Engage Stakeholders and Manage Budgets and Resources 2 Flashcards
All team members on a new project want to gain the trust of the customer by delivering value as quickly as possible. The project manager learns that one resource has worked with the sponsor on other projects. The resource seems to be using personal influence, working with a project sponsor to increase project benefits realization. At which stage in the project should the project manager address this concern to optimize cost effectiveness?
A. At the start of the team’s performing stage
B. Immediately after the first benefit realization
C. During the next retrospective ceremony
D. During the next resource performance review
Answer: C
Process - Task 4 - Engage Stakeholders
The retrospective would be the event to address this concern. PMBOK Guide Sixth Edition (2017), 8. Project Quality Management / 8.3.2. Control Quality: Tools and Technics / 8.3.2.6 Meetings, p305. PMBOK Guide Sixth Edition (2017), 13. Project Stakeholder Management / 13.4.2.6 Meetings, p535
You are the project manager for a large government services company. You are currently managing a project to provide program management, grant management, administrative support, HR, and veteran employment and reintegration services. You are actively tracking and reporting on direct and indirect costs. Indirect costs may include _____?
A. Lighting, building security, subcontractor costs
B. Project manager’s salary, deliverables inspections, material handling
C. Building lease payment, security services, executive salaries
D. Vendor costs, subcontractor costs, travel costs
Answer: C
Process - Task 5 - Manage Budget and Resources
Typically costs for the building, building security, and corporate executives are indirect costs to a project. All of the other answer choices have some elements that are usually included in a project’s direct cost.
You are managing a large project for the federal government. You receive funding allocations on a quarterly basis and are determined from a budgeting process that was finalized 2 years ago. You need to ensure that you have the appropriate funding for your project. Your sponsor wants to ensure you have calculated your S-Curve. Which of the following can be displayed as an S-Curve?
A. Estimate at completion
B. TCPI
C. CPI and SPI
D. Cost performance baseline
Answer: D
Process - Task 5 - Manage Budget and Resources
The Cost Performance baseline is often said to be displayed as an s-curve. The S-Curve is a graphic display of cumulative cost, labor hours, percentage of work, or other quantities, plotted against time. The S-Curve can also be used to show planned value, earned value, and actual cost of project work.
You are the project manager for the construction of a mall. You are working through the Planning Process Group and reviewing cost components of your project. Before you begin the Determine Budget process, what is needed?
A. Cost Estimates, Basis of Estimates and Project Schedule
B. Estimate Activity Duration and Basis for Estimates
C. Estimate at Completion and Budget at Completion
D. Parametric model used to arrive at the costs submitted
Answer: A
Process - Task 5 - Manage Budget and Resources
Cost Estimates, Basis of Estimates and Project Schedule are inputs to the Determine Budget process.
Which of the following resources is not a concern of the Control Resources process?
A. Equipment
B. Raw materials
C. Team members
D. Infrastructure
Answer: C
Process - Task 5 - Manage Budget and Resources
The Control Resources process is concerned with physical resources such as equipment, materials, facilities, and infrastructure. Team members are addressed in the Manage Team process.
You are setting up a planning meeting in an effort to develop a risk management plan for your project. Whom should you invite?
A. Just the project sponsor because her perception of how the risks will be handled is the most important
B. The corporate risk manager
C. The project team leaders, key stakeholders, relevant subject matter experts, and anyone engaged in risk management activities for the company
D. Subject matter experts only
Answer: C
Process - Task 4 - Engage Stakeholders
Risk planning should be a very inclusive exercise, so you want to think very broadly when choosing whom to invite to such meetings.
You are managing a complicated aerospace project for the Department of Defense. We are using SDLC and EVM throughout the project. You need to ensure that cost is managed closely and proactively. Which of the following would allow you to control costs on your project most effectively?
A. Prepare cost estimates at the beginning of the project and then check costs against the cost performance baseline as you proceed
B. Estimate costs during the execution of the project and then manage each task to the budget and immediately submit a change request if variance is greater than tolerance
C. Estimate costs during planning and then re-estimate before each task begins and update the baseline as necessary
D. Estimate costs during the planning of the project and have management confirm the estimates and update the estimates at the beginning of each phase of the project
Answer: A
Process - Task 5 - Manage Budget and Resources
Preparing accurate cost estimates at the beginning of the project and then closely monitoring and controlling costs against the budget will help lead to good cost performance.
You have just been assigned as the project manager in the middle of an ongoing project. The sponsor approaches you and wants to know when a specific contractor will be available. As the PM, how should you proceed?
A. Review the project schedule to determine their availability
B. Review the project calendar to determine their availability
C. Review the Resource Breakdown Structure to determine their availability
D. Review the Resource calendar to determine their availability
Answer: D
Process - Task 5 - Manage Budget and Resources
The resource calendar documents time periods in which each resource is available. The RBS determines which resources will be utilized. The project calendar documents what days, times and shifts are available to complete work on the project. The project schedule is the dynamic schedule used daily by the project manager containing data specific to the schedule.
