Project Cost Management Quiz Project Cost Management Quiz 1 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.You are using earned value progress reporting for your current project in an effort to teach your software developers the benefits of earned value. You plan to display project results on the PMO dashboard so that the team knows how the project is progressing. Use the current status, listed below, to answer questions 1 through 4:PV = $2,200EV = $2,000AC = $2,500BAC = $10,0001. According to earned value analysis, the SV and status of the project described above is— a. –$300; the project is ahead of schedule b. +$8,000; the project is on schedule c. +$200; the project is ahead of schedule d. –$200; the project is behind schedule d. –$200; the project is behind scheduleSV is calculated as EV – PV (in this case, $2,000 – $2,200). It is the amount by which the project is ahead or behind the planned delivery date at a given point of time. If it is positive, it shows the project is ahead of schedule; if it is neutral, it is on schedule. In this example, there is a negative variance means that the work completed is less than what was planned for at that point in the project, and it is behind schedule 2 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.You are using earned value progress reporting for your current project in an effort to teach your software developers the benefits of earned value. You plan to display project results on the PMO dashboard so that the team knows how the project is progressing. Use the current status, listed below, to answer questions 1 through 4:PV = $2,200EV = $2,000AC = $2,500BAC = $10,0002. What is the CPI for this project, and what does it tell us about cost performance thus far? a. 0.20; actual costs are exactly as planned b. 0.80; actual costs have exceeded planned costs c. 0.80; actual costs are less than planned costs d. 1.25; actual costs have exceeded planned costs b. 0.80; actual costs have exceeded planned costsCPI is calculated as EV/AC (in this case, $2,000/$2,500). EV measures the budgeted dollar value of the work that has actually been accomplished, whereas AC measures the actual cost of getting that work done. If the two numbers are the same, work on the project is being accomplished for exactly the budgeted amount of money (and the ratio will be equal to 1.0). If actual costs exceed budgeted costs (as in this example), AC will be larger than EV, and the ratio will be less than 1.0. CPI is also an index of efficiency. In this example, an index of 0.80 (or 80 percent) means that for every dollar spent on the project only 80 cents worth of work is actually accomplished. At this time, the project is over the planned costs 3 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.You are using earned value progress reporting for your current project in an effort to teach your software developers the benefits of earned value. You plan to display project results on the PMO dashboard so that the team knows how the project is progressing. Use the current status, listed below, to answer questions 1 through 4:PV = $2,200EV = $2,000AC = $2,500BAC = $10,0003. The CV for this project is— a. 300 b. –$300 c. 500 d. –$500 d. –$500CV is calculated as EV – AC (in this case, $2,000 – $2,500). A negative CV means that accomplishing work on the project is costing more than was budgeted. CV measures the amount of budget surplus or deficit at a point in time, and if it is positive, it is under the planned costs; neutral means it is on the planned costs. 4 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.You are using earned value progress reporting for your current project in an effort to teach your software developers the benefits of earned value. You plan to display project results on the PMO dashboard so that the team knows how the project is progressing. Use the current status, listed below, to answer questions 1 through 4:PV = $2,200EV = $2,000AC = $2,500BAC = $10,0004. What is the EAC for this project, and what does it represent? a. $12,500; the revised estimate for total project cost (based on performance thus far) b. $10,000; the revised estimate for total project cost (based on performance thus far) c. $12,500; the original project budget d. $10,000; the original project budget a. $12,500; the revised estimate for total project cost (based on performance thus far)EAC is calculated as BAC/CPI (in this case, $10,000/0.80). It is now known that the project will cost more than the original estimate of $10,000. The project has been getting only 80 cents worth of work done for every dollar spent (CPI), and this information has been used to forecast total project costs. This approach assumes that performance for the remainder of the project will also be based on a CPI of 0.80. The EAC is the expected total cost of completing all work expressed as the sum of the actual cost and the estimate to complete (ETC). Recognize there are three common ways to calculate the EAC based on different assumptions and learn when to use each method. 5 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.5. You have now prepared your cost management plan so now you are preparing your project’s cost estimate. You decided to use analogous estimating. Analogous estimating— a. Supports top-down estimating b. Calculates costs based on project parameters c. Produces higher levels of accuracy d. Indicates a range of estimates a. Supports top-down estimatingA frequently used method of Estimate Costs, the analogous technique relies on experience and knowledge gained to predict future events. This technique provides planners with some idea of the magnitude of project costs but generally not within ±10%. It is considered as a gross value estimating technique, and it is generally less costly and less time consuming than other techniques but also is generally less accurate. Sometimes it is adjusted for project complexities. It is more reliable when the previous projects are similar in fact, and when the project team members doing the estimating have the needed expertise 6 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.6. While cost estimates are the main output of the Estimate Costs process, not to be overlooked is— a. Updates