Manage Budget - Prep Questions

Question 1

A project has the following performance information:
BAC = 2,000,000
AC = 1,800,000
PV = 1,800,000
EV = 2,000,000
Which of the following statements BEST defines project performance?

A. The project has an unfavorable cost performance
B. The project has finished before its scheduled date
C. The project is late
D. The project should have been completed

Answer 1

B. The project has finished before its scheduled date

The project is completed because EV-BAC. However, the project has finished before its scheduled date because EV > PV.

Question 2

Senior management places budget limits above other project constraints. In the last status meeting you reported that the project to-complete performance index (TCPI) was 1 .1. What does a TCPI represent?

A. Expected total cost at project completion
B. Ratio between earned value and actual cost
C. Estimate cost to complete the project
D. The performance required in the future to achieve a previously defined objective

Answer 2

D. The performance required in the future to achieve a previously defined objective

TCPI is the performance required in the future to achieve a previously defined objective (the budget or a revised objective).

Question 3

You are currently planning a project with a clear scope of work. You estimated project costs and defined a cost provision to account for risk. The project has a baseline cost of 100,000, a total funding
of 115,000 and a _________ of 15,000.

A. Management reserve
B. Negative cost variance
C. Contingency reserve
D. Positive cost variance

Answer 3

A. Management reserve

The budget is the sum of the baseline cost plus the management reserve.
Therefore:
Management reserve = Budget - baseline cost = 115,000-100,000 = 15,000

Question 4

As the planning effort progresses, the team is now able to rely on detailed supporting information, such as a detailed WBS, resource estimates and vendor bids. The team needs to prepare a solid and
precise and cost estimate. Which estimating technique would you recommend?

A. Relative
B. Analogous
C. Decomposition
D. Bottom-up

Answer 4

D. Bottom-up

Bottom-up estimating determines the project costs starting from the lowest levels of the WBS. These detailed estimates, frequently obtained at the activity or work package level, may then be aggregated into an overall estimate (Answer D). The relative estimating (Answer A) and analogous estimating (Answer B)
techniques are not precise. Decomposition is not an estimating technique (Answer C).

Question 5

You are managing a robotic system project that is well underway. PMO requires you to produce a weekly report forecasting the expected total cost of the project. How should the acceptable range of cost variance change throughout the project?

A. Should decrease, because more work has been completed
B. Should increase, because more risks have been identified
C. Should remain steady throughout the project
D. Should increase, because there is less time to issue cost corrective actions

Answer 5

A. Should decrease, because more work has been completed

The acceptable range of cost variance should decrease throughout the project, as more work is completed.

Question 6

You are about to move on to determining the budget estimate. All of the following may be used as an input, EXCEPT:

A. WBS
B. Cost baseline
C. Basis of estimate
D. Project schedule

Answer 6

B. Cost baseline

The cost baseline is an output of the determine budget process. All other options can be inputs to the determine budget process.

Question 7

During the development phase, two team members cannot agree on how to measure the value of the work in progress. One team member insists that the team should use the percent complete with
milestones gates approach and another argues that the team should use a fixed formula. You should tell them that they should:

A. Not be concerned with monitoring and controlling activities
B. Use the earned value management method to measure the value of work in progress
C. Ask the sponsor
D. Check the cost management plan

Answer 7

D. Check the cost management plan

The project should adopt the approaches established in the cost management plan.

Question 8

You need to estimate the costs of the resources required to complete the project. Which of the following statements regarding cost estimates is correct?

A. Detailed estimates must be aggregated into an overall cost estimate
B. Cost estimates should indicate the range of potential values
C. Costs estimates should be recorded in the cost management plan
D. Each activity cost should incorporate a provision to account for uncertainty

Answer 8

B. Cost estimates should indicate the range of potential values

Range estimates, unlike one-point estimates, provide insight into the estimates’ uncertainty (answer B). Top-down estimates may be prepared at the early stages of the project (answer A). The cost management plan does not record cost estimates (answer C). Contingency reserves may be maintained at the work package, deliverable or project level (answer D).

Question 9

You just reported that the performance required to complete the project within the cost baseline is 1.3. How would you describe the project performance?

A. The project is overrunning the budget
B. The project is under budget
C. The project is late
D. The project has an unfavorable rate of return

Answer 9

A. The project is overrunning the budget

The project is overrunning the budget because the performance required to complete the project within the cost baseline (TCPI) is greater than 1 .

Question 10

The project manager is having trouble estimating the costs of a research and development project. Which of the following is the MOST likely cause?

A. The budget has not been approved
B. The scope is not clearly defined
C. Team members have not been fully assigned to the project
D. There are not enough funds

Answer 10

B. The scope is not clearly defined

Unclear scope definition will often lead to difficulties in estimating costs.

Question 11

The project manager is analyzing the approved version of the project cost objectives. This benchmark used as a reference to assess cost performance can be graphically represented as _______________.