You are managing a large construction project with multiple deliverables. Weather has delayed some parts of the project but forecasts indicate that conditions should be favorable throughout the remainder of your project. You need to meet with a new stakeholder from your Finance organization who has requested an Earned Value analysis of the project. Your EVM measures on a particular project are as follows: PV= 2900; EV = 2700; AC = 2500. Which of the following describes the situation?
A. The project is ahead of schedule and over budget
B. The project is under budget and behind schedule
C. The project is over budget and behind schedule
D. The project is under budget and ahead of schedule
Answer: B
Process - Task 5 - Manage Budget and Resources
CPI (EV/AC) is greater than 1, which shows the project is under budget and the SPI (EV/PV) is under 1, which means it is behind schedule.
Bottom-up estimating uses which of the following?
A. Project characteristics in a mathematical model
B. Actual costs of previous, similar projects
C. Past experiences, scale factors, parametric curves, or capacity estimates
D. The cost of individual activities or work packages, rolled up to the project level
Answer: D
Process - Task 5 - Manage Budget and Resources
Bottom-up estimating is the process of determining the costs for individual activities or work packages, and then rolling them up to the project level. Bottom-up is the most accurate method, but also the most time consuming.
You have been asked to provide a preliminary estimate of project costs by starting at the lowest levels of the WBS and assigning values for each item, then aggregating the figures as you work your way up to the top of each section. This describes which type of estimating?
A. Top-down
B. Analytical
C. Parametric
D. Bottom-up
Answer: D
Process - Task 5 - Manage Budget and Resources
By starting with the lowest tasks and then rolling up the costs, you will arrive at the final cost estimate. This is known as bottom-up estimating, and while it is time-consuming, it will yield the most accurate figure.
Your team must regularly hire a group of British engineers to test the product. You are not sure how many times you will need to use the engineers, but you do know that the engineers are all located in the UK, charge a regular rate, and need to be paid in British Pounds. What kind of cost is this?
A. Variable
B. Finite
C. Fixed
D. Indirect
Answer: A
Process - Task 5 - Manage Budget and Resources
This is a variable cost. By definition variable costs will vary based on the number of times you need to use the resource.
You are managing a hydroelectric project for the government, and you are getting pressure from your sponsor to deliver the project within your baselines. You are made aware of a potential labor shortage, a risk that you have not accounted for. You need to determine how your project is progressing and report to your sponsor so you can request additional funding if needed. Your project has a CPI of 0.81 and TCPI = 1.25. You know that your project is:
A. Over budget and ahead of schedule
B. Under budget and ahead of schedule
C. Over budget and TCPI is an index of cost performance relative to schedule performance and reflects overall effort required to complete the project on time and on schedule
D. Over budget and TCPI is a projection of cost performance that must be achieved on the remaining work
Answer: D
Process - Task 5 - Manage Budget and Resources
CPI of 0.8 shows that for every dollar spent we get only 81 cents worth of completed work. To complete performance index (TCPI) is a projection of cost performance that must be achieved on the remaining work to meet a specified management goal, such as the BAC or the EAC.
While you and your project team are in the process of identifying stakeholders, you realize you must bring certain documents to your meeting to help in this process. In addition to artifacts such as the project management plan and the project charter, you need to bring a document to identify the project objectives as well as an initial list of stakeholders. This document is known as what?
A. Benefits management plan
B. Business case
C. Stakeholder communications plan
D. Stakeholder engagement plan
Answer: B
Process - Task 4 - Engage Stakeholders
The business case speaks specifically to the question. The benefits management plan is a necessary input but does not include project objectives. There is no such thing as a stakeholder communications plan.
You are setting up a new training facility. You are allocating various resource types, such as teaching personnel, rooms, and video conferencing equipment. Which of the following are you most likely to use to show this information?
A. Organizational chart
B. Resource breakdown structure
C. WBS
D. Responsibility assignment matrix
Answer: B
Process - Task 5 - Manage Budget and Resources
The Resource Breakdown Structure (RBS) is a hierarchical structure of the identified resources by resource category and resource type. The RBS will include types of resources including people, facilities, equipment, and materials. It can also show skill, grade or expertise levels for the types of resources.
Of the following, which is the most reliable source of information for estimating project costs?
A. Historical information from a recently completed project that was very similar
B. Subject matter expert opinion
C. Opinions of team members that have worked on similar projects
D. Published estimating data
Answer: A
Process - Task 5 - Manage Budget and Resources
Of the choices presented, historical information from a recently completed project of very similar scope would likely be the most reliable source of information. Note that any of the answer choices could be used, and they are not mutually exclusive of each other. You may wish to start with the historical information, then run it past the team members, SMEs, etc. for a reality check.
