Cost Control & Monitoring Flashcards

A project has a BAC of $500,000, an EV of $300,000, and an AC of $350,000. What is the Cost Performance Index (CPI)?

Answer: 0.86

CPI = EV / AC = $300,000 / $350,000 = 0.857, meaning the project is over budget.

Which cost control technique involves setting a maximum allowable cost for a project element and requiring redesign if that threshold is exceeded?

Answer: Design-to-cost

Design-to-cost establishes a cost ceiling for a system or component and drives design choices to stay within that limit.

A Variance at Completion (VAC) of -$40,000 on a project means:

Answer: The project is forecasted to overrun by $40,000 at completion

VAC = BAC − EAC; a negative VAC indicates the project is forecast to cost more than its budget at completion.

In a cost monitoring system, a 'cost trend report' primarily serves to:

Answer: Identify patterns indicating whether costs are improving or deteriorating over time

A cost trend report tracks cost performance metrics over successive periods to reveal whether the project's cost efficiency is improving or worsening.

Which of the following best describes a 'management reserve' in project cost control?

Answer: Funds held by management for unknown unknowns outside project scope

Management reserve covers unknown risks (unknown unknowns) and is controlled by management, not the project manager.

When applying the 50/50 rule for earned value measurement, credit is given as:

Answer: 50% when started, 50% when complete

The 50/50 rule awards 50% of the budget when work starts and the remaining 50% only upon completion.

A project manager notices that the SPI has been consistently below 1.0 for the past three periods. This most likely indicates:

Answer: The project is consistently behind schedule

SPI = EV / PV; an SPI below 1.0 means less work has been accomplished than planned, indicating a schedule delay.