A. A project schedule
B. A cost aggregation curve
C. A S curve
D. An influence curve

Answer 11

C. A S curve

The time-phased cost baseline is also known as the S curve, because its graphical representation usually resemble as “S”.

Question 12

Olivia is managing an airport extension project that is well underway. She is using earned value analysis to assess project performance. Which of the following is Olivia working on?

A. Planning cost management
B. Estimating costs
C. Determining the budget
D. Controlling costs

Answer 12

D. Controlling costs

The EV management techinique is used as part of cost control.

Question 13

A project has the following performance data:
AC = 2,000,000
CV = -250,000
SPI = 1.12
BAC = 10,000,000
What is the project planned value?

A. 1,750,000
B. 1,562,500
C. 2,250,000
D. There is not enough information

Answer 13

B. 1,562,500

Question 14

You have been hired to manage a large project. You are estimating the cost of a deliverable based on the costs of the work packages required to complete it. The estimate costs process is defined as:

A. Rolling up costs along the WBS to create a cumulative time-phase budget
B. Estimating the costs of the resources needed to complete the project
C. Estimating costs at project completion and managing changes to the cost baseline
D. A project management technique for measuring project performance, combining and integrating scope, schedule and cost assessment

Answer 14

B. Estimating the costs of the resources needed to complete the project

The estimate costs process involves estimating all costs according with the resources required. Answer A is referring to the determine budget process. Answer C is referring to the control costs process. Answer D is referring to earned value management.

Question 15

The deliverable XYZ was scheduled to last two weeks with one team member working with a 50% allocation. When the deliverable actually started, the project manager decided to assign the team
member full time. At the end of the first week, the project manager determined that the deliverable was 25% complete. What is the schedule performance index?

A. 0 25
B. 0 50
C. 1
D. 2

Answer 15

B. 0 50

Question 16

Halfway through an engineering project, the project management team prepared an EVM report. The project management team reported that the project’s budgeted cost of the work scheduled was
250,000. The budgeted cost of the work scheduled to be completed up to a specific moment in time is known as:

A. Actual cost
B. Earned value
C. Planned value
D. Budget at completion

Answer 16

C. Planned value

The planned value represents the budgeted cost of the work scheduled to be completed up to a specific date.

Question 17

You are managing a project with a budget of 20,000 spread evenly across 10 months. What is the estimated variance at completion after 4 months if the accumulated actual costs are 10,000?

A. -5,000
B. 4,000
c. 5,000
D. 25,000

Answer 17

A. -5,000

The variance at completion can be calculated as:
VAC = BAC - EAC = BAC - (BAC/CPI) = BAC - (BAC/EV/AC) =
= 20,000 - (20,000/8,000/10,000) = -5,000

Question 18

In the last status meeting you reported that your project CPI is 1.1 . What does that mean?

A. There is a negative cost variance
B. The estimate at completion is larger than the budget at completion
C. The estimate at completion is smaller than the budget at completion
D. There is a negative variance at completion

Answer 18

C. The estimate at completion is smaller than the budget at completion

The project has a favorable cost performance. Therefore, the estimate at completion (EAC) is smaller than the budget at completion (BAC). The remaining statements are incorrect.

Question 19

The team is ready to start estimating the project costs. Which of the following is LEAST reliable?

A. Lessons learned from past projects
B. External databases on resource productivity
C. Team knowledge
D. Cost records of previous projects

Answer 19

C. Team knowledge

Team knowledge is subject to personal subjective elements, such as attitude, interests, memory and agenda. Therefore, it is a less reliable source of information.

Question 20

A business process reengineering project was budgeted for 500,000 and was scheduled to be completed in 6 months. 3 months after the project start, the project is 40% complete and has spent 300,000. Which of the following statement best describes the project’s performance?

A. Over budget and behind schedule
B. Over budget and ahead of schedule
C. Under budget and behind schedule
D. Not enough information

Answer 20

D. Not enough information

The project’s CP’ can be calculated as CPI=EV/AC = 0.66. Therefore, the project is over budget. However, we do not have information regarding the planned value. Therefore, we cannot assess schedule
performance.

Question 21

A project should cost 100,000 and take 10 months. After 5 months the project is 25% complete and the actual costs are 20,000. What is the project estimate do complete (ETC)?

A. 40,000
B. 60,000
C. 80,000
D. 100,000

Answer 21

B. 60,000

The project earned value (EV) is $25,000, because 25% of the total budget at completion (BAC) has been completed. Therefore the project CPI is EV/AC 25,000 / 20,000 = 1.25. Assuming a typical estimate, the estimate at completion (EAC) is BAC/CPI = 100,000 / 1.25 = 80,000. Therefore, the project estimate to complete (ETC) EAC-AC 80,000 - 20,000 = 60,000

Question 22

Olivia is managing an airport extension project that is well underway. She is using earned value analysis to assess project performance. She determined the following performance metrics:
EV = 700
AC = 750
PV = 680
What is the schedule variance (SV)?

