CPP Budgeting & Resource Management 3 — Questions and Answers
Question 1: A project has BAC = $500,000, EV = $300,000, and AC = $350,000. What is the Cost Performance Index (CPI)?
- 0.86 (Correct answer)
- 1.17
- 0.60
- 1.40
Correct answer: 0.86
CPI = EV / AC = $300,000 / $350,000 ≈ 0.86, indicating the project is getting $0.86 of value for every dollar spent.
Question 2: Which cost estimating technique uses statistical relationships between historical data and project variables to produce a single-point cost estimate?
- Analogous estimating
- Parametric estimating (Correct answer)
- Three-point estimating
- Bottom-up estimating
Correct answer: Parametric estimating
Parametric estimating uses statistical/mathematical models based on historical parameters (e.g., cost per square foot) to derive the estimate.
Question 3: When a project manager applies the 'fast-tracking' schedule compression technique, what is the MOST likely impact on the project budget?
- Budget decreases due to shorter duration
- Budget may increase due to rework from parallel activities (Correct answer)
- Budget is unaffected because fast-tracking only changes timing
- Budget decreases because fewer resources are needed
Correct answer: Budget may increase due to rework from parallel activities
Fast-tracking runs sequential activities in parallel, which increases the risk of rework and therefore can increase overall project costs.
Question 4: A resource calendar defines which of the following for project planning purposes?
- The hourly billing rate of each team member
- When and for how long each resource is available to work on the project (Correct answer)
- The organizational hierarchy of project personnel
- The sequence in which resources must be deployed
Correct answer: When and for how long each resource is available to work on the project
A resource calendar documents the availability, working hours, vacations, and other constraints for each project resource.
Question 5: Life cycle costing differs from project budgeting primarily because it:
- Only considers capital expenditures during construction
- Includes all costs from inception through disposal of the deliverable (Correct answer)
- Focuses on per-period operational budgets post-launch
- Excludes sunk costs from the analysis
Correct answer: Includes all costs from inception through disposal of the deliverable
Life cycle costing accounts for the total cost of ownership across all phases—design, implementation, operations, and disposal—not just the project execution phase.
Question 6: A CPP candidate is reviewing a budget S-curve. The S-shape occurs primarily because:
- Costs spike at project initiation then drop steadily
- Low spending in early phases ramps up through execution then tapers at closeout (Correct answer)
- Resource costs are evenly distributed but materials fluctuate
- The curve plots schedule variance, not cost
Correct answer: Low spending in early phases ramps up through execution then tapers at closeout
S-curves reflect the typical project spending pattern: slow start, rapid spending during peak execution, and trailing off during closeout.
Question 7: Which process is responsible for monitoring the status of the project to update costs and managing changes to the cost baseline?
- Estimate Costs
- Determine Budget
- Control Costs (Correct answer)
- Plan Cost Management
Correct answer: Control Costs
Control Costs is the process that tracks actual versus planned expenditures, calculates EVM metrics, and manages changes to the approved cost baseline.
CPP Budgeting & Resource Management 3
A project has BAC = $500,000, EV = $300,000, and AC = $350,000.
What is the Cost Performance Index (CPI)?