CCT Cost Control & Monitoring 4 — Questions and Answers
Question 1: An 'S-curve' in cost management represents:
- The relationship between risk and cost over the project life cycle
- Cumulative planned or actual costs plotted over time (Correct answer)
- The rate of cost escalation due to inflation
- A bell curve of resource utilization peaks
Correct answer: Cumulative planned or actual costs plotted over time
An S-curve plots cumulative costs (or effort) over time, showing a slow start, rapid mid-project buildup, and tapering at project end.
Question 2: Which cost control action is most appropriate when CPI = 0.75 and the project is 60% complete?
- Continue monitoring without intervention since recovery is still possible
- Conduct a formal re-baseline after a root cause analysis and corrective action plan (Correct answer)
- Immediately reduce scope to match remaining budget
- Replace the cost engineer with a more experienced resource
Correct answer: Conduct a formal re-baseline after a root cause analysis and corrective action plan
A CPI of 0.75 at 60% completion is a serious overrun; a formal re-baseline with root cause analysis and a corrective plan is the appropriate structured response.
Question 3: In cost monitoring, 'cost loading' of a schedule refers to:
- Adding contingency to each activity to cover risk
- Assigning budget amounts to individual schedule activities (Correct answer)
- Loading resource rates into the cost management software
- Front-loading costs to improve early CPI reporting
Correct answer: Assigning budget amounts to individual schedule activities
Cost loading assigns planned cost values to schedule activities, enabling time-phased budgets and earned value tracking.
Question 4: A project manager receives a change order that increases scope but the client insists the budget will not change. The BEST cost control response is to:
- Accept the change order and absorb the cost in management reserve
- Reject the change order outright
- Document the impact, quantify the additional cost, and formally negotiate budget adjustment (Correct answer)
- Reduce quality standards on other deliverables to offset the cost
Correct answer: Document the impact, quantify the additional cost, and formally negotiate budget adjustment
The correct response is to document and quantify the cost impact and use the formal change control process to negotiate appropriate budget authorization.
Question 5: What is the primary purpose of a 'cost account' in a project cost control system?
- A financial account where project funds are deposited
- A control point that integrates scope, schedule, and budget at a specific WBS level (Correct answer)
- A summary of all vendor invoices paid to date
- An account used to track overhead allocation
Correct answer: A control point that integrates scope, schedule, and budget at a specific WBS level
A cost account is the management control point where scope, schedule, and budget are integrated, enabling earned value measurement.
Question 6: When a project experiences 'cost creep,' the most effective early detection method is:
- Waiting for the final invoice from all vendors
- Comparing cumulative actual costs against the time-phased budget at each reporting period (Correct answer)
- Reviewing the project charter for original budget authorization
- Recalculating the IRR after each phase
Correct answer: Comparing cumulative actual costs against the time-phased budget at each reporting period
Regular comparison of cumulative actuals against the time-phased PMB at each reporting period catches cost creep before it becomes unmanageable.
Question 7: Which method of earned value measurement is most suitable for a long-duration engineering design task with no clear interim milestones?
- 0/100 rule
- Percent complete (subjective)
- Level of effort (LOE) (Correct answer)
- Weighted milestones
Correct answer: Level of effort (LOE)
Level of effort (LOE) is used for support or time-based activities with no measurable output, where earned value equals the planned value for the period.
CCT Cost Control & Monitoring 4
An 'S-curve' in cost management represents: