CAPM Cost Management 3 — Questions and Answers
Question 1: A project manager calculates EAC = AC + ETC. Under which assumption is this formula most appropriate?
- Future work will be performed at the budgeted rate (Correct answer)
- Current CPI will continue for the remainder of the project
- Future work will be performed at current efficiency
- The project is behind schedule
Correct answer: Future work will be performed at the budgeted rate
EAC = AC + ETC (where ETC = BAC - EV) assumes future work will be completed at the originally planned (budgeted) rate.
Question 2: What does a negative Schedule Variance (SV) indicate?
- The project is under budget
- The project is over budget
- The project is ahead of schedule
- The project is behind schedule (Correct answer)
Correct answer: The project is behind schedule
SV = EV - PV; a negative SV means earned value is less than planned value, indicating the project is behind schedule.
Question 3: Which process involves monitoring the status of the project to update costs and managing changes to the cost baseline?
- Plan Cost Management
- Estimate Costs
- Determine Budget
- Control Costs (Correct answer)
Correct answer: Control Costs
Control Costs is the process of monitoring project status to update costs and managing changes to the cost baseline.
Question 4: A WBS element has an estimated duration of 10 days with $500/day resource cost. What estimating technique was used if this calculation was performed?
- Analogous estimating
- Bottom-up estimating
- Parametric estimating (Correct answer)
- Expert judgment
Correct answer: Parametric estimating
Parametric estimating uses a statistical relationship between historical data and variables (e.g., cost per unit × quantity).
Question 5: Management reserves differ from contingency reserves in that management reserves are for:
- Known risks identified in the risk register
- Unknown unknowns that cannot be anticipated (Correct answer)
- Cost overruns on specific work packages
- Schedule delays on the critical path
Correct answer: Unknown unknowns that cannot be anticipated
Management reserves address unknown unknowns—unforeseeable events—while contingency reserves cover known risks.
Question 6: In Earned Value Management, what does the acronym BAC stand for?
- Budgeted Actual Cost
- Budget at Completion (Correct answer)
- Baseline Allocated Cost
- Base Assigned Cost
Correct answer: Budget at Completion
BAC (Budget at Completion) is the total budget authorized for the project.
Question 7: A project team is using three-point estimating with the following values: Optimistic=$10K, Most Likely=$15K, Pessimistic=$26K. What is the PERT estimate?
- $15,000
- $16,000 (Correct answer)
- $17,000
- $18,000
Correct answer: $16,000
PERT = (O + 4ML + P) / 6 = ($10K + 4×$15K + $26K) / 6 = $96K / 6 = $16,000.
CAPM Cost Management 3
A project manager calculates EAC = AC + ETC.
Under which assumption is this formula most appropriate?