You are replacing the current project manager on a project where communication with the client has been challenging. The project manager emails you a document, without a subject line in the email or a descriptive title. When you open the document you see it is in a table format with a list of names, contact details and locations. There is also a column for influence and impact. You are most likely looking at which of the following?
A. Issue Log
B. Risk Register
C. Stakeholder Register
D. WBS
Answer: C
Process - Task 4 - Engage Stakeholders
Influence and impact will be found in a Stakeholder Register since those columns document the power and interest of the stakeholders. A Risk Register will show Impact and Probability (not influence). The Issues Log, while it may contain names and contact details of team members, would not show influence. WBS will not contain any information pertaining to stakeholders or team members.
You are the project manager for the city of Pleasantville working on a beautification project. You have a new city council that wants the project to come in exactly on or below budget. Fortunately, you have a substantial level of detail around project activities. What type of estimating technique would you recommend for accuracy, and how would you account for uncertainties in the estimate?
A. Bottom-up estimating with a management reserve for unknowns.
B. Bottom-up estimate with a contingency reserve for unknowns.
C. Top-down estimating with cost of quality for quality activities.
D. Three point estimating and document uncertainties in the risk register
Answer: B
Process - Task 5 - Manage Budget and Resources
Bottom-up estimating is the most accurate (and time consuming) form of estimating if you have detailed information regarding the activities. Any known-unknowns can be accounted for through a contingency reserve (Choice B). Management reserves are not part of the project baseline, so Choice A is incorrect. Top-down estimating is the least accurate and cost of quality does not account for uncertainty so Choice C is incorrect. You would not account for uncertainties in the cost estimates on the risk register, so Choice D is incorrect.
Daisy is the PM on a government contract and she knows from experience that her stakeholders will want to see project status information that reflects data based on the Earned Value Method. Earned Value should be determined by using which of the following?
A. Value milestones
B. An estimated percent of work complete
C. Physical count of units complete
D. The method or technique selected during planning
Answer: D
Process - Task 5 - Manage Budget and Resources
EV will be calculated using the method defined in the planning stage, and you should refer to the cost management plan (a subsidiary of the project management plan).
You are the project manager for a large airline. You are working on a project to update your reservation system. This new system will allow for quick reservation confirmation and appropriate billing. Due to the increases in fuel cost your company is just breaking even, so it needs this critical upgrade delivered on time and on budget. You are currently working with your project team to analyze actual project costs. Control Cost outputs include all of the following except:
A. Work performance information
B. Cost forecasts
C. Project document updates
D. Cost performance baseline
Answer: D
Process - Task 5 - Manage Budget and Resources
The outputs of the Control Costs process are work performance information (CV, SV, CPI, SPI), cost forecasts (EAC, ETC, VAC), organizational process assets updates, change requests, project management plan updates, and project document updates. Cost performance baseline is an output of the Determine Budget process.
You are working on a project which requires the use of a special piece of equipment. The equipment is rented at a cost of $890 per month for the duration of the project. This is an example of which of the following?
A. Fixed cost
B. Cost of quality
C. Variable cost
D. Indirect cost
Answer: A
Process - Task 5 - Manage Budget and Resources
This is a fixed-cost expense since you must pay the same $890 per month regardless of how often the piece of equipment is used.
Staff acquisition and release criteria, safety policies, compliance matters, and training procedures can all be found in the ________.
A. Charter
B. WBS
C. Resource management plan
D. Company handbook
Answer: C
Process - Task 5 - Manage Budget and Resources
All of these can be found in a resource management plan.
While you are in the process of acquiring your project team members, the customer tells you that they want this project to be assigned to a specific consultant because the consultant has already worked on a previous project. You also find this person mentioned in the project charter. Under which Acquire Resources tool and technique does this situation fall?
A. Pre-assignment
B. Negotiation
C. Acquisition
D. Virtual Teams
Answer: A
Process - Task 5 - Manage Budget and Resources
This is the case where the specific consultant is pre-assigned to the project. This normally happens when the project depends upon the expertise of a specific person or persons.
You are working on a large project for a telecommunications company. It is a competitive industry and cost pressures are everywhere. You need to ensure your estimating strategy is accurate and timely. All of the following are cost estimating tools except for which one?
A. Analogous estimating
B. Parametric estimating
C. Three point estimating
D. Cost Aggregation
Answer: D
Process - Task 5 - Manage Budget and Resources
Cost aggregation is a method used to determine the budget, which involves adding up all of the estimates you created. Answers A-C will actually help you create those estimates.
You are the project manager for a large retail company. You are currently managing a project to create an online grocery delivery service that sells nonperishable food items and household goods. You will be focusing on lower income households so you must be incredibly accurate with your activity estimating. Three ways to estimate the project costs are ____?
