Bootcamp Chapter 7

Question 1

Which of the following is not included in the analysis of life cycle costs?

A. Operating costs
B. Warranty costs
C. Interest on advances
D. Requir costs

Answer 1

ANSWER: C

Interest on advances is a financial term unrelated to life cycle costing.

Question 2

What is the difference between costs and price?

A. Price includes inflation and cost does not
B. Price minus cost equals cash flow, which is tied to the company’s chart of accounts.
C. Cost is more accurate than price because it is based on the WBS
D. Cost is the amount of money it will take to create the project, and price is an organizational business decision on what to charge for the project

Answer 2

ANSWER: D

Question 3

Which of the following is a tool/technique for the Estimate Costs process?

A. Bottom-up estimating
B. Vendor invoices
C. Project management estimating hardware
D. Constrained optimization

Answer 3

ANSWER: A

Bottom-up estimating is one of several methods for estimating costs.

Question 4

A ROM (rough order of magnitude) estimate is most appropriate for which phase of project management?

A. Preliminary RAM
B. Initiating
C. Planning
D. When a SWAG is required

Answer 4

ANSWER: B

Answer A is unrelated to estimating ranges; C is where you would produce a budget estimate or definitive estimate; and D is a slang acronym related to a method of estimating.

Question 5

A definitive estimate, developed late in planning, has a ____ % range.

A. -5 to +10
B. -10 to +25
C. -1 to +5
D. There is no defined range

Answer 5

ANSWER: A

Question 6

Which term is used to refer to the project’s initial cost, plus the cost of using the project’s output over time?

A. Benefit cost ratio
B. Life cycle cost
C. SG&A
D. Operating cost

Answer 6

ANSWER: B

Question 7

Which of the following is not an input to the Determine Budget process?

A. PERT
B. Project schedule
C. Resource calendars
D. Contracts

Answer 7

ANSWER: A

PERT (program evaluation and review technique) is unrelated to the Determine Budget process.

Question 8

Which of the following quality costs should be included in the project cost estimate?

A. The cost of the Quality Control manager
B. Costs of conformance and nonconformance
C. Costs of only the quality assurance
D. Costs of only nonconformance

Answer 8

ANSWER: B

Answer A is only part of the quality cost and might or might not be included in project cost depending on the organizational policy. Answers C and D offer only part of the answer.

Question 9

In which document would you find funding constraints?

A. Scope statement
B. WBS
C. EVM
D. Life cycle cost

Answer 9

ANSWER: A

None of the other documents, methods, or processes in Answers B, C or D includes funding constraints

Question 10

Which of the following is true for management reserves?

A. They are controlled by the project manager
B. They are not part of the project costs baseline
C. They are always included in an EV calculation
D. They are set aside for known knowns

Answer 10

ANSWER: B

Answer A is not correct because management reserves are controlled by the project sponsor; C is not correct because management reserves are never included in EV unless they have been released to the project and the budget has been changed. Answer D is not correct because management reserves are set aside for unknown unknowns

Question 11

What is sunk cost?

A. Money ready to be spent on a project
B. Money already spent on a project
C. Money in contingency for unknown unknowns
D. Part of accelerated deprecation

Answer 11

ANSWER: B

A, C and D are financial terms, but not sunk cost.

Question 12

A project sponsor asks you to determine the cost performance needed with the remaining project resources in order meet the project goal. What measurement do you need to find to convey this information to the project sponsor?

A. TCPI
B. EV
C. BAC
D. SV

Answer 12

ANSWER: A

To-complete performance index is “a measure of the cost performance that is required to 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 remaining budget.

Question 13

You are the PM. you have purchased a large crane to aid in field construction on your long-term project (10 years). This crane cost $250k to purchase and install. At the end of its life (10 years) it will have a scrap value of $50k. Using straight line depreciation, how much would you depreciate the crane, each year, if the expected long term interest rate was 5% and the company used an IRR of 15%?

A. $25k
B. $200k
C. $27.5k
D. $20k

Answer 13

ANSWER: D

The correct calculation is ($250k-$50k)/10=$20k. Interest rate and IRR are unusable information

Question 14

Which of the following cannot be a category of cost?

A. Direct.
B. Indirect-variable
C. Direct-indirect
D. Direct-variable

Answer 14

ANSWER: C

Direct and indirect are separate and mutually exclusive categories of cost.

Question 15

Name two methods of accelerated depreciation?

