cost

The project manager has identified an Estimate at Completion (EAC) of $2,000, an Actual Cost (AC) of $500, and a Schedule Performance Index (SPI) of 75 percent. What is the project's Estimate to Complete (ETC)? A $2,500 B $1,875 C $1,500 D $1,125

$1,500 Estimate to Complete (ETC) is the expected cost to finish all the remaining project work. Assuming that work is proceeding on plan, the cost of completing the remaining authorized work can be calculated using: ETC = EAC - AC. ETC = $2,000 - $500 ETC = $1,500 The ETC for the project is $1,500.

The project manager started the project with a BAC of $5,000. The project currently has an EV of $2,000 and an AC of $1,000. What is the TCPI for the project? A 0.50 B 0.75 C 1.67 D 1.33

0.75. To calculate the efficiency that must be maintained in order to complete on plan, use the formula: TCPI = (BAC - EV) / (BAC - AC) TCPI > 1.0 is harder to complete TCPI = 1.0 is same to complete TCPI < 1.0 is easier to complete TCPI = ($5,000 - $2,000) / ($5,000 - $1,000) TCPI = $3,000 / $4,000 TCPI = 0.75 The TCPI shows the project manager the rate that must be sustained for the remaining work in order to stay on budget.

As the project manager, you need to decide if you should buy or lease a server for the software implementation. The monthly lease cost is $1,500. To purchase the server, the initial investment is $45,000 and the monthly service fee is $250. How many months will it take for the monthly lease cost to equal the purchase cost? A 36 months B 25 months C 48 months D 30 months

36 months. It will take 36 months for the monthly lease cost to equal the purchase cost. To figure the total months, let M equal the number of months when the purchase and lease costs are equal. $1,500M = $45,000 + $250M $1,500M - $250M = $45,000 $1,250M = $45,000 M = $45,000/$1,250 M = 36

Which of the following best describes net present value (NPV)? A The length of time required to recoup the cost of a project B A method used to analyze the profitability of a project C The value today of future cash flows D The summed benefits of a project minus the associated costs

A method used to analyze the profitability of a project

Which of the following statements is true in regard to Cost Variance (CV)? A A positive result is behind schedule B A negative result is over budget C A negative result is behind schedule D A positive result is over budget

A negative result is over budget

__ is the current actual cost incurred for the completed work.

AC

At this moment, a project's costs amount to $250 for the work that has been completed. Which of the following terms does this statement best describe? A Estimate to Complete (ETC) B Earned Value (EV) C Actual Cost (AC) D Budget at Completion (BAC)

Actual Cost (AC)

__ is interpreted as the current actual cost incurred for the work accomplished.

Actual Cost (AC)

__ is the realized cost incurred for the work performed on an activity during a specific time period.

Actual Cost (AC)

There are four types of estimating used to estimate costs:

Analogous estimating (also known as top-down estimating) Parametric estimating Bottom-up estimating Three-point estimating

The__ is calculated by dividing the total discounted value of the benefits by the total discounted value of the costs. To calculate the discounted values of each, use the net present value (NPV) formula, in which the values are divided by the sum of 1 and the discount rate raised to the number of periods.

BCR

The project manager set a budget of $5,000 to complete the total project. Which of the following terms does this statement best describe? A Variance at Completion (VAC) B Earned Value (EV) C Budget at Completion (BAC) D Actual Cost (AC)

Budget at Completion (BAC)

__ is the amount that was originally budgeted for the total project effort.

Budget at Completion (BAC)

__ is the sum of all budgets established for the work to be performed.

Budget at Completion (BAC)

Which of the following would be used to determine the worth of work you are getting out of every dollar that is spent on a project? A SPI = EV / PV B CPI = EV / AC C VAC = BAC - EAC D CV = EV - AC

CPI = EV / AC

To calculate the CPI, use the formula

CPI = EV / AC. CPI values > 1.0 indicate a project is under planned cost CPI values = 1.0 indicate a project is on planned cost CPI values < 1.0 indicate a project is over planned cost

The formula is CV =

CV = EV - AC Positive = Under planned cost Neutral = On planned cost Negative = Over planned cost

__ is a measure of the cost efficiency of budgeted resources expressed as the ratio of earned value to actual cost.

Cost Performance Index (CPI)

__ is the amount of budget deficit or surplus at a given point in time, expressed as the difference between the earned value (EV) and the actual cost (AC).