A. Analogous, bottom-up, activity based costing
B. Bottom-up, Parametric, or Analogous
C. Level staffing cost, Monte Carlo, Bottom-up
D. Analogous, Monte Carlo, Resource planning
Answer: B
Process - Task 5 - Manage Budget and Resources
Three methods of estimating costs are bottom up, parametric, and analogous estimating. Other methods include three-point estimates and expert judgment.
Which of the following is true regarding the Estimate Activity Resources process?
A. It is the process of estimating the type and quantities of material, people, equipment or supplies required to perform each activity.
B. It is the process of estimating the type of human resources required to perform each activity.
C. It is the process of estimating the amount of work effort required to perform each activity.
D. It is the process of estimating the quantities of material, people, equipment or supplies required to perform each activity.
Answer: A
Process - Task 5 - Manage Budget and Resources
Estimate Activity Resources is the process of estimating both the type and quantities of material, people, equipment or supplies required to perform each activity. The output is Activity Resource Requirements.
You are a new hire at Johnston Software Development LLC. As a project manager, you are expected to follow an agile methodology as defined by your PMO. How can you foster an agile mindset within your team regarding stakeholder management?
A. If the team members don’t already have an agile mindset remove them from the team
B. Stakeholder engagement strategies with external stakeholders should not be discussed with team members; this is the role of the project manager
C. Encourage the sharing of information within and across the organization by inviting all team members to meetings, focus on inclusion, and promote aggressive transparency.
D. Use a RACI chart to determine stakeholder risk early in the project
Answer: C
Process - Task 4 - Engage Stakeholders
The concept of stakeholder management in an agile environment is discussed on p 506 in the PMBOK Guide make sure to know the Considerations for Agile/Adaptive Environments paragraphs for each knowledge area.
You are a project manager in a public sector company and have just been assigned a new project. Your sponsor is pushing for a compressed schedule and would like you the use agile planning to speed up the process. You have just received approval for the project charter. What else will you need in order to conclude the Initiating process group?
A. Full project team
B. Work breakdown structure (WBS)
C. Schedule network diagram
D. Stakeholder register
Answer: D
Process - Task 4 - Engage Stakeholders
The Initiating process group includes only the processes of creating the project charter and identifying stakeholders.
You have been assigned a workflow improvement project for the accounting department. You received the business case from the sponsor and are helping to pull together the project charter. All the following are helpful items to look at while preparing the project charter except for which one?
A. Gather lessons learned from a previous project which involved workflow improvement but for the human resources department
B. Meet with the sponsor to understand their expectations
C. Identify all stakeholders this project will be impacting
D. Determine which risks or constraints have already been identified
Answer: C
Process - Task 4 - Engage Stakeholders
Lessons learned and any risks or constraints which have been identified (Choices A and D) should be utilized while gathering information for the project charter. Meeting with the sponsor to understand their expectations is very important (Choice B). While key stakeholders may be identified and involved with compiling the project charter, you would get the signed project charter before going through the process of identifying additional (all) stakeholders.
Formal approval has been provided for your project, and you are asking around to see who else might be impacted by your project. What process group are you in?
A. Initiating
B. Planning
C. Executing
D. Monitoring and Controlling
Answer: A
Process - Task 4 - Engage Stakeholders
The question is describing the Identify Stakeholders process, which is part of the Initiating process group.
The PMBOK Guide has numerous EVM calculations which are important to know in order to properly manage your project. You will need to focus on EV, PV, AC and BAC to calculate EVM metrics and determine accurate forecasts. The earned value of all activities completed divided by the sum of all actual costs incurred equals which of the following?
A. Cumulative EVM
B. Cumulative CPI
C. Cumulative SPI
D. Cumulative TCPI
Answer: B
Process - Task 5 - Manage Budget and Resources
Cumulative CPI = Cumulative EV / Cumulative AC
You are a project manager for a biotech company responsible for global virtual projects. You know stakeholders can be generally classified as negative and positive. There are some who can help you and some who may get in the way. There are more classifications used in the stakeholder assessment matrix. Which of the following best describes a stakeholder, and what might be a good tool to categorize stakeholders?
A. Only people directly involved with the project and whose interests will be impacted negatively or positively by the project or its outcomes and can be categorized with a power/interest grid
B. Individuals, groups, or organizations who may affect, be affected by or perceive themselves to be affected by a decision, activity or outcome of a project and can be categorized with a salience model
C. Certain groups of people or an individual impacted by the project’s outcomes and directly involved with the project and can be categorized with a power/influence grid
D. Specific individuals, groups, or organizations with specific communications requirements that could affect the project and its outcomes and can be categorized with a stakeholder cube
Answer: B
Process - Task 4 - Engage Stakeholders
The correct choice from the PMBOK Guide defines stakeholders as individuals, groups, or organizations who may affect, be affected by, or perceive themselves to be affected by a decision, activity or outcome of a project. There are many different ways to categorize stakeholders, including power/interest grid, power/influence grid, interest/influence grid, a stakeholder cube, or a salience model. Choices A, C and D have specific wording that limits those choices to a certain group of stakeholders, such as only, certain, or specific.
