CPM Budget & Cost Management Flashcards
6 cards from real CPM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CPM Budget & Cost Management flashcards as text
In Earned Value Management, what does the Cost Performance Index (CPI) measure?
Answer: The cost efficiency of budgeted resources
CPI is calculated as Earned Value divided by Actual Cost, indicating how efficiently the project is using its budget — a CPI above 1.0 means under budget.
Which cost estimating technique uses actual costs from similar past projects as a basis for estimating the current project?
Answer: Analogous estimating
Analogous estimating leverages historical data from comparable projects to estimate costs and is typically less accurate but faster than bottom-up estimating.
What is the Budget at Completion (BAC) in Earned Value Management?
Answer: The total authorized budget for the project
BAC is the total authorized budget assigned to the project and represents the sum of all the work packages in the cost baseline.
A project has a CPI of 0.85. What does this indicate?
Answer: The project is over budget
A CPI below 1.0 means the project is spending more than planned for the work accomplished, indicating an over-budget condition.
Which process involves aggregating the estimated costs of individual work packages to establish the cost baseline?
Answer: Determine Budget
Determine Budget aggregates all cost estimates including contingency reserves to produce the cost performance baseline used to measure project performance.
Management reserve in project budgeting differs from contingency reserve in that it is used for:
Answer: Unknown unknowns or unforeseen work
Management reserve covers unknown unknowns — unpredictable events not in the risk register — and requires management authorization to access, unlike contingency reserve.