CPE Cost Estimation & Budget Control 2

Question 1

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)?

Accepted Answer

0.86

Answer

CPI = EV / AC = $300,000 / $350,000 = 0.857, indicating cost overrun.

Question 2

Which cost estimating technique uses historical data from similar past projects as the primary basis?

Accepted Answer

Analogous estimating

Answer

Analogous estimating uses historical data from similar projects to estimate current project costs.

Question 3

Estimate at Completion (EAC) using the formula EAC = BAC / CPI assumes:

Accepted Answer

Future cost performance will match current CPI

Answer

EAC = BAC / CPI assumes the current cost efficiency will continue for all remaining work.

Question 4

What does a negative Cost Variance (CV) indicate?

Accepted Answer

The project is over budget

Answer

CV = EV - AC; a negative CV means actual costs exceed earned value, indicating an over-budget condition.

Question 5

Which type of cost reserve is established for known unknowns in a project?

Accepted Answer

Contingency reserve

Answer

Contingency reserve covers identified risks (known unknowns) and is part of the cost baseline.

(CPE) Certified Planning Engineer Practice Test