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PMP review > Controlling Project Costs > Flashcards

Controlling Project Costs Flashcards

1
Q

Which elements are inputs to the control cost process?

A

Organizational process assets
- This is a correct option. Organizational process assets are policies, guidelines, and procedures of the organization. Types of assets that can affect the control costs process include the organization’s monitoring and reporting methods, policies related to cost control, and cost control tools.

Work performance data
- This is a correct option. Work performance data includes statistics and figures that capture the status of measurable targets related to project activities.

Project documents
- This is a correct option. Project documents – in particular the lessons learned register – can be used to help you understand and control project costs.

Project funding requirements
- This is a correct option. Project funding requirements are the total estimated project costs plus any management contingency reserves. The project funding requirements are the total funds required for the project at each phase.

Project management plan
- This is a correct option. The project management plan contains two sections that help control costs, the cost baseline and the cost management plan. The cost baseline is a time-phased estimate of all project costs. The cost management plan describes how the project costs will be managed and controlled.

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2
Q

What are the tools and techniques used during the cost control process?

A

To-complete performance index
- The to-complete performance index, or TCPI, is expressed as a ratio and outlines how cost efficient your project will need to be in order to finish on budget.

Expert judgment
- A vital aspect of controlling costs during a project is consulting with experts who can help you carry out analysis and forecasting activities.

Project management information system
- Project management software can help you identify and monitor cost performance trends in the cost control process.

Data analysis
- Data analysis techniques you can use to control costs are reserve analysis, variance analysis, trend analysis, and earned value analysis.

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3
Q

BAC x planned % complete

= PV

A
  • BAC multiplied by the quotient of time passed and total schedule time – the planned percentage complete – is the formula you use to calculate the PV. It represents the budgeted value of work planned to have been completed by a specified date.
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4
Q

BAC x actual % complete = EV

A

EV.

  • BAC multiplied by the quotient of work completed and total work required – the actual percentage complete – is the formula you use to calculate the EV. It indicates the value of the actual work completed based on the approved budget for a given time period.
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5
Q

EV / AC

A

CPI.

  • The CPI tells you what the project is earning in relation to what it’s costing, as a ratio rather than a dollar value. So you calculate it as the EV divided by the AC.
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6
Q

EV - AC

A

CV.

  • CV is the difference between what a project has earned to date – its EV – and what it has cost – its AC.
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7
Q

A project’s AC after three weeks is $22,000. Its PV is $30,000 and the EV is $25,000.

What is the project’s CPI, rounded to two decimal places?

A

EV/AC = 1.14

  • This is the correct option. The CPI is calculated by dividing the EV – $25,000 – by the AC – $22,000. Rounded to two decimal places, this gives a value of 1.14.
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8
Q

Match the situations in which the EAC formulas may be used to the appropriate formulas for those situations.

EAC = AC + [(BAC - EV) / (cumulative CPI × cumulative SPI)]

A

When you take both the project’s cost and schedule performance into account.

  • To calculate the EAC based on a project’s cost and schedule performance to date, you add the actual cost so far to the quotient of BAC minus the EV and the product of the cumulative CPI and cumulative SPI.
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9
Q

EAC = BAC + AC - EV

A

When variances are not expected to occur for the remainder of the project

  • If variances are unlikely to occur for the remainder of a project, you can calculate the EAC assuming that work still to be performed will be completed at the budgeted rate. To do this, you add the BAC to the actual cost to date and then subtract the EV.
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10
Q

EAC = BAC / cumulative CPI

A

When you take the project’s cost performance into account and don’t expect the CPI to change.

  • To calculate the EAC based on a project’s cost performance to date when you don’t expect the CPI to change, you divide the BAC by the cumulative CPI.
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11
Q

EAC = AC + bottom-up ETC

A

When you estimate future costs for work packages and aggregate these costs

  • You calculate the bottom-up EAC by estimating the future cost of each work package not completed, adding the costs of completed work, and aggregating these costs up through the levels of the work breakdown structure.
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12
Q

A project’s BAC is $65,000. Its EV is $58,000 and its AC is $60,000. The cumulative CPI is 0.97 and the cumulative SPI is 1.23. The bottom-up ETC is $6,500.