A. 70
B. -70
c. 680
D. 20

Answer 22

D. 20

Question 23

A project manager is leading a telecommunications project that is overrunning the budget. The project manager should concentrate on ______________ costs to respond to the cost variance.

A. Direct and variable
B. Indirect and variable
C. Fixed and variable
D. Direct and fixed

Answer 23

A. Direct and variable

Question 24

A project manager is rescheduling future work to reconcile the rate of expenditures with the funds committed to the project. In which process is the project manager working on?

A. Estimate costs
B. Determine budget
C. Control costs
D. Monitor and control project work

Answer 24

B. Determine budget

Dubious question: assuming the PM is doing so during the Determine Budget process.
The project manager is reconciling funding requirements which is part of the determine budget process.

Question 25

Halfway through an engineering project, the project management team is preparing an EVM report. The project was budgeted for 500,000, having completed work budgeted for 400,000. If the current
CPI is 0.85 and the SPI is 0.8, what Will be the schedule variance at the end of the project?

A. (125,000)
B. 0
C. 1
D. Not enough information

Answer 25

B. 0

At the end of the project the schedule variance is always zero, because the earned value will equal the planned value.

Question 26

Your plant extension project is running behind schedule and overrunning the budget. It’s the end of the design phase and the steering committee must decide on whether to proceed with the project. All of the following should be taken into consideration, EXCEPT:

A. Cost Performance Index (CPI)
B. Sunk costs
C. Forecasted benefits
D. Estimate to Complete (ETC)

Answer 26

B. Sunk costs

Sunk costs have already been spent and cannot be avoided or undone (answer B). The remaining options can influence the project decision.

Question 27

You are starting a new waste management project that seeks to reduce industrial, household and municipal waste. You and your project team estimated the project costs considering the resources
required to complete the project work. What should you do before moving on to the next planning process?

A. Determine the project’s Cost Performance Index (CPI)
B. Define the funding requirements needed to support the project expenditures
C. Establish the cost baseline
D. Document the basis of estimates

Answer 27

D. Document the basis of estimates

You should document the basis of estimates, as additional details and assumptions that support and explain these estimates. Determine the project CPI (answer A) is part of cost control. Defining the funding requirement (answer B) and establishing the cost baseline (answer C) are part of determining the budget.

Question 28

Four months into the project, the project EV is 30,000, the PV is 35,000 and the AC is 40,000. What is the project SV?

A. -5.000
B. -10.000
c. 0.87
D. 5.000

Answer 28

A. -5.000

Question 29

The customer is considering whether to upgrade the existing manufacturing system or to use the existing system that has proven to be costly to maintain. Life cycle costing improves project decisions
by ___________ .

A. Considering the costs required to develop, operate, maintain and discontinue the product
B. Considering the project life cycle costs
C. Considering the operational costs
D. Progressively detailing the project costs as the project moves toward completion

Answer 29

A. Considering the costs required to develop, operate, maintain and discontinue the product

Life cycle costing considers all the costs required to develop, operate, maintain and discontinue the product.

Question 30

You are leading a software development project that is critical to a program milestone. You are considering the approaches that will be used to measure the value of work in progress. Which of the following options would you use to assess the performance of a work package that spans one single control period?

A. Weighted milestones
B. Percentage complete with milestones gates
C. Fixed formula
D. Level of effort

Answer 30

C. Fixed formula

A fixed formula may be applied to small work packages that have durations of less than one or two performance measurement periods. Weighted milestones (answer A) and percentage complete with milestones gates (answer B) are typically used in larger work packages. Level of effort (answer D) is used when we want to measure performance indirectly by the performance of another work package, or proportionally to the elapsed time.

Question 31

You recently joined a consulting company and were assigned to a social media application project. The sponsor requested a 10% budget cut while assessing the project budget. How should you
proceed?

A. Revisit the project WBS to meet the 10% budget cut target
B. Submit an accurate budget for approval
C. Adjust the cost estimate to meet the sponsor’s expectations and update the risk register to record the associated risks
D. Adjust the project cost contingency reserve to meet the sponsor’s expectations

Answer 31

B. Submit an accurate budget for approval

The project manager should provide an accurate budget for approval (answer B). The most cost-effective project WBS (answer A) should already have been prepared before determining the budget. You should provide realistic estimates (answers C and D).

Question 32

Matthew is managing the company’s Oil and gas project. He is rescheduling project activities to adapt the rate of resource consumption to available funds. Which of the following activity is Matthew performing?

A. Resource smoothing
B. Resource levelling
C. Funding limit reconciliation
D. Crashing

Answer 32

C. Funding limit reconciliation

Funding limit reconciliation compares and adjusts the use of funds with the existing financial constraints.

