CPE Cost Estimation & Budget Control 4

Question 1

A project's EAC is calculated as AC + (BAC - EV). This formula assumes:

Accepted Answer

The remaining work will be completed at the originally planned rate

Answer

EAC = AC + (BAC - EV) assumes all remaining work will be performed exactly as planned (at budget), ignoring past cost performance.

Question 2

Which cost component is typically NOT included in the project cost baseline?

Accepted Answer

Management reserve

Answer

Management reserve is held outside the cost baseline for unknown unknowns and is not part of the time-phased budget.

Question 3

In a fixed-price contract, who bears the cost risk if actual project costs exceed the contract price?

Accepted Answer

The seller

Answer

In a fixed-price contract, the seller assumes cost risk because they must deliver at the agreed price regardless of actual costs.

Question 4

What is life cycle costing in project management?

Accepted Answer

Considering total costs from inception through disposal when making decisions

Answer

Life cycle costing evaluates all costs over a product or asset's entire life — from acquisition through operations and disposal — for informed decision-making.

Question 5

A project has a BAC of $200,000, EV of $80,000, and AC of $100,000. What is the Estimate to Complete (ETC) using the typical CPI-based EAC?

Accepted Answer

$150,000

Answer

CPI = 80/100 = 0.8; EAC = 200,000/0.8 = $250,000; ETC = EAC - AC = $250,000 - $100,000 = $150,000.

(CPE) Certified Planning Engineer Practice Test

(CPE) Certified Planning Engineer Practice Test

CPE Cost Estimation & Budget Control 4