to the cost management plan b. Assumptions log c. Updates to the project schedule d. Cost baseline b. Assumptions logThe Estimate Costs process includes updates to three project documents as an output of this process. One is the assumptions log as during this project, new assumptions may be made, new constraints may be identified, and existing constraints or assumptions may be reviewed and changed; therefore, the assumptions log is updated with this new information. Other documents to update are the lessons learned register and the risk register 7 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.7. You must consider direct costs, indirect costs, overhead costs, and general and administrative costs during cost estimating. An example of an indirect cost is— a. Salary of the project manager b. Subcontractor expenses c. Materials used by the project d. Electricity d. ElectricityDirect costs are incurred for the exclusive benefit of a project (for example, salary of the project manager, materials used by the project, and subcontractor expenses). Indirect costs, also called overhead costs, are allocated to a project by its performing organization as a cost of doing business. These costs cannot be traced to a specific project and are accumulated and allocated equitably over multiple projects (for example, security guards, fringe benefits, and electricity). Other examples of costs to estimate are cost of financing including any interest if needed, inflation allowance, exchange rates, or a contingency reserve. Costs are estimated for all resources to be charged to the project. 8 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.8. If the cost variance is the same as the schedule variance and both numbers are greater than zero, then— a. The cost variance is due to the schedule variance b. The variance is favorable to the project c. The schedule variance can be easily corrected d. Labor rates have escalated since the project began b. The variance is favorable to the projectA positive schedule variance indicates that the project is ahead of schedule. A positive cost variance indicates that the project has incurred less cost than estimated for the work accomplished; therefore, the project is under budget and ahead of schedule. The CV is calculated as EV-AC, and the SV is calculated as the EV-PV 9 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.9. You are responsible for preparing a cost estimate for a large World Bank 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 c. Identify and estimate the cost for each work package or activityBottom-up estimating is a method of estimating a component of work. It is derived by first estimating the cost of the individual work packages or activities to the greatest level of specified detail. Then this detailed cost is summarized or ’rolled-up’ to higher levels for reporting and tracking. The cost and accuracy are influenced by the size and other attributes of the activity or the work package. It is a tool and technique in the Estimate Costs process 10 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.10. Management has grown weary of the many surprises, mostly negative, that occur on your projects. In an effort to provide stakeholders with an effective performance metric, you will use the to-complete performance index (TCPI). Its purpose is to— a. Determine the schedule and cost performance needed to complete the remaining work within management’s financial goal for the project b. Determine the cost performance needed to complete the remaining resources to meet management’s financial goal c. Predict final project costs d. Predict final project schedule and costs b. Determine the cost performance needed to complete the remaining resources to meet management’s financial goalThe TCPI takes the value of work remaining and divides it by the value of funds remaining to obtain the cost performance factor needed to complete all remaining work according to a financial goal set by management. There are two methods to calculate the TCPI, and you should be familiar with each one and when it should be used. In this example, the TCPI is calculated by (BAC-EV)/(BAC-AC). If it is greater than one, it is harder to complete; if it is 1, it is the same to complete, and less than one means it is easier to complete. It thus measures the cost performance that must be achieved with the remaining resources to meet a specified management goal and is expressed as a ratio of the cost to finish the outstanding work to the available budget. If it is obvious the BAC is no longer viable, the project manager then considers the forecasted EAC. Once approved, the EAC may replace the BAC in the formula 11 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.11. If operations on a work package were estimated to cost $1,500 and finish today but, instead, have cost $1,350 and are only two-thirds complete, the cost variance is— a. $150 b. –$150 c. –$350 d. –$500 c. –$350CV is calculated by EV – AC, or $1,500(2/3) – $1,350 = –$350. It is used to determine the amount of budget deficit (as in this example) or surplus at any given point in time. In this example, the project is over the planned cost; a positive value indicates it is under the planned costs, while a neutral value shows it on the planned costs 12 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.12. When you review cost performance data on your project, different responses will be required depending on the degree of variance or control thresholds from the baseline. For example, a variance of 10 percent might not require immediate action, whereas a variance of 100 percent will require investigation. A description of how you plan to manage cost variances should be included in the— a. Cost management plan b. Change management plan c. Performance measurement plan d. Variance management plan a. Cost management planThe management and control of costs focuses on control thresholds or variance thresholds. Certain variances are acceptable, and others, usually those falling outside a particular range, are unacceptable. They are typically expressed as percentage deviations from the baseline plan. The actions taken by the project manager for variances are described in the cost