Question 33

The project manager has prepared a performance report where the following data regarding the design phase of a large IT project: BAC= 120,000, EV = 60,000, AC = 80,000, PV = 40,000 and EAC = 110,000. How can you BEST describe the performance of the design phase?

A. The design is ahead of schedule and under budget
B. The design is ahead of schedule and over budget
C. The design is behind schedule and over budget
D. The performance report data are inconsistent

Answer 33

D. The performance report data are inconsistent

CPI is lower than 1, therefore the EAC should be greater than BAC.

Question 34

You are using EVM to forecast future performance. You assume that current cost performance would not continue in the future. Which formula should you use to determine the project estimate to complete (ETC)?

A. ETC = BAC/CPI
B. ETC = BAC -EV
C. ETC = (BAC/CPI)-AC
D. ETC = (BAC-EV)/CPI

Answer 34

B. ETC = BAC -EV

Atypical estimate to complete (ETC) is determined by (BAC-EV).

Question 35

The project closure report documented that the final cost performance index (CPI ) was 1.1 and the final schedule performance index (SPI) was 0.8. Which of the following is the best explanation for the project performance?

A. The project has been completed under budget and behind schedule
B. The project has been completed over budget and behind schedule
C. The project has been completed under budget and ahead of schedule
D. The project was terminated before completion while it was under budget and behind schedule

Answer 35

D. The project was terminated before completion while it was under budget and behind schedule

The best explanation for a project SPI different than 1 at the end of the project is a project early termination. At the project scheduled completion the project EV and PV Will converge.

Question 36

The budgeted cost of the work completed is 70,000 and the budgeted cost of the work scheduled is 50,000. Which of the following statement is correct?

A. The project is on schedule
B. The project is over budget
C. The project schedule variance is 20,000
D. Not enough information provided

Answer 36

C. The project schedule variance is 20,000

If the earned value (EV) is 70,000 and the planned value (PV) is 50,000, the project is ahead of schedule with a schedule variance (SV) of 20,000 (70,000-50,000).

Question 37

The deliverable XYZ was scheduled to last two weeks with one team member working with a 50% allocation. When the deliverable actually started, the project manager decided to assign the team
member full time. At the end of the first week, the project manager determined that the deliverable was 25% complete. What is the cost performance index?

A. 0.25
B. 0.50
C. 1
D. 2

Answer 37

A. 0.25

100% of the budget was spent to complete 25% of the work. Therefore the CPI is 0.25 (0,25/1)

Question 38

You need a time-phased graphical representation of the budgeted cost of the work scheduled. You should prepare _____________.

A. An S-curve with the Estimate at Completion
B. A run chart with the planned value
C. A control chart with the earned value
D. An S-curve representing the authorized time-phased budget

Answer 38

D. An S-curve representing the authorized time-phased budget

An S-curve is typically used to represent the budget cost of work scheduled (or authorized time-phased budget).

Question 39

You are leading a hotel construction project. After defining the project scope, creating the project WBS and estimating project costs you are now determining the cost baseline. In which of the following are you engaged in?

A. Planning cost management
B. Estimating costs
C. Determining the project budget
D. Controlling costs

Answer 39

C. Determining the project budget

Determining the cost baseline is part of determining the budget.

Question 40

Your project’s cost variance is positive and your schedule variance is negative. How would you describe your project performance?

A. There is a cost overrun and the project is behind schedule
B. There are cost savings because the project is behind schedule
C. There are cost savings and the project is behind schedule
D. There is a cost overrun because the project is ahead of schedule

Answer 40

C. There are cost savings and the project is behind schedule

Is the cost variance is positive there are savings. If the schedule variance is negative, the project is late.

Question 41

While managing an electric infrastructure project, your management requested the Estimate at Completion (EAC). You know that the project was budgeted for 100,000, that you have spent 50,000 so
far and that you have performed work that was budgeted for 40,000. You realize that there were some cost performance issues in the past, but you believe that they were due to a problem that has already been solved. Under the circunstances, what should be the project EAC?

A. 60,000
B. 100,000
C. 110,000
D. 125,000

Answer 41

C. 110,000

The project manager believes that the cost performance in the past Will not be repeated in the future. Therefore, he should use atypical EAC, calculated as EAC = AC + (BAC-EV)

Question 42

Halfway through an engineering project, the project management team prepared an EVM report. The project management team reported that the project’s earned value was 200,000. Earned value (EV) is also known as:

A. Budgeted cost of work scheduled
B. Actual cost of the work completed
C. Budgeted cost of work completed
D. A forecast of how much is going to be spent

Answer 42

C. Budgeted cost of work completed

Earned value assesses the progress performed up to a specific date. This value is calculated by analyzing the budget cost of the work completed by that date.