You are the project manager on an agile team that includes a key stakeholder who is clearly unhappy about the direction of the project, as evidenced by her negative feedback at the daily standup meetings. All other stakeholders are either undecided or for the project. Where would you best document this information?
A. The Stakeholder Register
B. The Issues Log
C. The Stakeholder Engagement Assessment Matrix
D. The Risk Register
Answer: C
Process - Task 4 - Engage Stakeholders
The Stakeholder Engagement Assessment Matrix is where you capture and track stakeholder attitudes–where they currently are (‘C’) and where you desire them to be (‘D’). The attitude classifications include unaware, resistant (your negative stakeholder would get a ‘C’ for this category), neutral, supportive (you’d typically want all key stakeholders to be here–neutral at the very least), and leading.
A project that should have been 95 percent complete by now is only 80 percent complete. The total project budget is US$140,000 and the actual cost of work performed (ACWP) is US$95,000. What is the schedule performance index (SPI) and a cost performance index (CPI) of the project?
A. The SPI is 0.84, and the CPI is 1.17
B. The SPI is 1.19, and the CPI is 0.96.
C. The SPI is 0.86, and the CPI is 1.14.
D. The SPI is 0.94, and the CPI is 1.16.
Answer: A
Process - Task 5 - Manage Budget and Resources
EV = Actual% * BAC = 0.80$140,000 = $112,000; PV = Plan% * BAC = 0.95$140,000 = $133,000; AC = $95,000 (given); SPI = EV/PV = $112,000/$133,000 = 0.84; CPI = EV/AC = $112,000/$95,000 = 1.17. PMBOK Guide Sixth Edition (2017) /PMI/7.4.2.2/263
You are working on your Resource Management plan and are focusing specifically on the staffing management plan component. The HR department has just sent you the latest policy regarding on-boarding union employees onto your project along with helpful information about union organizational hierarchies, financial compensation constraints and work hour limits, and the locations of various employee skills databases. Which of the following should be addressed in the resource management plan?
A. Technical capabilities
B. Rewards and recognition
C. Communications methods
D. Reporting structures
Answer: B
Process - Task 5 - Manage Budget and Resources
Rewards and recognition are important factors in project team motivation, and should be outlined in the resource management plan (along with things like hiring and release policies, safety, training, compliance with union regulations and pertinent laws, etc.).
You are a new project manager for your organization. Your project has a BAC of $250,000 and is expected to last 10 months. The project just completed month six and is 40 percent complete, but the project was expected to be 60 percent complete by this time. You have spent $125,000 to complete the work so far. What is the cost performance index of the project, and are you over, under or on budget?
A. 0.66 over budget
B. 1.25 under budget
C. Not enough information to complete the problem
D. 0.8 over budget
Answer: D
Process - Task 5 - Manage Budget and Resources
The cost performance index is calculated by dividing the earned value by the actual costs. The EV is the $250,000 budget multiplied by the 40% completion percentage for the project, i.e., $100,000. You are given actual cost of $125,000. The formula for CPI is EV/AC or 100,000/125,000. The result is 0.80 for CPI, and you are over budget (CPI < 1.0).
Your boss, the Director of innovation, Jack, is new to the organization and has never been part of an agile project. As the project manager, you have realized that Jack’s expectations for the project are based on his misconceptions about the agile methodology. Jack has asked you to stay within strict budgetary constraints and wants definitive budget reporting. What should you do as the project manager?
A. Tell Jack that you can adapt the project to his budgetary constraints but this will most likely affect the project scope and/or schedule.
B. Tell the sponsor that this is an Agile environment and budgets do not matter, he must have an agile mindset
C. Submit your resignation letter after you have updated LinkedIn and the Issue Log
D. Tell Jack that this is not possible in an agile project and set aside time to educate him on the methodology
Answer: A
Process - Task 5 - Manage Budget and Resources
Agile projects can exist in an environment with strict budgetary requirements but it will affect the project scope and schedule this should be communicated early in the project. PMBOK Guide p 234. Make sure to know the “Considerations for Agile/Adaptive Environments” paragraphs for each knowledge area
A manufacturing project has a schedule performance index (SPI) of 0.89 and a cost performance index (CPI) of 0.91. Generally speaking, what would be the best explanation for why this occurred?
A. The scope was changed.
B. A supplier went out of business and a new one needed to be found.
C. Additional equipment was needed.
D. A critical path activity took longer and needed more labor hours to complete than was expected.
Answer: D
Process - Task 5 - Manage Budget and Resources
Remember that approved scope changes always change the scope baseline, and very often though not always change the schedule and/or cost baselines, which initially would bring the project back on schedule and within budget. Answer a is the second best answer choice after d.
Your team is estimating the tasks for the current sprint. Which of the following is not an estimating tool used to estimate the costs of activities?
A. Parametric
B. Analogous
C. Direct Cost
D. Three-point
Answer: C
Process - Task 5 - Manage Budget and Resources
Estimating tools are Analogous Estimating, Parametric Estimating, Three-point Estimating and Bottom-up Estimating. Although Direct Cost will be used to estimate cost of activities, it is not a tool (it is a category of cost).
You are working on a bridge project and workers keep falling off the bridge into the water. Luckily nobody has been hurt thus far, but now the workers are threatening to strike. A colleague tells you that you can solve the problem by sending workers to fall training and buying them the necessary harness equipment. Unfortunately, your project does not have enough budget to pay for the training and you’ve been told that under no circumstances will budget increases be approved. This is an example of which of the following?
A. Resource constraints
B. Project team assignments
C. Teaming agreements
D. Budget constraints
Answer: D
Process - Task 5 - Manage Budget and Resources
You were given a lot of information in this question. The correct answer is D, as it is clear that there is a budget constraint. Constraints are things that limit the options of the project team; the budget constraint clearly does that in this question. For constraint types of questions, ask yourself: what is limiting my options?
You are managing a renovation project for a large hotel chain. The project has been going well but you have a firm deadline that renovations must be completed by November 1st. So far everything appears to have gone well and you believe that you are on schedule and confident that you will complete the project on time. Your project sponsor has asked you to identify the efficiency rate at which your team will need to perform in order to complete the project within budget. Your EVM measures are as follows: PV = $1,700; BAC = $ 5000; EV = $ 1,800; AC = $ 1,600. What figure will you provide to the sponsor?
A. 0.94
B. 0.89
C. 1.25
D. Not enough information to determine
Answer: A
Process - Task 5 - Manage Budget and Resources
The question is asking for TCPI, the standard formula for which is: (BAC-EV) / (BAC-AC). Solved, that works out to: [(5000-1800) / (5000-1600)] = 0.94. Note that, if the facts tell you the original budget is no longer feasible, you would use (BAC-EV) / (EAC-AC) (just substituting EAC in place of BAC in the denominator only).
Management reserves are designed to address which of the following?
A. Future needs
B. Known risks
C. Unidentified risks
D. Added scope
Answer: C
Process - Task 5 - Manage Budget and Resources
Management reserves are intended to cover unidentified risks, or unknown unknowns, which could not have been reasonably been foreseen during risk planning.
Your organization is implementing Agile methods for the first time and Senior Management are excited about the prospect of regular incremental delivery. You have been assigned the Team Facilitator for a new IT implementation project for the warehouse system. You are in a meeting with the Product Owner, senior team members and other stakeholders from the current warehouse system and are hearing statements from them such as why are we implementing this new system, what is the purpose, and you do not know how this works. Which of the following would be the best way to handle this situation?
A. Update the Stakeholder Engagement Assessment Matrix and hold a separate meeting with the stakeholders to explain the benefits of the new system.
B. Since, as a Team Facilitator you will mostly be working with the Product Owner (not the stakeholders) then ensure the Product Owner is supportive.
C. You should inform senior management that the warehouse stakeholders are not very happy about the change.
D. Log the stakeholders as resistant in the Stakeholder Engagement Assessment Matrix.
Answer: A
Process - Task 4 - Engage Stakeholders
The best option will be the one that attempts to engage the stakeholder the most. They may be resistant right now but explaining the benefits of this new delivery may get them on board. Even though you may not be working with them directly, they could still be an impediment to the project. You would first log them as resistant, and then work with them to engage them. Although D is true, A would be the better answer.
You are the project manager for a large window manufacturing company. New technology has revolutionized the frame material. You are leading a project team to create a new window using this new framing material. Recent company financial performance is less than planned so this project must meet strict cost requirements and is critical to the overall success of the entire company. Inputs to the Determine Budget process include all of the following except:
A. Cost performance baseline
B. Activity cost estimates
C. Basis of estimates
D. Project schedule
Answer: A
Process - Task 5 - Manage Budget and Resources
The inputs to the Determine Budget process are cost management plan, cost estimates, basis of estimates, scope baseline, project schedule, risk register, business case, business management plan, agreements, and organizational process assets. Cost performance baseline is an output of the Determine Budget process.
You are a new hire at Kruger Smoothing Software Development LLC. As a project manager, you are expected to follow an agile methodology as defined by your PMO. How can you foster an agile mindset within your team when it comes to stakeholder management?
