6 - Cost Management - Questions 2

Tutorial (6)
Cost Management
1. A project's financial management reserve is identified in which process:
A. Estimate Costs
B. Determine Budget
C. Control Costs
D. Estimate Activity Resources
2. Your Vice President has asked you what the Estimate at Completion is going to be
for a small project you are working on. You were given a budget of $30,000, and
to date you have spent $20,000 but only completed $10,000 worth of work. You
are sure that the future work will be accomplished at the planned rate.
A. 40,000 $
B. 30,000 $
C. 60,000 $
D. 10,000 $
3. The Earned Value Management methodology can be used as a means to:
A. Forecast future performance based on past performance

B. Calculate the number of days left in the project
C. Calculate the value provided to the customer
D. Calculate the profitability of the project
4. One common way to compute estimate at completion (EAC) is to take the

budget at completion (BAC) and:
A. Divide by SPI.
B. Multiply by SPI.
C. Multiply by CPI.
D. Divide by CPI.
5. Estimate at completion (EAC) is a periodic evaluation of:
A. The cost of work completed.

B. The value of work performed.
C. The anticipated total cost at project completion.
D. What it will cost to finish the job.
Cost Management Page 1

6. If earned value (EV) = 350, actual cost (AC) = 400, planned value (PV) = 325, what
is cost variance (CV)?
A. 350
B. -75
C. 400
D. -50
7. A cost performance index (CPI) of 0.89 means:
A. At this time, we expect the total project to cost 89 percent more than
planned.
B. When the project is completed we will have spent 89 percent more than
planned.
C. The project is only progressing at 89 percent of the rate planned.
D. The project is only getting 89 cents out of every dollar invested.
8. A schedule performance index (SPI) of 0.76 means:
A. You are over budget.

B. You are ahead of schedule.
C. You are only progressing at 76 percent of the rate originally planned.
D. You are only progressing at 24 percent of the rate originally planned.
9. The customer starts to have cash flow problems. The customer notifies the project
manager that there will be limits on when fund will be available for the project.
The CPI is currently 1.02 and the estimate to complete is US $927,000.0. If the
project manager performs funding limit reconciliation, there will also MOST likely
be a change in the:
A. Project communication plan

B. Number of change request
C. Cost baseline
D. Project schedule
10. It is expensive to lease office space for your international project in cities around
the world. Office space can cost approximately $80 per square foot in Dubai.
And it can cost approximately $50,000 per square meter in Shanghai. These
“averages” can help you to determine how much it will cost to lease office space
in these cities based on the amount of space leased. These estimates are
examples of:
A. Variance analysis
B. Parametric estimating
C. Bottom-up estimating
D. Reserve analysis

11. The cost contingency reserve should be:
A. Hidden to prevent management from disallowing the reserve.

B. Added to each activity to provide the customer with a shorter critical
path.
C. Maintained by management to cover cost overruns.
D. Added to the base costs of the project to account for risks.
12. You are responsible for preparing a cost estimate for a large project. You decide
to prepare a bottom-up estimate because your estimate needs to be as
accurate as possible. Your first step is to
A. Locate a computerized tool to assist in the process.

B. Use the cost estimate from a previous project to help you prepare this
estimate.
C. Identify and estimate the cost for each work package or activity.
D. Consult with subject matter experts and use their suggestions as the basis
for your estimate.
13. As of the fourth month on a project, accumulative planned expenditures were

$100,000. Actual expenditures totaled $120,000. How is the project doing?
A. It is ahead of schedule.
B. It is in trouble because of a cost overrun.
C. It will finish within the original budget.
D. The information is insufficient to make an assessment.
14. Which of the following calculations CANNOT be used to determine EAC?
A. EV to date plus the remaining project budget.

B. Accepts actual costs and predicts future ETC work will be done at the
budgeted rate.
C. Assumes what the project has experienced can be expected to
continue.
D. ETC will be performed at an efficiency rate considering both the CPI and
SPI.
15. You are managing a project laying underwater fiber optic cable. The total cost of
the project is $52/meter to lay 4 km of cable across a lake. It’s scheduled to take
8 weeks to complete, with an equal amount of cable laid in each week. It’s
currently week 5, and your team has laid 1,800 meters of cable so far. What is the
SPI of your project?
A. 1.16
B. 1.08
C. 0.92
D. 0.72

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Tutorial (6)

1. A project's financial management reserve is identified in which process:

3. The Earned Value Management methodology can be used as a means to:

A. Forecast future performance based on past performance

4. One common way to compute estimate at completion (EAC) is to take the

5. Estimate at completion (EAC) is a periodic evaluation of:

A. The cost of work completed.

Cost Management Page 1

7. A cost performance index (CPI) of 0.89 means:

8. A schedule performance index (SPI) of 0.76 means:

A. You are over budget.

A. Project communication plan

Cost Management Page 2

A. Hidden to prevent management from disallowing the reserve.

A. Locate a computerized tool to assist in the process.

13. As of the fourth month on a project, accumulative planned expenditures were

14. Which of the following calculations CANNOT be used to determine EAC?

A. EV to date plus the remaining project budget.

Cost Management Page 3

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