Question 43

The project manager is ensuring that the project’s expected pace of expenditures adheres to existing funding limits before submitting the budget for approval. Which of the following is the project manager performing?

A. Estimating costs
B. Determining the budget
C. Controlling costs
D. Planning cost management

Answer 43

B. Determining the budget

Defining the funding requirements needed to support the project expenditures is part of determining the budget.

Question 44

Your project completed 20,000 of work and has a cost overrun of 5,000. Which of the following statement is correct?

A. The CPI is 0.8
B. The project has a VAC of -5,000
C. The SPI is 0.8
D. There is not enough information

Answer 44

A. The CPI is 0.8

Question 45

You need to determine the cost baseline. Which of the following should you consider?

A. Operating costs
B. Direct and indirect costs
C. Management reserve
D. All ofthe above

Answer 45

B. Direct and indirect costs

Direct and indirect costs can be part ofthe cost baseline. Operating costs (answer A) are required to operate the project’s product but they are not project costs. The management reserve (answer C) is part of the budget but is not included in the cost baseline.

Question 46

Your latest report says that the project has completed work that is worth 1000, the actual total expense is 1200 and the budgeted cost of the work scheduled is 1000. How would you describe the project performance?

A. Overrunning the budget and on schedule
B. On budget and late
C. Overrunning the budget and late
D. There is not enough information

Answer 46

A. Overrunning the budget and on schedule

The project is overrunning the budget because it spent (AC) more than what was done (EV). The project is on schedule because it has done (EV) what it should have done (PV).

Question 47

The EV = 600, PV = 500, AC= 550 and BAC=I,OOO. After analyzing the project cost variance, the project manager determined that past performance had been influenced by specific factors that should not
resurface in the future. What it the project EAC?

A. 400
B. 917
C. 950
D. 1,050

Answer 47

C. 950

Because prior performance has been influenced by specific factors that should not repeat in the future, the project manager should use an atypical estimate at completion.
EAC(atypical) = AC + (BAC-EV) = 550 + (1,000 - 600) = 950

Question 48

A junior project manager made an incorrect statement about the cost contingency reserve. Which one was it?

A. Should be hidden within each cost estimate
B. Is controlled by the project manager
C. Is included within the budget
D. Is not used to account for emergent risks

Answer 48

A. Should be hidden within each cost estimate

Contingency reserves should be transparent and managed separately to ensure proper allocation and control. The remaining statements are correct.

Question 49

The project manager is preparing the cost baseline. This baseline should be defined:

A. Before executing the planned project activities
B. After estimating project costs
C. When senior management requests it
D. After balancing the different project management plan elements and ensuring that they are aligned with concurrent constraints

Answer 49

D. After balancing the different project management plan elements and ensuring that they are aligned with concurrent constraints

Baselines are defined when the project management plan is approved. The project management plan should be approved after balancing the different project management plan elements and ensuring that they are aligned with concurrent constraints (answer D) which is not necessarily when senior management requests it (answer C). Project execution may start before establishing the baselines (answer A). The cost estimation process may be performed throughout the project as more information becomes available (answer B).

Question 50

Early into the project, you are estimating the costs required to complete the project. You documented the assumptions that were made to produce the estimate. An example of a cost management assumption is:

A. Technology Will be available to support an advanced requirement
B. Hardware Will be delivered on late August
C. There are enough funds to complete the project
D. Resources Will be trained before starting the project

Answer 50

C. There are enough funds to complete the project

The project is assuming that there Will be enough funds to complete the project, although there is some uncertainty involved.

Question 51

You have been hired to manage a large project. You are estimating the cost of a deliverable based on the costs of the work packages required to complete it. Which estimating technique are you using?

A. Top down
B. Bottom up
C. Aggregation
D. Padding

Answer 51

B. Bottom up

A bottom-up estimate estimates the costs starting from the lowest levels of the WBS. These detailed estimates, frequently performed at the work package level, may then be summarized to obtain the cost of higher levels of the WBS. Aggregation is used in the determine budget process (answer C). Top-down estimates (answer A) and padding (answer D) cannot be used to roll-up costs throughout the WBS.

Question 52

You have been hired to manage a cross-functional project. Five months into the project, you collected work performance information. If EV= 1,000, AC= 1,000, PV= 1,200, how is the project performance?

A. On budget and behind schedule
B. On budget and ahead of schedule
C. Over budget and behind schedule
D. There is not enough information

Answer 52

A. On budget and behind schedule

The project is on budget because the earned value (EV) equals the actual cost (AC). The project is behind schedule because the earned value (EV) is less than the planned value (PV).

Question 53

Very late in an agricultural development project, the project manager reported that the actual costs are 290,000 and the planned value is 250,000. Based on the reported metrics, what is the project performance?

