CPM Budget & Cost Management Flashcards

A project manager wants to control costs by comparing actual performance against the cost baseline. Which process does this describe?

Answer: Control Costs

Control Costs monitors project status to update project costs and manage changes to the cost baseline, using tools like EVM and variance analysis.

The To-Complete Performance Index (TCPI) greater than 1.0 indicates that:

Answer: The remaining work must be done more efficiently than planned to meet the target

A TCPI above 1.0 means the project team must achieve a higher efficiency rate on remaining work than originally planned to meet the budget or EAC target.

Which cost estimation approach involves estimating the cost of individual work packages and then rolling them up to the project total?

Answer: Bottom-up estimating

Bottom-up estimating decomposes work to the lowest level of detail, estimates each component, and aggregates those estimates for the most accurate but time-consuming result.

A project manager is reviewing a cost baseline. What does the cost baseline represent?

Answer: The time-phased budget used to measure cost performance

The cost baseline is the approved, time-phased project budget (excluding management reserve) used as the benchmark against which actual cost performance is measured.

Value engineering in project cost management is used primarily to:

Answer: Find ways to reduce cost while maintaining required scope and quality

Value engineering systematically examines project functions and costs to identify alternatives that achieve required performance at a lower cost without sacrificing quality.

Which CPM cost concept refers to a cost that has already been incurred and cannot be recovered, and therefore should NOT influence future project decisions?

Answer: Sunk cost

Sunk costs are costs already spent and unrecoverable, and the CPM framework teaches that they should not factor into decisions about continuing or changing a project.