Cost Variance (CV)

__ is the summed benefits of a project minus the associated costs.

Cost-benefit analysis

Which of the following is not an important aspect of a project's cost control variance analysis? A Determining whether corrective action is required B Determining whether preventative action is required C Determining whether the base budget is adequate for the project D Determining the degree of variance

Determining whether the base budget is adequate for the project

If future work will be accomplished at the planned rate, use: EAC =

EAC = AC + BAC - EV

If the initial plan is no longer valid, use: EAC =

EAC = AC + Bottom-up ETC

If both the CPI and SPI influence the remaining work, use: EAC =

EAC = AC + [(BAC - EV) / (CPI × SPI)]

If the CPI is expected to be the same for the remainder of the project, use: EAC =

EAC = BAC / CPI

What is the formula for calculating Cost Variance (CV)? A EV - PV B EV - AC C EV / AC D EV / PV

EV - AC

__ is interpreted as the current estimated value of the work actually accomplished.

Earned Value (EV)

__ is the estimated value of work that has been accomplished.

Earned Value (EV)

__ is the measure of work performed expressed in terms of the budget authorized for that work.

Earned Value (EV)

An __ compares the performance measurement baseline to the actual schedule and cost performance.

Earned Value Analysis (EVA)

Which report should the project manager review when needing to assess the project's performance based on its scope, cost, and schedule measures? A Status report B Progress report C Forecasting report D Earned value report

Earned value report

AC + BAC - EV is the formula used to find: A Estimate to Complete (ETC) B Variance at Completion (VAC) C Cost Performance Index (CPI) D Estimate at Completion (EAC)

Estimate at Completion (EAC)

__ is interpreted as the current expectation of the total project cost.

Estimate at Completion (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.

Estimate at Completion (EAC)

__ is the current forecasted cost to finish the project.

Estimate to Complete (ETC)

__ is the expected cost to finish all the remaining project work.

Estimate to Complete (ETC)

Which of the following estimates is not a cost estimate used in three-point estimating? A Optimistic B Most likely C Estimated D Pessimistic

Estimated

Which of the following is not a type of estimating that may be used during the Estimate Costs process? A Four-point estimating B Parametric estimating C Analogous estimating D Three-point estimating

Four-point estimating

Which of the following is true in regard to the interpretation of a To Complete Performance Index (TCPI)? A 0 = Harder to complete B Exactly 1 = Easier to complete C Less than 1 = Same to complete D Greater than 1 = Harder to complete

Greater than 1 = Harder to complete. To calculate the efficiency that must be maintained in order to complete on plan, use the formula: TCPI = (BAC - EV) / (BAC - AC) TCPI > 1.0 is harder to complete TCPI = 1.0 is same to complete TCPI < 1.0 is easier to complete To calculate the efficiency that must be maintained in order to complete the current EAC, use the formula: TCPI = (BAC - EV) / (EAC - AC) TCPI > 1.0 is harder to complete TCPI = 1.0 is same to complete TCPI < 1.0 is easier to complete

__ is the rate of growth a project is expected to generate.

Internal rate of return

__ is a finance term used to express a project's returns as an interest rate.

Internal rate of return (IRR)

__ is best described as the rate of growth a project is expected to generate.

Internal rate of return (IRR)

Which of the following is not a type of estimate used in three-point estimation? A Optimistic (cO) B Pessimistic (cP) C Least likely (cL) D Most likely (cM)

Least likely (cL)

Estimates used in three-point estimation include:

Most likely (cM) Optimistic (cO) Pessimistic (cP) These estimates are used to determine an approximate range for an activity's cost.

__ is used to analyze the profitability of a project.

Net present value

__ is the length of time required to recoup the cost of a project.

Payback period

__ is the estimated value of work that is currently planned to be accomplished.

Planned Value (PV)

The following dimensions are used in conducting an EVA:

Planned Value (PV): the estimated value of work that is currently planned to be accomplished Earned Value (EV): the measure of work performed expressed in terms of the budget authorized for that work Actual Cost (AC): the realized cost incurred for the work performed on an activity during a specific time period

__ is the value today of future cash flows.

Present value

Company X's project committee is in the process of picking the next project to implement. There are four projects for the committee to choose from. Project 1 has an internal rate of return of 10% Project 2 has an internal rate of return of 23% Project 3 has an internal rate of return of 2% Project 4 has an internal rate of return of 21% Which project presents the best option for Company X? A Project 2 B Project 3 C Project 4 D Project 1

Project 2. Internal rate of return (IRR) is a finance term used to express a project's returns as an interest rate. Project 2 is the best option for Company X to choose, as it has the highest IRR number. It is important to remember that the higher the IRR number, the better.

