PMP Cost Management Questions

Questions: 20 time: 35 Minutes

You are the project manager of a project that is budgeted to cost $1 million at completion.
The project will last ten months, and its budget is spread evenly across each month. It is
currently 50% complete and has so far cost $750K but only produced value of $500K.
1. What is the schedule variance (SV) of the project?

A. $0
B. $200K
C. $500K
D. $750K

2. What is the cost performance index (CPI) of the project?

A. 0.67
B. 1
C. 1.5
D. 2

3. If the variance is not expected to continue, what is the expected estimate at completion
(EAC) of the project?

A. $500K
B. $750K
C. $1 million
D. $1.25 million

Given a project with the following characteristics, answer the following questions:

• You are the project manager of a project to build fancy birdhouses.

• You are to build two birdhouses a month for 12 months.
• Each birdhouse is planned to cost $100.
• Your project is scheduled to last for 12 months.
• It is the beginning of month 10.
• You have built 20 birdhouses and your CPI is .9091.
4. How is the project performing?

A. Over budget and ahead of schedule

B. Under budget and ahead of schedule
C. Over budget and behind schedule
D. Under budget and behind schedule.

5. What is the actual cost of the project right now?

A. $1800
B. $2000
C. $2200
D. $2400

6. Assuming that the COST variance experienced so far in the project will continue, how
much more money will it take to complete the project?

A. $400
B. $440
C. $2800
D. $2840

7. If the variance experienced so far were to stop, what is the project’s estimate at
completion?

A. $2400
B. $2440
C. $2600
D. $2800

8. What is the project’s TCPI using the project’s budget at completion?

A. .5
B. 1
C. 1.5
D. 2

9. Senior management wants to the percentage of the project that is complete. What should
you report?

A. 75%
B. 83%
C. 92%
D. 95%

10. Imagine if instead of 10 months and costing $2200, the project was in month three and
costing $4000. What formula might you use for BAC?

A. [(BAC – EV) / (CPI * SPI)] + AC

B. new bottom-up estimate
C. AC + new ETC
D. AC + BAC – EV

11. Cost variance is computed by:

a. Subtracting planned value from actual cost
b. Subtracting actual cost from earned value
c. Subtracting budget at completion from earned value
d. Subtracting BAC from ETC

12. Which of the following is not needed to generate a schedule performance index (SPI)?
a. Earned value
b. Actual cost
c. Planned value
d. Basis of estimate

13.Which of the following is not needed to generate a schedule performance index (SPI)?
a. Earned value
b. Actual cost
c. Planned value
d. Basis of estimate

14.What is a basis of estimate and how does it apply to Earned Value calculations?
a. The basis of estimate is actually earned value (EV)
b. The basis of estimate is a method for determining what the project should cost based on
historical data or bottom-up estimating. It is the foundation for planned value (PV)
c. The basis of estimate is created via the use of stochastic variables and advanced
mathematical models, which will point to the most effective of the three major estimating
tools for your project: analogous, parametric, or bottom-up
d. The basis of estimate is a separate estimating function that addresses management
philosophy. It is not used in earned value calculations

15.You are having a discussion with the key stakeholder about the best estimating method
to use for the upcoming project. You argue for what provides the best team buy-in, while
your stakeholder argues for a bottom-up estimate. What is the real issue?
a. There is no issue - you are both talking about the same thing
b. The stakeholder is correct and you're just not getting it
c. You are correct and the stakeholder is just not getting it
d. You are both incorrect and need to explore other options

16. CPI is 1.2, SPI is 1.1. Four months later CPI is.91 and SPI is .86. The most likely reason
for this change is:
a. The project manager has not been keeping track of variances on the project to implement
corrections
b. As work packages were being executed, discovery on critical path activities caused
estimates to change drastically on several of the work packages
c. The WBS was inaccurate
d. Several key stakeholders insisted on a last-minute scope change

17.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

18.Management Contingency Reserve is identified in which process:

a. Estimate Activity Duration
b. Estimate Costs
c. Determine Budget
d. Estimate Activity Resources

19.Several stakeholders on the project have been questioning the effectiveness of some of
the technical team. While the work is proceeding according to plan, some of the
stakeholders are not satisfied with the work delivered to date, even though it meets
requirements specifications. You have held several meetings with the stakeholders to try to
get to the root cause of the problem. With some of the technical team present at these
meetings, it becomes obvious that some of the stakeholders have had great difficulty in
describing what they want. As a result, some of the delivered product doesn't meet
stakeholder expectations. Currently your CPI is 1.3 and the SPI is .89. What is your largest
concern right now?
a. Clarifying the requirements collection process
b. The schedule
c. Managing stakeholder expectations
d. An increasing probability that some technical team members may leave the project due
to high levels of frustration with stakeholders

20. You are three months into a six-month project. Assume the budget burn rate is
constant. The budget at completion (BAC) is $120,000. AC = $65,000. The SPI = 1.2. What
is the CPI of this project? (Round to 2 decimal places)
a. 1.32
b. 1.25
c. 1.11
d. It cannot be determined from the information given