CCT Cost Control & Monitoring 3 — Questions and Answers
Question 1: In Estimate at Completion (EAC) calculations, which formula assumes future work will be performed at the current CPI?
- EAC = AC + (BAC − EV)
- EAC = BAC / CPI (Correct answer)
- EAC = AC + (BAC − EV) / CPI
- EAC = AC + ETC
Correct answer: EAC = BAC / CPI
EAC = BAC / CPI assumes the cost efficiency experienced so far will continue for the remainder of the project.
Question 2: A project's To-Complete Performance Index (TCPI) based on BAC is 1.25. This means the project team must:
- Spend $1.25 for every $1.00 of remaining work
- Complete $1.25 of work for every $1.00 spent going forward (Correct answer)
- Reduce scope by 25% to meet the budget
- Increase resources by 25% immediately
Correct answer: Complete $1.25 of work for every $1.00 spent going forward
TCPI = (BAC − EV) / (BAC − AC); a value of 1.25 means the team must achieve $1.25 of work value for every remaining dollar spent.
Question 3: Which cost monitoring document provides a time-phased allocation of the project budget and serves as the baseline for performance measurement?
- Cost management plan
- Performance measurement baseline (PMB) (Correct answer)
- Work breakdown structure dictionary
- Resource histogram
Correct answer: Performance measurement baseline (PMB)
The Performance Measurement Baseline is the time-phased budget against which project performance is measured and reported.
Question 4: Cost control 'threshold' in project monitoring typically refers to:
- The maximum percentage variance allowed before corrective action is triggered (Correct answer)
- The point at which contingency reserves are fully depleted
- The minimum CPI required for project approval
- The total cost cap imposed by the project sponsor
Correct answer: The maximum percentage variance allowed before corrective action is triggered
A cost threshold defines the acceptable variance limit (e.g., ±10% of budget) beyond which formal corrective action is required.
Question 5: During a cost review, the project team identifies that a subcontractor is consistently billing for more hours than agreed. The FIRST corrective action should be:
- Immediately terminate the subcontract
- Escalate to executive management
- Verify billing records against contract terms and documented deliverables (Correct answer)
- Increase the project contingency reserve
Correct answer: Verify billing records against contract terms and documented deliverables
Before taking action, the project manager should verify facts by comparing billing records against the contract and accepted deliverables.
Question 6: Which type of cost variance analysis compares the cost of completed work to the cost that was budgeted for that same work?
- Actual vs. planned spending variance
- Cost variance (CV) in earned value management (Correct answer)
- Return on investment analysis
- Life-cycle cost comparison
Correct answer: Cost variance (CV) in earned value management
CV = EV − AC, which compares the budgeted cost of work performed to the actual cost of that work.
Question 7: A project using a 'rolling wave planning' approach to cost control will likely have:
- Highly detailed cost estimates for all future work packages from the start
- Detailed near-term estimates with high-level estimates for distant future work (Correct answer)
- Fixed budgets for every task regardless of uncertainty
- No formal cost baseline until all planning is complete
Correct answer: Detailed near-term estimates with high-level estimates for distant future work
Rolling wave planning provides detailed estimates for near-term work and progressively elaborates estimates for future work as more information becomes available.
CCT Cost Control & Monitoring 3
In Estimate at Completion (EAC) calculations, which formula assumes future work will be performed at the current CPI?