management plan, which is the output of the Plan Cost Management Plan process 13 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.13. As of the fourth month on the Acme project, cumulative planned expenditures were $100,000. Actual expenditures totaled $120,000. How is the Acme 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 d. The information is insufficient to make an assessment.The information provided tells us that, as of the fourth month, more money has been spent than was planned. However, we need to know how much work has been completed to determine how the project is performing. In earned value terms, we are missing the EV or the measure of work expressed in terms of the budget authorized for the work. It is the budget associated for the work that has been completed. The objective is to establish progress measurement criteria for each WBS component to measure work in progress. EV then is monitored incrementally to determine current status and cumulatively to determine the long-term performance trends 14 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.14. On your project, you need to assign costs to the time period in which they are incurred. To do this, you should— a. Identify the project components so that costs can be allocated b. Use the project schedule as an input to determine the budget c. Prepare a detailed and accurate cost estimate d. Prepare a cost performance plan b. Use the project schedule as an input to determine the budgetAccurate project performance measurement depends on accurate cost and schedule information. The project schedule includes planned start and finish dates for all activities, milestones, and work packages. and control accounts. This information is used to aggregate costs to the calendar period for which the costs are planned to be incurred. The project schedule is an input under project documents in the Determine Budget process 15 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.15. You have a number of costs to track and manage because your project is technically very complex. They include direct costs and indirect (overhead) costs. You have found that managing overhead costs is particularly difficult because they— a. Are handled on a project-by-project basis b. Represent only direct labor costs c. Represent only equipment and materials needed for the project d. Can be included in the activities or at higher levels d. Can be included in the activities or at higher levelsOverhead or indirect costs include costs such as rent, insurance, or heating, which pertain to the project as a whole. These costs may be included in the activities or at a higher level if they are part of the project’s cost estimate. The amount of overhead to be added to the project is frequently decided by the performing organization and may be beyond the control of the project manager 16 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.16. If you want to calculate the ETC based on the assumption that work is proceeding as planned, the remaining work can be calculated by which of the following formulas? a. ETC = BAC – EV b. ETC = (BAC – EV)/CPI c. ETC = AC + EAC d. ETC = EAC – AC d. ETC = EAC − ACThe ETC is the expected cost to finish the remaining work. This formula is used if the work is performing as planned. Otherwise you may need to re-estimate the remaining work from the bottom up using the formula of ETC = Re-estimate 17 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.17. You receive a frantic phone call from your vice president who says she is going to meet with a prospective client in 15 minutes to discuss a large and complex project. She asks you how much the project will cost. You quickly think of some similar past projects, factor in a few unknowns, and give her a number. You provided which of the following type of estimate— a. Definitive b. Budget c. Rough-order-of-magnitude d. Detailed c. Rough-order-of-magnitudeA rough-order-of-magnitude estimate has an accuracy range of –25% to 75% and is made without detailed data. These estimates are when the project is in the initiation stage, but the cost estimates should be reviewed and refined during the project to reflect additional detail as the accuracy of the estimates will increase. Later in the project, for example definitive estimates can narrow the range of accuracy to −5% to +10% 18 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.18. Your approved cost baseline has changed because of a major scope change on your project. Your next step should be to— a. Estimate the magnitude of the scope change b. Issue a change request c. Document lessons learned d. Execute the approved scope change b. Issue a change requestChange requests are an output of the Control Costs process. Before a revised cost baseline leading to a budget update can be prepared, it is necessary to issue a change request. These change requests then are reviewed and processed through the Perform Integrated Change Control process. Change requests are an output of the Control Costs process and may be needed to other components in the project management plan 19 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.19. You have set aside a certain portion of your project for contingency and management reserves. You want to use these reserves to cover the costs of risk responses or other contingencies. On your project, you have had some opportunities that resulted, which means you should— a. Add these opportunities to your reserves for later risk responses b. Use value analysis c. Remove them from the contingency fund but maintain the management reserves d. Use value engineering a. Add these opportunities to your reserves for later risk responsesReserve analysis is a tool and technique in the Control Costs process. Reserve analysis is used to monitor and control the status of contingency and management reserves for the project to see if they are still needed or if additional funds are required. However, the question notes opportunities, which tend to result in cost savings. When this is the case, funds may be added to the contingency reserve amount or taken from the project as a margin/profit 20 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.20. There are many useful EVM metrics, but the most critical is— a. CPI b. EAC c. TCPI d. VAC a. CPIThe CPI has been proven to be an accurate and reliable forecasting tool. It is a measure of the cost efficiency of budgeted resources and is considered to be the most critical earned value measurement metric and measures the cost efficiency for the work completed. Its indices are useful for providing a basis to estimate project cost and schedule outcomes 21 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.21. The approved, integrated scope-schedule-cost plan for project work is— a. Project budget baseline b. Performance measurement baseline c. Level-of-effort control accounts d. Expressed in the To Complete Performance Index b. Performance measurement baselineThe performance measurement baseline is the approved plan for the project work, which is used to compare actual project execution. From it, deviations are measured for management control. It integrates scope, schedule, and cost parameters. It is an output of the Control Costs process as changes to it are incorporated in response to approved changes in scope, schedule performance, or cost control. If these variances are so severe, then a change request is used to revise the performance measurement baseline, so it is more realistic 22 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.22. It is expensive to lease office space in cities around the world. Office space can cost approximately USD $150 per square foot in Tampa, Florida. And it can cost approximately ¥50,000 per square meter in Tokyo. These “averages” can help a person 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 b. Parametric estimatingParametric estimating involves using statistical relationships between historical data and other variables, such as square footage as in this example, to calculate a cost estimate for project work. This approach can produce higher levels of accuracy depending on the sophistication and underlying data in the model. Parametric estimates may be used for the entire project or for parts of it in conjunction with other estimating techniques 23 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.23. Your project manager has requested that you provide him with a forecast of project costs for the next 12 months. He needs this information to determine if the budget should be increased or decreased on this major construction project. In addition to the usual information sources, which of the following should you also consider? a. Cost estimates from similar projects b. WBS c. Project schedule d. Costs that have been authorized and incurred d. Costs that have been authorized and incurredThese costs are part of work performance data about project progress. Work performance data are an input to the Control Costs process. In addition, these data include costs that have been invoiced and paid. If it is determined that the budget requires an update, knowledge about the actual costs spent to date is required, and any budget changes are approved according to the Perform Integrated Change Control process 24 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.24. There are a number of different earned value management rules of performance measurement that can be established as part of the cost management plan. One of them is the— a. Control account b. Formulas to determine the ETC c. Risk thresholds d. Activity attributes a. Control accountRules of earned value performance measurement are part of the cost management plan and may (1) define the points in the WBS where measurement of control accounts will be performed; (2) establish the EV measurement techniques; and (3) state specific tracking methods and EV equations for calculating the EAC forecasts to provide a validity check on the bottom-up EAC 25 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.25. Which of the following calculations CANNOT be used to determine EAC? a. EAC = ETC − AC b. EAC = BAC/CPI c. EAC = AC + (BAC − EV) d. EAC = AC + (BAC − EV)/(CPI × SPI) a. EAC = ETC - ACEAC is the expected total cost of completing all work expressed as the sum of the actual cost to date and the estimate at completion. There are four methods to compute it based on different assumptions. If the CPI is expected to be the same for the remainder of the project use EAC = BAC/CPI or answer b. If the initial plan no longer is valid, use EAC = AC + Bottom-up ETC or answer c. If both the CPI and the SPI influence the remaining work, use EAC = AC + (BAC − EV)/(CPI × SPI) or answer d 26 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.26. Typically, the statement “no one likes to estimate, because they know their estimate will be proven incorrect” is true. However, you have been given the challenge of estimating the costs for your nuclear reactor project. You are considering a variety of items as you incorporate the cost of financing, which is in the— a. Schedule b. Financial management plan c. The amount of indirect costs d. The benefit delivery plan a. ScheduleThe project schedule is an input to the Estimate Costs process as part of project documents. The schedule is significant as it includes the type, quantity, and amount of time the team and physical resources will be used on the project. The duration estimates effect cost estimates when resources are charged one unit of time and when there are seasonal fluctuations in costs. It also provides useful information for projects that incorporate the cost of financing including any interest charged 27 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.27. By reviewing cumulative cost curves, the project manager can monitor— a. EAC b. PV, EV, and AC c. CVs and SVs d. CPI and SPI b. PV, EV, and ACCumulative cost curves, or S-curves, enable the project manager to monitor the three parameters of planned value, earned value, and actual cost and report on a period-by period basis such as weekly or monthly or on a cumulative basis 28 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.28. Control accounts— a. Are charge accounts for personnel time management b. Summarize project costs at level 2 of the WBS c. Identify and track management reserves d. Represent the basic level at which project performance is measured and reported