CPM CPM Budget & Cost Management

Question 1

In Earned Value Management, what does the Cost Performance Index (CPI) measure?

Accepted Answer

The cost efficiency of budgeted resources

Answer

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.

Question 2

Which cost estimating technique uses actual costs from similar past projects as a basis for estimating the current project?

Accepted Answer

Analogous estimating

Answer

Analogous estimating leverages historical data from comparable projects to estimate costs and is typically less accurate but faster than bottom-up estimating.

Question 3

What is the Budget at Completion (BAC) in Earned Value Management?

Accepted Answer

The total authorized budget for the project

Answer

BAC is the total authorized budget assigned to the project and represents the sum of all the work packages in the cost baseline.

Question 4

A project has a CPI of 0.85. What does this indicate?

Accepted Answer

The project is over budget

Answer

A CPI below 1.0 means the project is spending more than planned for the work accomplished, indicating an over-budget condition.

Question 5

Which process involves aggregating the estimated costs of individual work packages to establish the cost baseline?

Accepted Answer

Determine Budget

Answer

Determine Budget aggregates all cost estimates including contingency reserves to produce the cost performance baseline used to measure project performance.

(CPM) Certified Project Manager Practice Test

(CPM) Certified Project Manager Practice Test

CPM CPM Budget & Cost Management