A. First cost and life-cycle cost
B. Direct and fixed
C. Sum of the year’s digits and double declining balance
D. Linear and nonlinear

Answer 15

ANSWER: C

Answer A is not related to depreciation, B refers to categories of cost, D refers to constrained optimization project selection methods

Question 16

Value analysis is another term for ______?

A. Developing the quality plan cost
B. Value engineering
C. Transferring value assets to the balance sheet
D. Controlling costs

Answer 16

ANSWER: B

Answer A is related to estimating the cost of developing the quality plan; C is a financial activity; D is a Project Cost Management process

Question 17

Earned value formulas can be classified as______?

A. Status and forecast
B. Fixed formula rules
C. Tools for schedule compression
D. Tools to determine the project critical path

Answer 17

ANSWER: A

Answer B; fixed formula rules establishes how to determine EV; C is related to the Control Schedule process; and D is related to time, not to cost

Question 18

What are the three dimensions of EVM?

A. Budgeted costs, sunk costs, and variance
B. Budgeted costs, sunk costs, and value of work done
C. Budgeted value, spending, and remaining budget
D. Budget for work done, spending on work done and value of work done

Answer 18

ANSWER: B

The three basic variables for EVM and calculation are PV (Planned value), which represents the budgeted costs of work scheduled, or the planned costs for work in the plan; AC (actual costs), which represent the actual cost of work performed, or the amount of spending to date for any work accomplished whether in the plan or not; and finally, EV (earned value), which represents the budgeted cost of work performed, or the planned cost for the work that has been accomplished. Work that has been done but was not in the approved plan always has an EV of $0 because it wasn’t planned.

Question 19

The 0/100% fixed formula technique to determine earned value data is best used under what type of conditions?

A. Large and complex
B. Large value activity
C. Small value, short duration activities
D. Large value but long duration activity

Answer 19

ANSWER: C

Answers A, B and D are not appropriate for the 0/100% fixed formula rule because this rule could significantly lower the calculated value for EV.

Question 20

When is it best to use the EVM “level of effort” rule?

A. Activities do not produce tangible results
B. Activities can be measured objectively
C. Activities do not consume resources
D. Activities are not in the cost baseline

Answer 20

ANSWER: A

LOE is used to determine EV, PV, and AC for activities that do not produce tangible results and do not lend themselves well to the measurement of physical work progress

Question 21

Your project has the following EVM values: PV= $48k, EV=$32k, and AC=$44k. What is SV?

A. Not enough information to calculate
B. +1.5
C. -$12k
D. -$16k

Answer 21

ANSWER: D

Correct calculation is SV=EV-PV, which is $32k-$48k=$-16k

Question 22

Your project has a PV of $48k, EV of $32k, and AC of $44k. What is the CV as a percentage of the work accomplished?

A. -37.5%
B. +37.5%
C. -75%
D. +75%

Answer 22

ANSWER: A

The correct calculation is CV=EV-AC which is $32k-$44k=-$12k. The %= CV/EV, which is =-$12k/$32k=-37.5%

Question 23

You are building a house. You need to estimate the costs for the foundation. You have the following data: 30 cubic yards (CY) of sould to be removed, 2600 pounds of steel rebar to be installed, and 20 CY of concrete to be placed. Soil removal costs $100/CY; steel rebar costs $1.50/pound installed; and concrete costs $400/CY placed. Calculate how much the foundation will cost, using the parametric estimating method.

A. $8800
B. $14,900
C. $9600
D. $12,400

Answer 23

ANSWER: B

The correct calculation is:

30CY of soil x $100/CY = $3000
2600 pounds of rebard x $1.50/lb=$3,900
20CY of concrete x $400/CY = $8000
_________
$14,900

Question 24

You are a foundation contractor. Over many projects of a certain size you have developed a cost factor of $400 per linear foot of foundation. Which estimating technique are you using?

A. Detailed
B. Bottom-up
C. Parametric
D. Sum of the squares

Answer 24

ANSWER: C

This is an example of the parametric estimating technique because the estimate is developed by defining a metric appropriate to the activity, based on expertise, and then factoring that metric by the activity requirement.

Question 25

Which of the following is not an output of the Determine Budget process?

A. Cost baseline
B. Project funding requirements
C. Cost aggregation
D. Project documents updates

Answer 25

ANSWER: C

Cost aggregation is a tool/technique of the Determine Budget process. Answers A, B and D are all outputs of Determine Budget.