A. The project is late
B. The project is overrunning the budget
C. The project is ahead of its baseline schedule
D. It is not possible to determine project performance with the existing information

Answer 53

D. It is not possible to determine project performance with the existing information

It is not possible to determine project performance relying exclusively on the actual cost and planned value metrics. You also need to know the project’s earned value.

Question 54

The project manager has just collected the following performance information: budget at completion (BAC) = 60,000, earned value (EV) = 30,000, planned value (PV) = 32,000 and actual cost (AC) = 25,000.
What is the project TCPI based on the EAC?

A. 0.86
B. 1
C. 1.2
D. Cannot be determined

Answer 54

C. 1.2

Considering typical EAC.

Question 55

The project with an initial budget of 50,000 has an estimate at completion of 60,000. If a new change request is authorized with a budget of 5,000, what would be the revised project budget?

A. 50,000
B. 55,000
c. 60,000
D. 65,000

Answer 55

B. 55,000

The budget can only be changed with an approved change request. If 5,000 were added to the initial budget of 50,000, the revised budget is 55,000.

Question 56

While assessing project performance, the project manager determined that the project EV is 5000. If the BAC is 5000, we can conclude that the project:

A. Spent the entire budget
B. Should have been completed by now
C. Is complete
D. Is overrunning the budget

Answer 56

C. Is complete

The project is complete because it has done (EV) the complete scope of work (BAC). We are unable to determine if the project spent the entire budget (answer A) and overrun the budget (answer D) because we do not have information about the project’s actual costs. We do not have enough information to assess schedule performance (answer B).

Question 57

You are managing a project with a budget of 4000. You determined that the project PV is 4000 and the AC is 3000. Which of the following statements is correct?

A. The project is ahead of schedule
B. The project should have been completed
C. The project is complete
D. The project is saving money

Answer 57

B. The project should have been completed

When the planned value (PV) equals the budget at completion (BAC), the project should have been completed.

Question 58

Halfway through a production system automation project, you are preparing an EVM report. You have just collected the following project performance information:
Earned Value (EV) = 22,500
Actual Cost (AC) = 18,000
If the Budget at Completion (BAC) = 30,000, what is the Estimate to Complete (ETC)?

A. 6,000
B. 24,000
C. 12,000
D. There is not enough information

Answer 58

A. 6,000

Question 59

The project manager is analyzing the project performance information and has determined that the project SPI is 0.9. What should he do next?

A. Inform the customer
B. Crash the schedule
C. Determine the project CPI
D. Use less expensive resources

Answer 59

C. Determine the project CPI

The project manager should have a clear understanding of project performance before informing the customer or taking corrective action.

Question 60

A railroad construction project has been ongoing for two years. The project manager determined that the project was 50% complete, should have been 45% complete and spent 40% of the budget. Which of the following statement best describes the project’s performance?

A. Over budget and ahead of schedule
B. Under budget and behind schedule
C. Under budget and ahead of schedule
D. Not enough information

Answer 60

C. Under budget and ahead of schedule

The project is under budget because it is 50% complete and spent 40% of the budget. The project is ahead of schedule because it is 50% complete and should have been 45% complete.

Question 61

3 months have been completed out of the 6 initially scheduled in a pharmaceutical project with a budget of 300,000. The planned value (PV) is 180,000 and the actual costs (AC) were 250,000. What can you conclude about the schedule performance?

A. The project is ahead of schedule because the planned value is lower than the actual costs
B. The project is behind schedule because the planned value is lower than the actual costs
C. The project is on schedule because 3 months out of 6 have been completed
D. There is not enough information

Answer 61

D. There is not enough information

Without information about the EV it is not possible to assess schedule performance.

Question 62

A project with a budget of 200,000 has been completed with total costs of 180,000. If the cost baseline was 185,000 and the contingency reserve was 10,000, how much was the management reserve at the end of the project?

A. 10,000
B. 15,000
c. 20,000
D. 25,000

Answer 62

B. 15,000

The management reserve at the beginning of the project was 1 5,000, as the difference between the budget and the cost baseline. Because the project did not use all its authorized funds, as the total costs were lower than the cost baseline, the management reserve remained unused.

Question 63

While reviewing the cost estimates sent by team members, you noticed that one estimate was higher than what you expected. How should you proceed?

A. Correct the estimate using the three-point estimate approach
B. Request the basis of estimate
C. Accept the estimate because it was developed by the team
D. Ask the team member to use an analogous estimate for the duration ofthe activity

Answer 63

B. Request the basis of estimate

Your first Step should be to understand the information provided by the team members. The basis of estimates can provide additional details that support and justify the estimates.

Question 64

You have just collected the following project performance information:
EV = 20,000
PV = 20,000
AC = 18,000
How is the project performance?

