CAPM Cost Management 2 — Questions and Answers
Question 1: A project manager is reviewing a project with a BAC of $100,000, EV of $60,000, and AC of $70,000. What is the Cost Performance Index (CPI)?
- 0.86 (Correct answer)
- 1.17
- 0.60
- 1.43
Correct answer: 0.86
CPI = EV / AC = $60,000 / $70,000 = 0.857, rounded to 0.86, indicating the project is over budget.
Question 2: Which cost estimating technique relies on historical data from similar past projects to predict current project costs?
- Bottom-up estimating
- Parametric estimating
- Analogous estimating (Correct answer)
- Three-point estimating
Correct answer: Analogous estimating
Analogous estimating uses historical data from similar projects as a basis for estimating current project costs.
Question 3: A project has SPI of 1.2 and CPI of 0.9. What does this indicate?
- Ahead of schedule and under budget
- Behind schedule and over budget
- Ahead of schedule and over budget (Correct answer)
- Behind schedule and under budget
Correct answer: Ahead of schedule and over budget
SPI > 1 means ahead of schedule, while CPI < 1 means over budget.
Question 4: What is the Estimate to Complete (ETC) when using the formula ETC = (BAC - EV) / CPI?
- Remaining work priced at the original rate
- Remaining work priced at the current efficiency rate (Correct answer)
- Total project cost at completion
- Variance in total budget
Correct answer: Remaining work priced at the current efficiency rate
ETC = (BAC - EV) / CPI calculates the cost of remaining work based on current cost performance efficiency.
Question 5: During project execution, the team discovers a $5,000 cost overrun on a $50,000 budget. Which document should be updated first?
- Project charter
- Cost baseline
- Issue log (Correct answer)
- Change log
Correct answer: Issue log
Cost variances should be logged in the issue log first for tracking and analysis before initiating a change request.
Question 6: What is the primary purpose of a cost baseline in project management?
- To define the total project budget
- To measure and monitor cost performance over time (Correct answer)
- To allocate contingency reserves
- To estimate future project costs
Correct answer: To measure and monitor cost performance over time
The cost baseline is the approved version of the project budget used to measure and monitor cost performance.
Question 7: Which type of cost is directly attributable to the project and would not be incurred without it?
- Indirect cost
- Overhead cost
- Fixed cost
- Direct cost (Correct answer)
Correct answer: Direct cost
Direct costs are those that can be directly linked to and attributed to a specific project or deliverable.
CAPM Cost Management 2
A project manager is reviewing a project with a BAC of $100,000, EV of $60,000, and AC of $70,000.
What is the Cost Performance Index (CPI)?