What is the bottom-up EAC for the project?

A

$66,500

  • This is the correct option. You calculate the bottom-up EAC by adding the AC – $60,000 – to the project manager’s bottom-up ETC of $6,500.
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13
Q

A project’s BAC is $75,000, EV is $68,000, and AC is $70,000. The CPI is 0.97 and SPI is 1.23. The bottom-up ETC is $7,500.

Based on the original budgeted value of work still to be completed, what’s the EAC?

A

$77,000
- This is the correct option. To calculate the EAC assuming that the cost of work still to be completed won’t vary at all from the budgeted cost for this work, you add the AC of $70,000 to the BAC of $75,000, and then subtract the EV of $68,000. This gives a total of $77,000.

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14
Q

A project’s BAC is $60,000. Its EV is $53,000. The AC is $55,000, the CPI is 0.97, and the SPI is 1.23. The bottom-up ETC is $6,000.

Calculate this project’s EAC based on its cost performance so far.

A

$61,855.67
- This is the correct option. To calculate the EAC assuming that the project’s cost performance to date won’t change for the rest of the project, you divide the BAC value of $60,000 by the cumulative CPI of 0.97.

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15
Q

A project’s BAC is $65,000, EV is $58,000, AC is $60,000, CPI is 0.97, and SPI is 1.23. The bottom-up ETC is $6,500.

What’s the EAC if you take schedule and cost performance to date into consideration?

A

$65,867.07
Not selected
Correct answer. - This is the correct option. To calculate the EAC assuming the project’s schedule and cost performance to date will remain unchanged, you include the SPI and CPI values. The full formula is AC + [(BAC – EV) / (cumulative CPI × cumulative SPI)].

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16
Q

A project’s AC is $113,000. Its EV is $85,000, and the BAC is $135,000. It’s no longer feasible to finish within the BAC, so you forecast a new EAC of $145,000.

What’s the TCPI, based on the EAC?

A
  1. 56
    - This is the correct option. To calculate the TCPI based on the EAC, you divide the difference between the BAC and the EV by the difference between the EAC and the AC.
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17
Q

The AC of a project to date is $143,000. Its EV is $96,000, and the BAC is $165,000.

Calculate the TCPI based on the BAC.

A
  1. 14
    - This is the correct option. To calculate the TCPI based on the BAC, you divide the difference between the BAC and EV by the difference between the BAC and the AC. This gives $165,000 minus $96,000, divided by the result of $165,000 minus $143,000 – or $69,000 divided by $22,000. The result, rounded to two decimal places, is a value of 3.14.
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18
Q

Match the outputs of the control costs process to descriptions of how they’re used in a project.

To ensure that monitoring of subsequent project activities is based on an accurate cost baseline

A

Project management plan updates

  • The cost baseline and cost management plan are components of the project management plan you may need to update as a result of any changes made to control costs. If the cost baseline isn’t updated, future comparisons of actual to baseline costs will be inaccurate.
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19
Q

To ensure the accuracy of documented cost estimates as a project progresses

A

Project document updates

  • Project documents, like those containing cost estimates, should be updated to reflect any new information or insights. This allows more accurate estimation of total costs as project work proceeds.
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20
Q

To report the estimated future cost performance of a project

A

Cost forecasts

  • Cost forecasts are an estimate of the probable future cost performance of a project at its completion. This information should be communicated to stakeholders so they know where a project is headed and the likely cost implications.
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21
Q

To bring actual cost performance in line with the budget

A

Change Requests

  • Change requests can be used to increase or decrease the budget. They can also be used to prompt changes in actual performance to bring costs back in line with the planned budget.
22
Q

