Exit Test for Project Cost Management

Entry Test Total Questions: 18

1. You are managing a multi-million dollar project that is a joint venture

between your company and another organization. You have
repeatedly tried to get the contract and the project charter finalized
between the two organizations, but there has been a great deal of
quibbling over language and details. The project's scope has been
expanding, costs have been increasing, and the schedule has been
regularly lengthening. You learn very suddenly that the project has
been cancelled, because the other organization withdrew its share of
the funding for the project. What is the MOST likely reason that this
occurred?
a. Failure to understand the budgetary process
b. inadequate scope management
c. Lack of executive commitment
d. Poorly done initial cost-benefit analysis

2. To accommodate a new project in your department, you need to move

resources from one project to another. Because your department is
currently working at capacity, moving resources will inevitably delay
the project from which you move the resources. You should move
resources from which of the following projects?
a. Project A with a benefit cost ratio of .8, no project charter and four resources
b. Project B with a net present value of $60,000, 12 resources, and variable costs
between $1,000 and $2,000 per month
c. Project C with an opportunity cost of $300,000, no project control plan, and an
internal rate of return of 12%
d. Project D with indirect costs of $20,000 and 13 resources

3. If EV = 350, AC = 400, PV = 325, what is CV?

a. 350
b. negative 75
c. 400
d. negative 50

4. The BEST method to control costs is to:

a. estimate at the beginning of the project and then check costs against the
baseline.
b. estimate during the execution of the project and then manage each task to the
budget.
c. estimate during planning and then re-estimate before each task begins.
d. estimate during the execution of the project and have management confirm the
estimates.

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5. Estimate at complete can be computed by taking the budget at

complete and:
a. dividing it by the schedule performance index.
b. multiplying it by the schedule performance index.
c. multiplying it by the cost performance index.
d. dividing it by the cost performance index.

6. A project manager has run into cost difficulties. The scope of work
must be completed, but at less cost. The project manager should:
a. change the depreciation method for the equipment used on the project.
b. perform a value analysis.
c. evaluate benefit cost ratios.
d. recover some sunk costs.

7. A definitive estimate is:

a. a level of estimating that can be achieved without the team's help.
b. created during initiation.
c. within a range of -10% to +25% of actual.
d. the most expensive to create.

8. You have a choice of four ongoing projects that you can take over as
project manager. Project 1 has a BCR of 1.4, is a high priority project
and has a critical path length of 16 months. Its CPI is 1.2. Project 2
has an SPI of 1.1, is using three critical resources, has a low priority
and has a BCR of 1.1. Project 3 has a CPI of 1.2, and SPI of .893, a
BCR of 1.6 and a critical path length of 19 months. Project 4 has a
CPI of .82, a task with 33 days of float, a resource that is hard to get
assigned to task L and a priority of keeping cost low. Based on the
above, which project would you prefer to take over?
a. Project 1
b. Project 2
c. Project 3
d. Project 4

9. You are a project manager working on a project that requires 100

widgets to be built in five weeks. You have just begun week three,
with an overall budget of $10,000. To date, you have spent $2,000
with 40 widgets successfully built. What does the cost variance tell
you in this circumstance?
a. The project is proceeding at 100% of the expected rate.
b. The project is $2000 under budget.

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c. The project is on budget.

d. The project is getting $2 of work for every dollar spent.

10. If EV is $300,000, AC is $350,000, and PV is $375,000, what does the

schedule performance index indicate?
a. You are only progressing at 86% of the rate originally planned.
b. You are progressing at 125% of the rate originally planned.
c. You are progressing at 116% of the rate originally planned.
d. You are only progressing at 80% of the rate originally planned

11. You have four projects from which to choose one. Project A is being
done over a six year period and has a NPV of $70,000. Project B is
being done over a three year period and has a NPV of $30,000.
Project C is being done over a five year period and has an NPV of
$40,000. Project D is being done over a one year period and has an
NPV of $60,000. Which project would you choose?
a. Project A
b. Project B.
c. Project C
d. Project D

12. A customer has requested a change that requires you to obtain new
equipment. You need to decide whether to lease or buy the equipment.
The daily lease cost is $150. The cost of purchasing the item is
$2,000 for the investment cost and $50 for the daily cost. You will
need to use the item for about 12 days. What should you do?
a. Lease it.
b. Buy it.
c. Ask the customer for a $2,000 change order.
d. Lease it for only seven days to try to save cost.

13. The previous project manager informed management that all was well
on the project. However, the new project manager discovers that the
project has a CPI of .89. What does this mean?
a. At this time, it is expected that the total project will take 89% longer than
planned.
b. When the project is completed, 89% more than planned will have been spent.
c. The project is only progressing at 89% of what was planned.
d. The project is only getting 89 cents out of every dollar invested.

14. A new store development project requires the purchase of various

equipment, machinery and furniture. The department responsible for
the development recently centralized its external purchase process and

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standardized its new order system. In which document can these new
procedures be found?
a. Project scope statement
b. WBS
c. Staff management plan
d. Organizational policies

15. Company ABC is evaluating three consulting companies to find a

consultant to perform professional services. They request information
on how the three consulting companies allocate fringe benefits to their
clients. What type of cost is Company ABC asking about?
a. Direct
b. Fixed
c. Indirect
d. Variable

16. You are a project manager for a small construction project. Your
project was budgeted for $72,000 over a six week period. As of today,
you've spent $22,000 of your budget to complete work that you
originally expected would cost $24,000. According to your schedule,
you should have spent $30,000 by this point. Based on these
circumstances, your project could be BEST described as:
a. under budget.
b. over budget.
c. On budget.
d. not having enough information provided.

17. A project manager is working with management to create the project

estimate. During the initiation phase, what level of accuracy should
the estimate have?
a. -25% to +75%
b. -10% to +25%
c. -35% to + 75%
d. -10% to +10%

18. Which of the following are inputs to estimating?

a. An estimate from management, a work breakdown structure and a project plan
b. An estimate from management, a risk assessment and a team
c. A team, a work breakdown structure and historical records
d. A team, a project plan and a risk assessment

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