Budget & Resources

Question 1

According to the Process Groups model, what are the processes of cost management?

Answer 1

Plan Cost Management
Estimate Costs
Determine Budget
Control Costs

Question 2

What combined baselines are called the performance measurement baseline?

Answer 2

Scope, schedule, and cost baselines

Question 3

What is earned value analysis, and how is it used?

Answer 3

It is an analysis method that uses earned value and other metrics to evaluate how well the project is doing relative to what was planned to date

Together with other measures the project manager can determine the overall project performance against the performance measurement baseline

Question 4

What is earned value management (EVM)?

Answer 4

The practice of managing scope, schedule, and cost using earned value analysis to control the project

Question 5

What artifact results from the Plan Cost Management process?

Answer 5

Cost management plan

Question 6

What artifacts are needed for the Estimate Costs process?

Answer 6

Resource requirements documentation
Cost and quality management plans
Scope and schedule baselines
Lessons learned and risk registers
Policies and historical records related to estimating
Templates and processes including those from past projects
Corporate governance
Marketplace conditions, commercial cost databases, exchange rates, inflation, and supply sources

Question 7

How do variable costs differ from fixed costs?

Answer 7

Variable costs change with the amount of production or amount of work done on the project

Fixed costs do not change as production changes

Question 8

What is a direct cost?

What is an indirect cost?

Answer 8

Direct cost: A cost that is directly attributable to the work on the project

Indirect cost: Overhead costs or costs incurred for the benefit of more than one project

Question 9

Name the advantages of analogous estimating.

Answer 9

Quick

Activities do not need to be identified

Less costly to create

Provides cost constraints to evaluate high-level project feasibility

Overall project costs will be capped

Question 10

Name the advantages of bottom-up estimating.

Answer 10

More accurate

Gains buy-in from the team

Based on a detailed project and deliverable analyses

Provides a basis for monitoring and controlling, performance
measurement, and management

Question 11

Name the typical range for the following:

rough order of magnitude (ROM) estimate
budget estimate
definitive estimate

Answer 11

ROM estimate: –25 to +75 percent from actual

Budget estimate:–10 percent to +25 percent from actual

Definitive estimate:+/–10 percent from actual

Question 12

What key artifacts result from the Estimate Costs process?

Answer 12

Cost estimates
Basis of estimates
Updates to project documents

Question 13

What methods are used to estimate costs in an adaptive environment?

Answer 13

T-shirt sizing
Affinity estimating
Planning Poker®

Question 14

What is cost aggregation?

Answer 14

Pulling together the costs of all activities

Question 15

At what point are contingency reserves added to the budget?

Answer 15

After risk management planning

Question 16

What is the difference between a cost budget and a cost baseline?

Answer 16

The cost baseline is an estimated total cost performance measurement baseline; it does not include the management reserves

The cost budget is the total that includes the cost baseline + management reserves

Question 17

What agile tool can be used to anticipate future budgetary issues on agile projects?

Answer 17

Velocity

Question 18

On adaptive projects the majority of cost estimates for projections and estimate at completion are based on what?

Answer 18

Burn rates

Question 19

What key artifacts result from the Determine Budget process?

Answer 19

Cost baseline
Project funding requirements
Updates to project documents

Question 20

How can progress reporting help the project manager?

Answer 20

It can help control schedule and costs

It can help the project manager assess whether the project is on track through earned value analysis

Question 21

What is the purpose of reserve analysis?

Answer 21

It allows the project manager to identify and apply lessons learned in controlling costs

Cost control includes analyzing where contingency reserves are still necessary or where new reserves are required

Question 22

What is the difference between planned value and earned value?

Answer 22

Planned value is the estimated value of the work planned, as of today

Earned value is the estimated value of the work actually accomplished, as of today

Question 23

What is actual cost

What is budget at completion?

Answer 23

The actual cost incurred for the work accomplished, as of today

The project’s planned budget; indicates what the end cost of the project would be if everything went according to plan

Question 24

What is the formula for cost variance?

Answer 24

EV − AC = CV

Question 25

What is the formula for schedule variance?

Answer 25

EV – PV = SV

Question 26

What is the formula for cost performance index?

Answer 26

EV
—— = CPI
AC

Question 27

What is the formula for schedule performance index?

Answer 27

EV
—— = SPI
PV

Question 28

What does a positive number indicate for CV or SV?

Answer 28

A positive number indicates that the project is under budget (CV) or ahead of schedule (SV)

A negative number would indicate that the project is over budget (CV) or behind schedule (SV)

Question 29

What does a number less than one indicate with SPI and CPI?

Answer 29

Greater than one is good

Less than one is bad