CPP Budgeting & Resource Management 2 — Questions and Answers
Question 1: A project manager discovers mid-project that actual costs are running 15% above the budget baseline. Which response is MOST appropriate under CPP standards?
- Request additional funding immediately
- Perform variance analysis and update the cost forecast (Correct answer)
- Reduce project scope to match the original budget
- Pause all expenditures until the sponsor approves
Correct answer: Perform variance analysis and update the cost forecast
CPP standards require variance analysis followed by an updated forecast (EAC) before any corrective action is decided.
Question 2: Which formula correctly calculates the Estimate at Completion (EAC) when future work is expected to be performed at the budgeted rate?
- EAC = BAC / CPI
- EAC = AC + (BAC - EV) (Correct answer)
- EAC = AC + ETC
- EAC = EV / BAC
Correct answer: EAC = AC + (BAC - EV)
EAC = AC + (BAC - EV) assumes remaining work will be completed at the planned rate regardless of past performance.
Question 3: A resource histogram shows a team member is allocated at 140% capacity for three consecutive weeks. What is the FIRST action a project manager should take?
- Approve overtime for those weeks
- Level resources by adjusting task sequencing or assignments (Correct answer)
- Reduce the project schedule to eliminate the overallocation
- Request the resource work split shifts
Correct answer: Level resources by adjusting task sequencing or assignments
Resource leveling—adjusting task timing or assignments—is the standard technique to resolve overallocation before resorting to overtime.
Question 4: The To-Complete Performance Index (TCPI) is calculated as (BAC − EV) / (BAC − AC). A TCPI of 1.25 indicates what?
- The project is 25% over budget and must be cancelled
- Remaining work must be completed at a rate 25% more efficient than planned (Correct answer)
- The team is currently performing 25% above plan
- The cost variance is favorable by 25%
Correct answer: Remaining work must be completed at a rate 25% more efficient than planned
A TCPI greater than 1.0 means the team must improve efficiency on remaining work to finish within the original budget.
Question 5: Which reserve type is used to address 'known-unknown' risks and is included in the project cost baseline?
- Management reserve
- Contingency reserve (Correct answer)
- Schedule reserve
- Operational reserve
Correct answer: Contingency reserve
Contingency reserves cover identified risks (known-unknowns) and are included in the project cost baseline.
Question 6: A sponsor asks why the project budget includes amounts above the cost baseline. The project manager should explain that the difference represents what?
- Profit margin for the performing organization
- Management reserve for unknown risks (Correct answer)
- Contingency for identified risks
- Escalation allowance for inflation
Correct answer: Management reserve for unknown risks
The difference between the cost baseline and the total project budget is the management reserve, held for unforeseen 'unknown-unknown' events.
Question 7: During resource planning for a CPP-level project, a staffing management plan should address which of the following?
- Individual salary negotiation terms
- Acquisition, training, recognition, and release of project resources (Correct answer)
- Corporate HR policies for permanent employees
- Vendor contract payment milestones
Correct answer: Acquisition, training, recognition, and release of project resources
The staffing management plan covers the full lifecycle of project team resources: how they are acquired, developed, recognized, and released.
CPP Budgeting & Resource Management 2
A project manager discovers mid-project that actual costs are running 15% above the budget baseline.
Which response is MOST appropriate under CPP standards?