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Questions on Project Cost Management

perparepm is thankful to Neeraj Kanojia for providing these questions. 1. Reserve Analysis a technique NOT used in: A. Cost Estimate Costs B. Determine Budget C. Control Costs D. Estimate Activity Duration

2. A Project with a total funding of $100,000 finished with a BAC value of $95,000. What term can BEST describe the difference of $5,000? A. Cost Variance B. Management Overhead C. Management Contingency Reserve D. Schedule Variance

3. Project Cost Management Plan is created as a part of: A. Develop Project Management Plan process B. Estimate Costs process C. Determine Budget process D. Control Costs process

4. A particular project in the domain of civil construction requires that every on-site worker be insured. Which of the following inputs BEST conveys this requirement to the Estimate Costs process so that the insurance cost is estimated and subsequently budgeted: A. Enterprise Environmental Factor

B. Organizational Process Assets C. Project Scope Statement D. Project Management Plan

5. _____________ is not a part of the project cost baseline but is included in the project budget: A. Activity Cost Contingency Reserve B. Management Contingency Reserve C. Management Overheads D. Project Management Planing

6. ___________ is not part of the Earned Value calculations. A. Known Unknowns B. Unknown Unknowns C. Project Budget D. Amount of work completed

7. What is the BEST way to make an accurate forecasting of ETC? A. Manual Forecasting of cost of remaining work. B. BAC EV C. (BAC EV)/CPI D. EAC - AC

8. If the Earned Value is equal to Actual Cost, it means: A. Project is on budget and on schedule B. Schedule Variance Index is 1 C. There is no schedule variance D. There is no cost variance

9. Trend Analysis is BEST described as: A. Analyzing performance of similar projects over time B. Examining project performance over time C. Calculating Earned Value D. Calculating Cost Variance

10. Which of the following is not done as part of Performance Measurements? A. Calculating Planned Value B. Calculating Earned Value C. Calculating ETC D. Calculating Cost Variance

11. Management Contingency Reserve is identified in which process: A. Estimate Activity Duration B. Estimate Costs C. Determine Budget D. Estimate Activity Resources

12.

Project Cost Management Plan is created as a part of: A. Develop Project Management Plan process B. Estimate Cost process C. Determine Budget process D. Control Cost process

13. A particular project in the domain of civil construction requires that every on-site worker be insured. Which of the

following inputs BEST conveys this requirement to the Cost Estimation process so that the insurance cost is estimated and subsequently budgeted? A. Enterprise Environmental Factor B. Organizational Process Assets C. Project Scope Statement D. Project Management Plan

14.

Analogous Cost Estimating is A. Generally Accurate B. Generally less accurate C. Uses statistical relationship between historical data and other variables D. Bottom-up estimating

15.

Which is NOT true about Analogous Cost Estimating A. Uses Expert Judgment B. Used when reference projects are similar C. Does not require high expertise on part of estimators as estimates are based on previous projects D. Useful in early phases of the project

Answers

1. C 2. C. At completion the BAC represents the revised Cost baseline for the project. Management reserves are not part of the cost baselines but they are part of the Project Funding requirements. Therefore the difference between the Cost Baseline and Funding requirement at Project completion is Management Contingency Reserve.

3. A 4. C 5. B

6. B 7. A 8. D. EV AC = Cost Variance. Therefore if EV = AC, the Cost Variance is zero (i.e. Project is on budget (but not necessarily on schedule, as there is not enough information on schedule variance) 9. B 10. B

11. C 12. A. Note that there is no separate process in the Project Cost Estimation knowledge area to develop a cost management plan. 13. C. Project Scope Statement usually contains assumptions and constraints. 14. B 15. C

(1) Which type of project cost estimate is the most accurate? 1. Preliminary 2. Definitive 3. Order of magnitude 4. Conceptual Answer:B

(2)Which of the following type of contracts is most preferable to the contractor doing the project work? 1. Cost plus fixed fee 2. Fixed price 3. Fixed price plus incentive free 4. B and C Answer: A (3)To assist in budget control, it is suggested that the estimate occur at the _____ ____ ______ level of the WBS 1. Highest 2. Lowest 3. Major work effort 4. Third Answer: B (4)Cost Variance (CV) is which of the following equations? 1. CV = BCWP - BCWS 2. CV = BCWP - ACWP 3. CV = SV / BCWS 4. A and c Answer:B (5)Cost budgeting can be best described by which of the following? 1. The process of developing the future trends along with the assessment of probabilities, uncertainties, and inflation that could occur during the project 2. The process of assembling and predicting costs of a project over its life cycle

3. The process of establishing budgets, standards, and a monitoring system by which the investment cost of the project can be measured and managed 4. The process of gathering, accumulating, analyzing, reporting, and managing the costs on an on-going basis Answer:C (6)Which of the following is a direct project cost? 1. Lighting and heating for the corporate office 2. Workers Compensation insurance 3. Piping for an irrigation project 4. A and B Answer: C (7)Cost controls can be best described by which of the following? 1. The process of developing the future trends along with the assessment of probabilities, uncertainties, and inflation that could occur during the project 2. The process of assembling and predicting costs of a project over its life cycle 3. The process of assembling and predicting costs of a project over its life cycle 4. The process of gathering, accumulating, analyzing, reporting, and managing the costs on an on-going basis. Answer: D (8)The BCWS = $250, the ACWP = $350, and the BCWP = $200. Calculate the Cost Variance. 1. -$150 2. $150 3. -$50

4. $50 Answer: A (9)One of the types of cost estimation is Order of Magnitude. This estimate: 1. is performed when detailed information is available 2. is performed when detailed information is available 3. is used in the beginning of the project conceptualization 4. Uses mostly information from past projects 5. Usually made before the project is designed, and must therefore rely on the cost data of similar projects built in the past. Answer: E (10)Life Cycle Costing is a term that is: 1. used when making decisions between alternatives 2. employed principally by the government 3. typically used in the construction industry 4. not used within the government 5. A and B Answer: E