ahead of schedule.