A. If the team members don’t already have an agile mindset remove them from the team.
B. Stakeholder engagement strategies with external stakeholders should not be discussed with team members this is the role of the project manager.
C. Encourage the sharing of information within and across the organization by inviting all team members to meetings, focus on inclusion, and promote aggressive transparency.
D. Use a RACI chart to determine stakeholder risk early in the project.
Answer: C
Process - Task 4 - Engage Stakeholders
The concept of stakeholder management in an agile environment is discussed on p 506 in the PMBOK Guide. Make sure to know the "Considerations for Agile/Adaptive Environments" paragraphs for each knowledge area.
Kimberly is calculating tax deductions for her project. Each of her team members is using a laptop computer (a fixed asset) with an initial cost of $1,500, a scrap value of $300, and an estimated life of three years. What is the straight-line depreciation per computer?
A. $300
B. $500
C. $400
D. $1,200
Answer: C
Process - Task 5 - Manage Budget and Resources
Straight-line depreciation provides an equal amount of depreciation to be taken in each year, and is therefore the simplest method to use. In this case, the assets will depreciate by $1,200 ($1,500 minus $300 scrap value) over a 3-year period. Thus, using straight line depreciation, we divide the $1,200 total depreciation by 3 and take the resulting $400 of depreciation each year.
Your project has just completed the training phase. During a lessons-learned workshop, the finance department contacts you about some details regarding your spending. In addition, they are interested in updating various financial templates for upcoming training projects, and they have asked you to outline the common cost elements they can expect to see on projects. Common project cost elements include which of the following?
A. Labor and material
B. Labor, material, other direct costs and overhead costs
C. People, facility costs, materials, subcontractors
D. Labor, materials, other direct costs
Answer: B
Process - Task 5 - Manage Budget and Resources
Common project cost categories are labor, material, other direct costs, and overhead costs.
A PM is creating a top-down estimate of costs for her project. In particular, one historical record shows a project of similar size and duration that might fit the current estimation needs. This cost estimate is based on the grand total cost of that previous project and has an approximate range of -25 to + 75%. What type of estimate is this?
A. Definitive
B. High-level
C. Budget
D. Rough order of magnitude
Answer: D
Process - Task 5 - Manage Budget and Resources
This is a rough order of magnitude estimate. It is quick and cheap, but not very accurate. It is usually done very early in the project, perhaps during Initiating.
Which of the following knowledge areas does Acquire Resources belong to?
A. Project Management Integration
B. Project Procurement Management
C. Project Resource management
D. Project Communication Management
Answer: C
Process - Task 5 - Manage Budget and Resources
The processes in the Project Resources Management knowledge area are Plan Resource Management, Estimate Activity Resource, Acquire Resources, Develop Team, Manage Team and Control Resources.
A project has the following characteristics: $3 million budget, Planned cost of $630,000, Actual cost of $650,000, Earned value of $540,000. Which statement is true about the current status of the project?
A. The project is ahead of schedule and under budget.
B. The project is behind schedule and over budget.
C. The project is ahead of schedule and over budget.
D. The project is behind schedule and under budget.
Answer: B
Process - Task 5 - Manage Budget and Resources
CV = EV - AC, 540 - 650 = -110. SV = EV - PV, 540 - 630 = -90. Negative cost variance means over budget. Negative schedule variance means behind schedule. PMBOK Guide Sixth Edition (2017), 7. Project Cost Management / 7.4.2.2 Data Analysis, p262.
Gina has been studying for her PMP exam. Having worked in her industry for over 10 years, she has become accustomed to certain patterns in the life cycle of her projects. She knows that phases can be used as decision points to continue or kill a project and that doing so can save money in the long run if orchestrated properly. She knows the best places to schedule these gates is often right before when most of the project money is spent. In general, when is MOST of the project budget spent?
A. Project Planning
B. Project Execution
C. Project Monitoring and Controlling
D. Project Closing
Answer: B
Process - Task 5 - Manage Budget and Resources
Since resources (people, materials, and machinery) are utilized during Project Execution, most of the project money is spent in the Project Execution process group. This is where the work is getting done.
Which of the following is not included in the cost baseline of the project?
A. Activity costs
B. Contingency reserve
C. Management reserve
D. Control accounts
Answer: C
Process - Task 5 - Manage Budget and Resources
Management reserve is part of the project budget, but not part of the cost baseline. All other answers are part of the cost baseline and budget.
Prithi is an excellent project manager, but she lacks experience with large government projects. Her sponsor has informed her she should use earned value measurements to conduct project performance reviews. What is the purpose of using earned value measurements in performance reviews?