Company X's project committee is in the process of picking the next project to start, and they have four projects to choose from. Project 1 will take six months to complete and has a net present value of $5,000. Project 2 will take two years to complete and has a net present value of $56,000. Project 3 will take one year to complete and has a net present value of $45,000. Project 4 will take four years to complete and has a net present value of $125,000. Which project presents the best investment opportunity for Company X? A Project 1 B Project 2 C Project 4 D Project 3

Project 4. Project 4 presents the best investment opportunity for Company X. Organizations generally select the project that generates the greatest net present value. The time required to complete the project is irrelevant. Present value is based on the economic theory that a dollar today is worth more than a dollar tomorrow. Net present value is this same concept, only factoring in the cost of the project.

Company X is considering four different projects. Project A has an NPV of $45,000, an IRR of 10%, a payback period of 18 months, and a benefit-cost ratio of 2.25. Project B has an NPV of $75,000, an IRR of 12%, a payback period of 12 months, and a benefit-cost ratio of 0.75. Project C has an NPV of $20,000, an IRR of 8%, a payback period of 8 months, and a benefit-cost ratio of 1.95. Project D has an NPV of $70,000, an IRR of 13%, a payback period of 10 months, and a benefit cost ratio of 1.0. Which project should Company X choose if they are basing their decision on the payback period? A Project C B Project A C Project B D Project D

Project C. When choosing a project based on payback period, the company should choose the project with the shortest payback period. Project C shows the shortest payback period at 8 months; therefore, it is the project that should be chosen. Project C has an NPV of $20,000, an IRR of 8%, a payback period of 8 months, and a benefit-cost ratio of 1.95.

Which of the following is not a dimension used to conduct an earned value analysis (EVA)? A Actual Cost B Earned Value C Reserve Analysis D Planned Value

Reserve Analysis

__ is used to monitor the status of the project contingency.

Reserve Analysis

Which of the following is best described as a review of a project's financial resources to compare the current balance against the projected amount needed? A Risk audit B Risk reassessment C Reserve analysis D Workaround

Reserve analysis

Which of the following formulas is used to calculate Schedule Variance (SV)? A SV = EV / AC B SV = EV / PV C SV = EV - PV D SV = EV - AC

SV = EV - PV

The results of the __ determine if a project is ahead of or behind schedule.

Schedule Variance (SV)

__ is the ratio between earned value (EV) and planned value (PV), to reflect whether the project work is ahead of, on, or behind schedule in relative terms.

Schedule performance index (SPI)

__ is the amount by which the project is ahead or behind the planned delivery date, at a given point in time, expressed as the difference between the Earned Value (EV) and the Planned Value (PV).

Schedule variance (SV)

What calculation would you use if you wanted to know the cost efficiency that must be maintained on your project in order to complete the plan? A BAC B EAC C TCPI D SPI

TCPI

Company X has a project with a benefit-cost ratio (BCR) of 1.5. What does that mean? A The benefit is 1.5 times the cost B Company X will receive a return of 1.5% C The cost is 1.5 times the benefit D The benefits are equal to the costs

The benefit is 1.5 times the cost. If Company X has a project with a BCR of 0.6, it means that the costs are greater than the benefits. BCR > 1 the benefits are greater than the costs BCR = 1 the costs and benefits are equal BCR < 1 the costs are greater than the benefits Therefore, if Company X has a project with a BCR of 1.5, it means that the benefits of the project are 1.5 times the cost of the project.

Optimistic (cO):

The cost based on analysis of the best-case scenario for the activity.

Pessimistic (cP):

The cost based on analysis of the worst-case scenario for the activity.

Most likely (cM):

The cost of the activity, based on realistic effort assessment for the required work and any predicted expenses.

If the benefit cost ratio is 1, it means: A The costs and benefits are the same B There is only one benefit associated with the project C The benefits are greater than the costs D The costs are greater than the benefits

The costs and benefits are the same

Company X has a project with a benefit-cost ratio (BCR) of 0.6. What does that mean? A The benefits are greater than the costs B The benefits are equal to the costs C Company X will receive a return of 0.6 D The costs are greater than the benefits

The costs are greater than the benefits. If Company X has a project with a BCR of 0.6, it means that the costs are greater than the benefits. BCR > 1 the benefits are greater than the costs BCR = 1 the costs and benefits are equal BCR < 1 the costs are greater than the benefits

Which of the following best describes Planned Value (PV)? A The current expectation of the total project cost B The current estimated value of the work planned to be done C The current actual cost incurred for the work accomplished D The current estimated value of the work actually accomplished

The current estimated value of the work planned to be done

Formula for SV

The formula is SV = EV - PV.