d. Represent the basic level at which project performance is measured and reportedThe points in the WBS where measurements of the control accounts will be performed are part of rules of performance measurement in the cost management plan. Control accounts also are used as the WBS component to link to the project’s cost accounting system as stated in the section of this plan on organizational procedures links. They represent a management control point where scope, budget, actual costs, and schedule are integrated and compared to earned value for performance measurement 29 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.29. Assume you are holding performance review meetings on your project to assess schedule activity and work packages over-running or under-running the budget and to determine any estimated funds needed to complete work in progress. You also are using earned value. You are preparing reports for your stakeholders as they want regular cost forecasts. This means they are interested in— a. The Estimate at Completion b. CPI and SPI c. To Complete Performance Index d. Variance analysis a. The Estimate at CompletionCost forecasts are an output of the Control Costs process. Either a calculated Estimate at Completion or a bottom-up EAC value is documented and communicated to stakeholders. The EAC is prepared as the project progresses to see if it is different from the budget at completion based on project performance 30 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.30. Overall cost estimates must be allocated to individual activities to establish the cost performance baseline. In an ideal situation, a project manager would prefer to prepare estimates— a. Before the budget is complete b. After the budget is approved by management c. Using a parametric estimating technique and model specific for that project type d. Using a bottom-up estimating technique a. Before the budget is completeOften project cost estimates are prepared after budgetary approval is provided. However, activity cost estimates should be prepared before the budget is complete. Cost estimates are a project document that are an input to the Determine Budget process. These cost estimates are for each activity within a work package that are aggregated for a cost estimate for the work package 31 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.31. One way to engage team members to improve estimate accuracy is to— a. Hold a focus group b. Use vendor bid analysis c. Use decision making d. Use a Delphi technique c. Use decision makingIn Estimate Costs, one tool and technique is decision making. In it, voting is used as an assessment process with multiple alternatives with an expected outcome in the form of future actions. These techniques help engage team members to improve estimating accuracy and to promote commitment to the emerging estimates 32 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.32. Assume you have used reserve analysis as a tool and technique in Control Costs. However, during your project risk identification and subsequent analysis of the identified risks was ongoing. In fact you had a risk expert on your team. This means you may need to— a. Use management reserve b. Rebaseline your cost estimate c. Perform an assumptions analysis d. Request additional contingency reserves for your budget d. Request additional contingency reserves for your budgetReserve analysis monitors the status of contingency and management reserves to see if they are still needed or if additional reserves need to be requested. The reserves may be used as planned to cover risk response costs or for other contingencies. In this situation risk identification and analysis are ongoing, and they may indicate a need to request additional reserves 33 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.33. Increased attention to return on investment (ROI) now requires you to re-estimate the costs for your project. When you looked at how costs were first estimated, you realized an order-of-magnitude estimate was prepared, which was never refined. Therefore, now you are estimating costs from the beginning. As you are preparing a new smart TV along with an automated home as the products of your project, you realize market conditions should be reviewed because— a. A competitor may be working on the same product b. Global supply and demand conditions can influence resource costs c. Resource cost data are available in your company’s knowledge transfer system d. Expert judgment can assist in determining when costs exceed profit b. Global supply and demand conditions can influence resource costsMarket conditions, along with published commercial information, and exchange rates and inflation are enterprise environmental factors, an input to Estimate Costs. Market conditions describe the products, services, and results available in the market and who provides them along with any terms and conditions. As well, regional and global supply and demand conditions can greatly influence resource costs, assisting in the estimating process 34 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.34. A revised cost baseline may be required in cost control when— a. CVs are severe, and a realistic measure of performance is needed b. Updated cost estimates are prepared and distributed to stakeholders c. Corrective action must be taken to bring expected future performance in line with the project plan d. EAC shows that additional funds are needed to complete the project even if a scope change is not needed a. CVs are severe, and a realistic measure of performance is neededAfter the CVs exceed certain ranges, the original project budget may be questioned and changed as a result of new information. Changes to the cost baseline are incorporated in response to approved changes in scope, activity resources, or cost estimates 35 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.35. As project manager, you identified a number of acceptable tolerances as part of your earned value management system. During execution, some “unacceptable” variances occurred. After each “unacceptable” variance occurred, a best practice is to— a. Update the budget b. Prepare a revised cost estimate c. Adjust the project