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CAPM > Chapter 7: Project Cost Management > Flashcards

Chapter 7: Project Cost Management Flashcards

1
Q

The Cost Performance Baseline in Earned Value Management is also part of:

A. The cost estimating baseline
B. The budget baseline
C. The performance measurement baseline
D. The cost measurement baseline

A

C. The performance measurement baseline

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2
Q

Company WWX is planning its cost management activity and examining the extent to which they will allow project costs to exceed the baseline before action is taken. These limits are known as:

A. Control boundaries
B. Control headlines
C. Control thresholds
D. Control limits

A

C. Control thresholds

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3
Q

If the EAC is 1200, the BAC is 1000 and the ETC is 800, what is the VAC?

A. -400
B. -200
C. 400
D. 200

A

B. -200

VAC=BAC-EAC

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4
Q

Company LWJ has completed 50% of its project and the project sponsor has asked how much more money will be needed for the last half of the project. The metric that you will use to provide the answer is:

A. EAC
B. CV
C. AC
D. ETC

A

D. ETC

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5
Q

If EV=30 000, PV=25000, AC=27000, what is the SV?

A. -3000
B. 5000
C. -5000
D. 3000

A

B. 5000

SV=EV-PV

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6
Q

Your project sponsor has requested a meeting about the project status. You would like to graphically show them the earned value and will use which chart:

A. S-curve
B. Trend analysis
C. Pareto diagram
D. Control chart

A

A. A-curve

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7
Q

If EV=30000, PV=25000, AC=27000, what is the CV?

A. -3000
B. -5000
C. 5000
D. 3000

A

D. 3000

CV=EV-AC

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8
Q

The degree of confidence in cost estimates which usually becomes more accurate as the project proceeds is:

A. Random order of measure
B. Routine order of measure
C. Rough order of magnitude
D. Regular order of magnitude

A

C. Rough order of magnitude

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9
Q

Time reporting, required expenditure and disbursement reviews, accounting codes and standard contract provisions are known as:

A. Financial accounting conventions
B. Financial controls procedures
C. Financial controls processes
D. Financial accounting processes

A

B. Financial controls procedures

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10
Q

Which type of estimation methods can be used in agile/adaptive environments:

A. Lightweight estimating
B. Parametric estimating
C. Bottom up estimating
D. Analogous estimating

A

A. Lightweight estimating

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11
Q

Early scope definition is critical for project cost management because:

A. It ensures that projects are aligned with organizational strategic objectives
B. It minimizes the project cost
C. The ability to influence cost is greatest at the early stages of the project
D. Sponsors need early notice to secure funding

A

C. The ability to influence cost is greatest at the early stages of the project

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12
Q

In a project being conducted by company LXC the midway point in the schedule has been reached. The SPI has been calculated and is 1.1. This means the project is:

A. Ahead of schedule
B. Over budget
C. Under budget
D. Behind schedule

A

A. Ahead of schedule

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13
Q

The WBS component that is used for project cost accounting is called:

A. The cost breakdown structure
B. The control account
C. The WBS dictionary
D. The project budget

A

B. The control account

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14
Q

Which of the following is not a project indirect cost:

A. The occasional support provided to the project by the information technology department
B. The heating costs for the production area in which the project is being conducted
C. Benefits for employees who are working part time on the project team
D. The full time project manager’s salary

A

D. The full time project manager’s salary

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15
Q

If EV=30000, PV=25000, AC=27000, what is the SPI?

A. 0.83
B. 1.2
C. 1.18
D. 0.88

A

B. 1.2

SPI=EV/PV

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16
Q

Tailoring considerations for Project Cost Management do not include which one of the following:

A. Flexibility of ethical considerations
B. Estimating and budgeting
C. Knowledge management
D. Use of agile approach

A

A. Flexibility of ethical considerations

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17
Q

If EV=30000, PV=25000, AC=27000, what is the CPI?