To report actual progress to stakeholders

A

Work performance information

  • Work performance information indicates how project activities are actually progressing in relation to the cost baseline. This information is important for stakeholders to know.
23
Q

EAC = AC + [(BAC - EV) / (cumulative CPI × cumulative SPI)]

A

When you take the project’s cost and schedule efficiency into consideration

24
Q

EAC = AC + BAC - EV

A

When you consider that variances are not expected to occur for the remainder of the project

25
Q

EAC = BAC / cumulative CPI

A

When you take the project’s cost efficiency into consideration

26
Q

EAC = BAC / cumulative SPI

A

There is no match for this activity.

27
Q

EAC = AC + bottom-up ETC

A

When you consider the project manager’s estimate to complete

28
Q

EAC = BAC + [(AC - EV) / (cumulative CPI × cumulative SPI)]

A

There is no match for this activity.

29
Q

Your project has a CPI of 0.92 and you expect the rate of spending to continue.

If your original budget was $1 million, what is your new estimate at completion (EAC)?

A

$1,086,957

30
Q

Your project has a $1 million budget and a one year time frame. After six months, you have completed 60% of the work.

What is the schedule variance?

A

$100,000

31
Q

Your project has an SPI of 0.9 and a CPI of 1.0.

What is the best action you can take to address project performance?

A

Perform two sequenced activities on the critical path simultaneously

32
Q

You have an earned value of $750,000 and an actual cost of $700,000.

What is the cost performance index?

A

750,000/700,000 = 1.07

33
Q

What are the inputs for the control cost process?

A

Project documents

Project funding requirements

Work performance data

Organizational process assets

Project management plan

34
Q

Your EAC formula includes the SPI.

What can you assume this means?

A

Your deadline is firm

35
Q

Ensure documented cost estimates are accurate as the project progresses

A

Project documents updates

36
Q

Enable reporting about an estimate at completion for the project

A

Cost forecasts

37
Q

Ensure the cost baseline is accurate for use in controlling costs

A

Project management plan updates

38
Q

Enable reporting to stakeholders about actual progress

A

Work performance information

39
Q

Enable bringing actual costs in line with planned costs

A

Change requests

40
Q

Your project has an SPI of 1.2 and a CPI of 0.8.

What does this indicate about your project performance?

A

The project is ahead of schedule and over budget

41
Q

Your project has a $1 million budget and a one year time frame.

What is the planned value after three months?

A

1,000,000/ 12 mos x 3 mos = PV

42
Q

You’re calculating a project’s TCPI. The EV is $27,000, AC is $25,000, and BAC is $32,000. As the BAC is no longer realistic, you forecast a new EAC of $35,000.

What is the TCPI based on the new EAC?

A

To calculate the TCPI based on the EAC, you divide the difference between the BAC and the EV by the difference between the EAC and the AC.

32,000-27,000/35,000-25,000 = TCPI
5,000/10,000 = TCPI
TCPI = 0.50
43
Q

EAC = BAC + [(EV - AC) / (cumulative CPI × cumulative SPI)]

A

There is no match for this activity.

44
Q

EAC = AC + BAC - EV

A

orecasting by considering that variances are not expected to occur for the remainder of the project

45
Q

EAC = AC + bottom-up ETC

A

Forecasting using an estimate to complete

46
Q

EAC = AC / cumulative CPI

A

There is no match for this activity.

47
Q

EAC = AC + [(BAC - EV) / (cumulative CPI × cumulative SPI)]

A

Forecasting by considering the project’s cost and schedule efficiency

48
Q

EAC = BAC / cumulative CPI

A

Forecasting by considering the project’s cost efficiency

49
Q

You have an earned value of $750,000 and an actual cost of $700,000.

What is the cost performance index?

A

750,000/700,000 = 1.07

50
Q

Your project has an SPI of 1.2 and a CPI of 0.8.

What does this indicate about your project performance?

A

The project is ahead of schedule and over budget

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