plan d. Document lessons learned d. Document lessons learnedLessons learned but not documented are “lessons lost.” The lessons learned register will help current project members, as well as people on future projects, make better decisions. Accordingly, the reasons for the variance, the rationale supporting the corrective action, and other related informationmust be documented. Further, the techniques that were effective in maintaining the budget, variance analysis, earned value analysis, forecasts, and corrective actions to respond to cost variance are documented 36 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.36. Assume that the project cost estimates have been prepared for each activity and the basis of these estimates has been determined. Now, as the project manager for your nutrition awareness program in your hospital, you are preparing your budget. Because you have estimates for more than 1,200 separate activities, you have decided to first— a. Aggregate these estimates by work packages b. Aggregate these estimates by control accounts to facilitate the use of earned value management c. Use the results of previous projects to predict total costs d. Set your cost performance baseline a. Aggregate these estimates by work packagesCost estimates are a project document, which is an input to the Determine Budget process. As the budget is determined, the cost estimates for the activities should be aggregated by the work packages in the WBS. Ultimately, the cost baseline is developed, which is an approved version of the time-based budget excluding any management reserves, and it summarizes the approved budgets for the schedule activities 37 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.37. Assume you are using earned value on your project, and as of today, your cumulative CPI is below the baseline. This means— a. All future work will need to be performed immediately with the range of the TCPI b. The ETC work will be performed at an efficiency rate that considers both the schedule and performance indices c. What the project has experienced to date is expected to continue d. The budget should be rebaselined a. All future work will need to be performed immediately with the range of the TCPI.The TCPI is a measure of cost performance that is required to be achieved with the remaining resources to meet a specified management goal. It is expressed as the ratio of the cost to finish the remaining work to the remaining budget. If the cumulative CPI falls below the baseline, future project work will need to be performed immediately within the range of the TCPI to stay within the authorized budget at completion. Whether this performance level is achievable is a judgment call based on considerations such as risk, time remaining, and technical performance 38 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.38. Assume it has become obvious on your project that the budget at completion is no longer viable. This means as the project manager, you should— a. Recommend to your managers that the project be terminated b. Perform an analysis of the remaining tasks on the critical path and take corrective or preventive action as required c. Determine the relationship of physical performance to costs spent to show performance for a specified time period for trend analysis d. Consider the forecasted EAC d. Consider the forecasted EACForecasting is part of trend analysis, which is a tool and technique in Control Costs. In this situation, use of the forecasted EAC is recommended as it involves making projections of conditions and events in the future of the project based on current performance information and other knowledge that is available. Forecasts are generated, updated, and reissued based on work performance data provided as the project is executed. EACs are typically based on the actual costs for work completed plus an estimate of the remaining work 39 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.39. Assume that your actual costs are $800; your planned value is $1,200; and your earned value is $1,000. Based on these data, what can be determined regarding your schedule variance? a. At +$200, the situation is favorable as physical progress is being accomplished ahead of your plan b. At –$200, the physical progress is being accomplished at a slower rate than is planned, indicating an unfavorable situation c. At +$400, the situation is favorable as physical progress is being accomplished at a lower cost than was forecasted d. At –$200, you have a behind-schedule condition, and your critical path has slipped b. At –$200, the physical progress is being accomplished at a slower rate than is planned, indicating an unfavorable situation.Schedule variance is calculated: EV – PV or $1,000 – $1,200 = –$200. Because the SV is negative, physical progress is being accomplished at a slower rate than planned. It is a useful metric as it can indicate when a project is falling behind or is ahead of its baseline schedule. Ultimately, it equals zero when the project is complete because all the planned values have been earned. It should be used along with monitoring the critical path 40 / 40 INSTRUCTIONS: Note the most suitable answer for each multiple-choice question.40. The CPI on your project is 0.84. This means that you should— a. Place emphasis on improving the timeliness of the physical progress b. Reassess the life-cycle costs of your product, including the length of the life-cycle phase c. Recognize that your original estimates were fundamentally flawed, and your project is in an atypical situation d. Place emphasis on improving the productivity by which work was being performed d. Place emphasis on improving the productivity by which work was being performedCPI = EV/AC and measures the efficiency of the physical progress accomplished compared to the baseline. A CPI of 0.84 means that for every dollar spent, you are only receiving 84 cents of progress. Therefore, you should focus on improving the productivity by which work is being performed as now it represents a cost overrun for the project. The CPI is considered the most critical earned value metric Your score is The average score is 50% LinkedIn Facebook Twitter VKontakte 0% Restart quiz