A. 1.15
B. 0.83
C. 0.88
D. 1.11

A

D. 1.11

CPI=EV/AC

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18
Q

Company NHS is halfway through its project and the project sponsor has asked how much the total project will cost when it is completed. The value metric that will be used for this is:

A. ETC
B. EAC
C. AC
D. CV

A

B. EAC

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19
Q

An amount of the project budget that is withheld for management control purposes and reserved for unforeseen work that is within the project scope is known as:

A. Parametric reserves
B. Management reserves
C. Contingency reserves
D. The cost of quality

A

B. Management reserves

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20
Q

Which of the following is not a point in the project when the cost of an acquired item may be measured:

A. When the order is placed
B. When the project closure activities have commenced
C. When the actual cost is incurred or recorded for project accounting purposes
D. When the acquisition decision is made or committed

A

B. When the project closure activities have commenced

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21
Q

In PMBOK, the definition of Project Cost Management

A

“The processes involved in planning, estimating, budgeting, financing, funding, managing and controlling costs so that the project can be completed within the approved budget”

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22
Q

The processes from the PMBOK Project Cist Management Knowledgement Area

A
  1. Plan Cost Management
  2. Estimate Costs
  3. Determine Budget
  4. Control Costs
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23
Q

Plan Cost Management inputs

A
  • summary budget
  • Project charter (outlines process to gain approval of financial decisions)
  • Project management plan elements (schedule management plan and risk management plan)
  • EEFs
  • Organizational process assets
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24
Q

Plan Cost Management tools and techniques

A
  • financial analysis techniques (payback period, return on investment and others)
  • Meetings (with stakeholders)
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25
Q

Plan Cost Management outputs

A
  • Guidance for managing financial aspects (estimates, budget and managing and controlling costs)
  • weekly reviews of the financial position of the project
  • reports (for senior management)
26
Q

Estimate Costs process

A

The project manager estimates what the project will cost when it has been completed

27
Q

Estimate Costs inputs

A
  • Project management plan elements (cost, quality, and human resources management plans)
  • Scope baseline (WBS and WBS dictionary)
  • Project schedule
  • project risk management activity
  • EEFs
  • Organizational process assets
28
Q

Estimate Costs tools and techniques

A
  • Expert judgement
  • estimating techniques (analogous, parametric, bottom-up and three-point)
  • analysis techniques (reserve and vendor bid)
  • spreadsheets
  • Meetings
  • Group decision making (brainstorming and nominal group technique)
29
Q

Vendor bid analysis

A

In Estimate Costs tools and techniques, an analysis technique where suppliers submit bids to conduct project work, including costings that the vendor has made for completing the work, which are later negotiated

30
Q

Estimate Costs outputs

A
  • cost estimates
  • basis of estimates
  • documentation of changes and unexpected variance from estimates
31
Q

Determine Budget process

A

Process in which the project manager examines the Project Cost Estimates and proposes a budget for the project that is within the overall cost that the organization has established. Some budgets (as in iterative projects) are prepared periodically as the project proceeds.

32
Q

Determine Budget inputs

A
  • Project management plan elements (cost management plan, activity cost estimates and basis of estimates)
  • Resource management plan
  • Scope baseline (WBS and WBS dictionary)
  • Project schedule
  • project risks and risk register
  • Organizational process assets
33
Q

Determine Budget tools and techniques

A
  • Expert judgement
  • cost aggregation
  • reserve analysis
  • parametric and analogous estimating
34
Q

Cost aggregation

A

In Determine Budget process, used to prepare the budget by adding together cost estimates for individual project elements; work packages are combined to create larger project elements that are combined to create an overall project cost

35
Q

Determine Budget outputs

A
  • cost baseline
  • proposal for budget change
  • Project budget
  • funding requirements
  • reviews of other areas of project activity (risk register, cost estimates and project schedule)
36
Q

Cost baseline

A

Main output of Determine Budget process; times budget that has been agreed for the project, excluding management reserves. Actual spending is compared to the cost baseline and variance from this is monitored to identify where any changes may be needed

37
Q

Management Reserve

A

An amount of the project budget that is withheld for management control purposes and reserved for unforeseen work that is within the project scope

38
Q

Project budget

A

Output of Determine Budget process, which allows funding requirements to be identified

39
Q

Funding requirements

A

Output of Determine Budget process; the amounts and times at which money needs to be available for the project to spend

40
Q

Control Costs process

A

Process for carefully monitoring the project expenditure against the budget and dealing with any variations between the actual costs and the budget which may occur