Which of the following best describes "payback period"? A The length of time required to recoup the cost of a project B The value today of future cash flows C The rate of growth a project is expected to generate D A method used to analyze the profitability of a project

The length of time required to recoup the cost of a project

The project manager calculates the CPI and finds that the result is .76. What does this tell him? A The project is progressing at 76 percent of the planned rate B The project is getting back about 76 cents out of every dollar that is put into it C The project is currently expected to be 76 percent over budget when completed D The project is ahead of schedule

The project is getting back about 76 cents out of every dollar that is put into it

Internal rate of return (IRR) is best described as: A The summed benefits of a project minus the associated costs B A method used to analyze the profitability of a project C The value today of future cash flows D The rate of growth a project is expected to generate

The rate of growth a project is expected to generate

Present value is best described as: A The length of time required to recoup the cost of a project B A method used to analyze the profitability of a project C The value today of future cash flows D The rate of growth a project is expected to generate

The value today of future cash flows

__ uses three estimates to define an approximate range for an activity's duration:

Three-point estimation

__ is a measure of the cost performance that must be achieved with the remaining resources in order to meet a specified management goal, expressed as the ratio of the cost to finish the outstanding work to the budget available.

To Complete Performance Index (TCPI)

__ is a measure of the cost performance that must be achieved with the remaining resources in order to meet a specified management goal. In other words, it is the efficiency needed to finish the project on budget; it is the ratio between budgeted cost of work remaining and money remaining.

To Complete Performance Index (TCPI)

two TCPI formulas:

Under Budget Formula (BAC - EV) / (BAC - AC) > 1 harder to complete; < 1 easier to complete Over Budget Formula (BAC - EV) / (EAC - AC) > 1 harder to complete; < 1 easier to complete

A project with a CPI value calculated to be 1.12 tells the project manager the project is: A Nearing planned cost B Over planned cost C Exactly on planned cost D Under planned cost

Under planned cost

VAC can be calculated with the following formula:

VAC = BAC - EAC. Positive = Under planned cost Neutral = On planned cost Negative = Over planned cost

At this moment, the project manager expects the project to be $500 over budget by the end. Which of the following terms does this statement best describe? A Estimate to Complete (ETC) B Variance at Completion (VAC) C Estimate at Completion (EAC) D Earned Value (EV)

Variance at Completion (VAC)

__ is a projection of the amount of budget deficit or surplus, expressed as the difference between the budget at completion and the estimate at completion.

Variance at Completion (VAC)

Which report should the project manager review when needing to compare the project's actual results to its baselines? A Status report B Progress report C Variance report D Trend report

Variance report

A __ attempts to identify the relationship between the cost and benefits of a proposed project.

benefit-cost ratio (BCR)

The __ should be used when you need to assess a project's performance based on its scope, cost, and schedule measures.

earned value report

The __ should be used when you need to review the project's future status and performance.

forecasting report

It is important to remember that the __ the IRR number, the better.

higher

If the benefit cost ratio __ 1, it means that the project's costs and benefits are equal.

is

If the benefit cost ratio is __ 1, it means that the project's costs are more than the project's benefits.

less than

If the benefit cost ratio is __ 1, it means that the project's benefits are more than the project's costs.

more than

CPI values = 1.0 indicate a project is __

on planned cost

CPI values < 1.0 indicate a project is __

over planned cost

The __ should be used when needing to know what has been accomplished on the project thus far.

progress report

A __ is a review of a project's financial resources to compare the current balance against the projected amount needed.

reserve analysis

A __ is an action to verify that all risks have been identified, that plans have been created to handle risks, and that the individuals responsible for responding to the risks are prepared to take action.

risk audit

A __ is an action taken to periodically review and adjust the documentation of the risk management plan and risk register.

risk reassessment

The __ should be used when needing to know where the project stands in regard to the performance measurement baseline.

status report

The __ should be used when needing to examine the past results of the project to see if its performance is improving or not.

trend report

CPI values > 1.0 indicate a project is __

under planned cost

An important aspect of a project's cost control is __. The analysis determines the cause and degree of variance relative to the cost baseline, and helps one decide whether corrective or preventative action is required.

variance analysis

The __ should be used when comparing the project's actual results to its baselines.

variance report

A __ is an unplanned response that is created to handle unexpected problems on a project.

workaround