A. The project is under budget and on schedule
B. The project is on budget and behind schedule
C. The project is over budget and on schedule
D. The project is on budget and ahead of schedule

Answer 64

A. The project is under budget and on schedule

SPI = 1 and CPI > 1

Question 65

You have been hired to manage a large project. You are estimating the cost of a deliverable based on the costs of the work packages required to complete it. Which of the following options is part of estimating project costs?

A. Determining the basis of estimates
B. Estimating project costs based on vendor’s bids
C. Estimating the contingency reserves
D. All ofthe above

Answer 65

D. All ofthe above

All of the options available are part of the estimate costs process.

Question 66

Your latest status report says that the project ratio of earned value to actual costs is 0.7 and the ratio of earned value to planned value is 1.2. Which of the following statements regarding your project performance is correct?

A. The project’s costs outweigh its benefits
B. The project is under budget
C. The project’s TCPI is higher than 1
D. The project is late

Answer 66

C. The project’s TCPI is higher than 1

The performance required in the future to complete the project within the cost baseline (TCPI) must be higher than 1 because the ratio of earned value to actual costs (CP’) is lower than 1 (answer C). We do not have enough information to conclude that the project’s costs outweigh its benefits (answer A). The project is over budget (answer B) because the CPI is lower than 1. The project is ahead of schedule (answer D) because the SPI is higher than 1 .

Question 67

You are using EVM to assess project performance. The project’s CPI is 0.8, the SPI is 1.1 and the BAC is 10,000. What is the project EAC?

A. 8,000
B. 20,000
C. 12,500
D. There is not enough information

Answer 67

C. 12,500

The Estimate at Completion (EAC) can be calculated as BAC / CPI. Therefore, EAC = 1,000/0.8 = 12,500.

Question 68

A project has the following performance data:
AC = 2,000,000
CV = -250,000
SPI = 1.12
BAC = 10,000,000
What is the project earned value?

A. 1,750,000
B. 1,562,500
C. 2,250,000
D. There is not enough information

Answer 68

A. 1,750,000

Question 69

You are managing a railway infrastructure project that is in danger of overrunning the budget. You are currently forecasting the expected total cost of the project. All of the following can be used to calculate EAC, EXCEPT:

A. BAC/CPI
B. ETC + AC
C. AC + (BAC-EV)/CPI
D. ETC + (BAC-EV)

Answer 69

D. ETC + (BAC-EV)

ETC + (BAC-EV) does not represent EAC. There are several methods to calculate the EAC, including a new estimate (answer B) or a typical estimate (answers A and C).

Question 70

The project manager determined that a problem with electricity during hardware installation was the cause of an unfavorable CPI. The electricity problem can no longer occur. Which of the following should the project manager use to calculate the project EAC?

A. Typical EAC
B. Atypical EAC
C. Use other projects as a reference
D. Pessimistic EAC

Answer 70

B. Atypical EAC

If the electricity problem can no longer occur, we can assume that the past cannot be used as a reference to estimate future performance. Therefore, the project manager should use an atypical estimate at completion (EAC).

Question 71

You are currently planning a project with a clear scope of work. You estimated project costs and defined a cost provision to account for risk. The management reserve is primarily used to account for:

A. Unforeseen work that is within the scope of work
B. Scope changes
C. Identified risks
D. Indirect costs related to management activities

Answer 71

A. Unforeseen work that is within the scope of work

Management reserve is a provision of time or costs, held by management, to compensate for unknown-unknowns.

Question 72

You have just collected the following project performance information:
PV = 1,500,000
EV = 1,100,000
AC = 1,000,000
If the project BAC = 2,000,000 what is the project ETC?

A. 818,182
B. 828,182
C. 1,818,182
D. 1,828, 182

Answer 72

A. 818,182

Question 73

The project manager has just collected the following performance information: BAC = 60,000, earned value (EV) = 30,000, planned value (PV) = 32,000 and actual cost (AC) = 25,000. What is the value of
Estimate At Completion (EAC) assuming that the work is performed at the present CPI?

A. 50,000
B. 55,000
c. 58,750
D. 60,000

Answer 73

A. 50,000

Question 74

Your project data shows that, at some point in the time, the earned value (EV) is 15,000 and the actual cost (AC) is 12,000. If the Budget at Completion (BAC) is 30,000, what is the estimate at completion
(EAC)?

A. 24,000
B. 37,500
C. 12,000
D. There is not enough information

Answer 74

A. 24,000

Question 75

You have just been authorized to manage a new highly anticipated project. You are working with the team to determine how the costs will be managed. All of the following options may be part of a cost
management plan, EXCEPT:

A. Methods used to measure actual performance
B. Forecasts of future cost performance
C. Adopted estimating methods
D. Reports used to control costs

Answer 75

B. Forecasts of future cost performance

Forecasting future cost performance is part of cost control

Question 76

You are using EVM to forecast future performance. You will rely on the typical estimate at completion (EAC) to estimate the expected total cost of a project deliverable. The typical estimate at completion assumes that:

A. Future work will be estimated again, ignoring the performance to date.
B. Previous performance will be maintained in the future
C. Future performance will take into account the previous cost and schedule performance
D. The past cannot be used as a reference to estimate future performance

Answer 76

B. Previous performance will be maintained in the future

The typical estimate at completion approach assumes that the performance in the past will be maintained in the future.