41
Q

Control Costs inputs

A
  • Project management plan elements (cost baseline)
  • cost management plan
  • work performance data
  • Organizational process assets
42
Q

Control Costs tools and techniques

A
  • schedule performance index
  • cost performance index
  • forecasting tools
  • project performance reviews
  • PMIS
  • reserves and reserve analysis
43
Q

Control Costs outputs

A
  • reports (for stakeholders - work performance information and cost forecasts)
  • change requests
  • Project management plan updates
  • Other project document updates
  • organization process assets updates
44
Q

Example EEFs that are inputs to Plan Cost Management process

A
  • Organizational culture
  • Organizational structure
  • local and global economic conditions
  • availability of skilled workers
  • cost of new equipment
45
Q

Example organizational process assets that are inputs to Plan Cost Management process

A
  • organization’s processes and expenditures for approving and controlling costs
  • contract clauses
46
Q

Example EEFs that are inputs to Estimate Costs process

A

Local market conditions

47
Q

Example organizational process assets that are inputs to Estimate Costs process

A

Information from previous projects

48
Q

Example organizational process assets that are inputs to Determine Budget process

A
  • Organization’s policies and procedures

- organization’s accounting information systems

49
Q

Example organizational process assets that are inputs to Control Costs process

A

Organization’s Procedures for controlling and reporting costs

50
Q

Example organizational process assets that are outputs of Control Costs process

A

Updates to information categories in financial management systems after larger purchases

51
Q

PV

A
  • planned value
  • authorized budget assigned to scheduled work
  • value of work planned to be completed to a point in time
52
Q

EV

A
  • earned value
  • measure of work performed expressed in terms of the budget authorized for that work
  • PV of all work completed (earned) to a point in time
  • EV = sum of PV of completed work
53
Q

AC

A
  • actual cost
  • realized cost incurred for work performed on an activity during a specific time period
  • actual cost of all work completed to a point in time
54
Q

BAC

A
  • budget at completion
  • sum of all budget established for the work to be performed
  • value of total planned work, the project cost baseline
55
Q

CV

A
  • cost variance
  • amount of budget deficit or surplus at a given point in time
  • difference between value of work completed and actual costs to a point in time
  • CV = EV - AC
  • positive: under planned cost
  • 0: on planned cost
  • negative: over planned cost
56
Q

SV

A
  • schedule variance
  • amount by which project is ahead of behind planned delivery date
  • difference between work completed and work planned to be completed to a certain point in time
  • SV = EV - PV
  • positive: ahead of schedule
  • 0: on schedule
  • negative: behind schedule
57
Q

VAC

A
  • variance at completion
  • projection of the amount of budget deficit or surplus
  • estimates difference in cost at completion
  • VAC = BAC - EAC
  • positive: under planned cost
  • 0: at planned cost
  • negative: over planned cost
58
Q

CPI

A
  • cost performance index
  • measure of the cost efficiency of budgeted resources expressed as the ratio of earned value to actual cost
  • CPI = EV/AC
  • CP >1: under planned cost
    CPI=1: on planned cost
    CPI <1: over planned cost
59
Q

SPI

A
  • schedule performance index
  • measure of schedule efficiency
  • SPI = EV/PV
  • SPI >1: ahead of schedule
  • SPI =1: on schedule
  • SPI <1: behind schedule
60
Q

EAC

A
  • Estimate at completion
  • expected total cost of completing all work
  • CPI constant for project remainder: EAC=BAC/CPI
  • future work accomplished at planned rate: EAC=AC+BAC-EV
  • initial plan no longer valid: EAC=AC+bottom up ETC
  • both CPI and SPI influence remaining work: EAC=AC+[(BAC-EV)/(CPI*SPI)]
61
Q

ETC

A
  • Estimate to complete
  • expected cost to finish all the remaining project work
  • assuming work is proceeding on plan: ETC=EAC-AC
  • re-restimate: ETC=re-Estimate
62
Q

TCPI

A
  • to complete performance index
  • measure of the cost performance that must be achieved with the remaining resources in order to meet a specified management goal
  • efficiency that must be maintained to complete on plans: TCPI=(BAC-EV)/(BAC-AC)
  • efficiency that must be maintained to complete current EAC: TCPI=(BAC-EV)/(EAC-AC)

CAPM (14 decks)

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