A. To measure the actual progress to date against the scope and schedule baseline.
B. To measure project performance against the performance measurement baseline.
C. To control cost performance against the budget only.
D. To compare earned value performance to the cost management plan.
Answer: B
Process - Task 5 - Manage Budget and Resources
Earned value management is useful in performance reviews because it allows us to measure project performance against the combined scope, schedule, and cost baselines, which together are known as the performance measurement baseline. The cost management plan does not contain the budget, so Answer choice D is incorrect. Earned value is used for both cost and schedule, so answer choices A and C are incorrect.
You are controlling the budget variance on your project using a control chart and you have a data point that appears outside of the upper control limit. What does the center line on a control chart depict?
A. Upper Control Limit
B. Lower Control Limit
C. Mean value associated with the process/activity
D. Standard deviation of the process
Answer: C
Process - Task 5 - Manage Budget and Resources
A) The Upper Control Limit is the upper limit line. Thus, choice B is incorrect. B) The Lower Control Limit is the lower limit line. Thus, choice B is incorrect. C) The center line depicts the mean value of the process measurement. D) The standard deviation is not depicted on the control chart, though the default is to set upper and lower control limits 3 standard deviations from the mean. Thus, choice D is incorrect.
The project manager thinks their international project is going well, although there are a substantial number of changes being made. The project manager has followed the Project Management Office (PMO) recommendations for the company and is using 18 project management processes. The project manager is not only a technical expert, he has also had training on people management and communication. Based on this information, what is the most likely cause of the project problems?
A. The amount of processes used should have increased because it is an international project
B. The project manager is not receiving the proper oversight from the sponsor
C. The project manager is not trained in understanding the policies of the organization
D. Not all stakeholders were identified
Answer: D
Process - Task 4 - Engage Stakeholders
The number of processes used is determined based on the needs of the project - it has nothing to do with the fact it is an international project, so Choice A is not a correct answer. There is nothing in the question to indicate that the project manager has not received the proper oversight from the sponsor (Choice B) nor the necessary training in organization policies (Choice C). That would leave Choice D, which is the most logical reason why there are a substantial number of changes. Stakeholders which were not originally identified can cause additional changes.
You are a project manager working on a complicated networking project. You have experienced some variances which are atypical. Your project has three work packages. The project has a budget of $567. Actual cost spent to date are $326. The work packages are 69%, 32% 21% complete, respectively. What is the earned value for the project?
A. $153
B. $148
C. Cannot be calculated without further information
D. $132
Answer: C
Process - Task 5 - Manage Budget and Resources
The EV for the project can only be calculated by multiplying the work package cost by the percentage of completion of each work package, but here we don’t know the respective values of the 3 work packages.
You and your project team are estimating project costs. You decide to use bottom-up estimating and will base your estimates on the WBS. Which of the following is not an attribute of bottom-up estimating?
A. The type of resource used is considered, along with the probable duration of each activity.
B. It creates a more accurate estimate.
C. It’s more expensive to do than other methods.
D. It’s less expensive to do than other methods.
Answer: D
Process - Task 5 - Manage Budget and Resources
Answer A, B, and C are all attributes of a bottom-up estimate. Since this type of estimate is more time-consuming, it would also be more expensive in terms of labor.
What is CPI if EV = 5 and AC = 4?
A. 0.8
B. 1
C. 1.25
D. 2
Answer: C
Process - Task 5 - Manage Budget and Resources
CPI = EV / AC; Thus, 5 / 4 = 1.25
Peter is going through another iteration of estimations because the project is about enter into a new phase. He is creating an activity cost estimate, and on a very aggressive timeline to complete his estimate. He is also under a lot of pressure from senior management to deliver a high level of confidence in the estimate. As such, which of the following should not be included?
A. Information about the types of resources used in the activities
B. Details on the assumptions used in the estimate
C. The order in which activities will be completed
D. Descriptions of resources used in the activities
Answer: C
Process - Task 5 - Manage Budget and Resources
Activity Cost Estimates are a result of estimating costs. The order/sequence in which the activities are completed is irrelevant as costs are assigned to the individual activities, not a relationship between activities (activity sequence). All other answer choices are relevant.
You are an experienced project manager working in the pharmaceutical industry. You are leading a project for a cutting-edge medication which is revolutionary. You are monitoring the status of the project work to update the project budget and manage changes to the cost baseline. So far things appear to be progressing well, but you are starting to but concerned with work being done by a new vendor. Which output would you be most concerned with?
A. Work performance information and cost forecasts
B. Budget reserves and cost estimates
C. Work performance reports and earned value management
D. Cost estimates and aggregation
Answer: A
Process - Task 5 - Manage Budget and Resources
The process described is Control Costs and the outputs are documented in A. This is one of the more technical processes to understand for the PMP exam as it includes the earned value tools and techniques. Budget reserves are monitored during the Monitor Risks process. Earned value management is a technique and not an output. Cost aggregation is when you add all of your individual cost estimates together and is done to determine what the project budget will be.