Question 77

A project performance report shows a EAC lower than the project BAC. Which of the following sentence is correct?

A. The current ETC is lower than 1
B. The current SPI is lower than 1
C. The project CPI is lower than 1
D. The project TCPI is lower than 1

Answer 77

D. The project TCPI is lower than 1

If the Estimate at Completion (EAC) is lower than the Budget at Completion (BAC), the project has a favorable cost performance. Therefore the project CPI Will be higher than 1 and the To Complete Performance Index (TCPI) Will be below 1 . There is no information regarding the Schedule Performance Index (SPI) and the Estimate to Complete (ETC).

Question 78

You have decided to use the three-point estimate approach to estimate activity durations. Which of the following estimates has the highest standard deviation?

A. Activity A with an estimate ranging from 4 to 9 days
B. Activity B with an estimate of optimistic = 3, most likely = 6, pessimistic = 9
C. Activity C with a most likely estimate of 6 and a standard deviation of 1.5
D. Activity D with an estimate of optimistic = 4, most likely 6, pessimistic 11

Answer 78

C. Activity C with a most likely estimate of 6 and a standard deviation of 1.5

Question 79

A junior project manager needs to know the budget that was formally allocated for each project period. Which performance metric would you recommend?

A. Earned value
B. Estimate at completion
C. Budget at completion
D. Planned value

Answer 79

D. Planned value

The planned value (answer D) can be derived from the project’s time-phased cost baseline established when the project was budgeted. The earned value (answer A) and estimate at completion (answer B) do not represent was originally budgeted. The budget at completion (answer C) represents the authorized budget to complete the scope of work.

Question 80

On a recently initiated engineering project, management requested a preliminary project cost estimate. How should the project manager proceed if he does not have enough information to provide an accurate estimate?

A. Include a contingency reserve in the project budget
B. Provide a rough order of magnitude estimate
C. Provide a definitive estimate
D. Do not provide the estimate until the scope is defined

Answer 80

B. Provide a rough order of magnitude estimate

A rough order of magnitude estimate is prepared during initiation, when there is not enough information to produce a more precise estimate. This rough order of magnitude estimate can be used to set initial expectations. Options A and C are not correct because the project manager does not have enough information to prepare a detailed and accurate estimate. Option D is not realistic.

Question 81

The project manager has decided to hire an external consultant to help estimating the cost of the design phase. What cost estimating technique is being using?

A. Vendor bid analysis
B. Bottom-up
C. Learning curve
D. Expert Judgment

Answer 81

D. Expert Judgment

The design phase will be estimated based on the experts’ opinion.

Question 82

On a recently initiated engineering project, management requested a preliminary project cost estimate. Which of the following options regarding a rough order of magnitude (ROM) estimate is NOT TRUE?

A. May range from -50% to +50% relative to the most likely estimate
B. Establishes expectations
C. Its precision level may be defined in the cost management plan
D. Relies on detailed supporting information

Answer 82

D. Relies on detailed supporting information

A rough order of magnitude estimate does not rely on detailed supporting information. All other statements are correct.

Question 83

You are leading a software development project that is critical to a program milestone. You are considering the approaches that Will be used to measure the value of work in progress. Which of the following approaches may you use? (Choose three.)

A. Percent complete with milestones gates
B. Actual cost
C. Percent complete
D. 20-80 method
E. Planned value
F. Kanban

Answer 83

A. Percent complete with milestones gates
C. Percent complete
D. 20-80 method

Percent complete with milestones gates (answer A), percent complete (answer C) and fixed-formula (answer D) approaches can be used to measure the work in progress. The remaining options are not used to measure the work in progress.

Question 84

As an experienced project manager, Mary is trying to prevent a cost increase by influencing the factors that create changes to the project budget. Mary is performing the ____________ process.

A. Plan cost management
B. Estimate costs
C. Determine budget
D. Control costs

Answer 84

D. Control costs

Mary is performing the control costs process to influence the factors that create changes.

Question 85

You are using EVM to forecast future performance. You will rely on the optimistic estimate at completion (EAC) to estimate the expected total cost of a project deliverable. An optimistic Estimate at Completion (EAC) is calculated as:

A. EAC = BAC/CPI
B. EAC=AC+ [(BAC - (CPI x SPI]
C. EAC=AC+ BAC-EV
D. EAC = AC + new ETC

Answer 85

A. EAC = BAC/CPI

An optimistic or typical can be calculated by EAC = BAC/CPI