FREE Cost Management Questions and Answers

Question 1

A project manager is directing her team in the development of the s-curve, cost baseline, and requirements for project funding. Which process is being led by the project manager's team?

Accepted Answer

Determine budget

Answer

The project manager's team is engaged in the 'Determine Budget' process. This process involves aggregating the estimated costs of individual activities and work packages to establish an authorized cost baseline for the project. Developing the S-curve (cumulative cost baseline) and defining funding requirements are key outputs and activities within this specific project cost management process.

Question 2

If a project has an earned value (EV) of $1,000, an actual cost (AC) of $950, and a planned value (PV) of $1,000, what is the cost variance (CV)?

Accepted Answer

50

Answer

Cost Variance (CV) is calculated by subtracting the Actual Cost (AC) from the Earned Value (EV). In this scenario, EV is $1,000 and AC is $950. Therefore, CV = $1,000 - $950 = $50. A positive cost variance indicates that the project is currently under budget.

Question 3

A minor scope change was requested by a customer, who expects it to be finished quickly and cheaply. The project manager thinks they have enough authority to decide for themselves, but they are unsure. The project manager should now decide what to do.

Accepted Answer

Use the perform Integrated Change Control process and submit this to the change control board (CCB) for approval.

Answer

Any change to a project's scope, even a minor one, must be formally processed through the 'Perform Integrated Change Control' process. This ensures that the change is properly evaluated for its impact on cost, schedule, quality, and risk, and is formally approved or rejected by the Change Control Board (CCB). Following this process maintains project integrity and prevents uncontrolled scope creep.

Question 4

A project uses staff hours as the unit of measure for resources, rounds activity estimate data to the nearest $100, and has a variance threshold of 10% deviation from the initial plan. Usually, these would be recorded in the

Accepted Answer

Cost management plan

Answer

The cost management plan is a crucial document that outlines how project costs will be planned, structured, and controlled throughout the project lifecycle. It specifies the units of measure (e.g., staff hours), levels of precision and accuracy for estimates, and control thresholds (e.g., 10% variance deviation). These details are essential for effective cost monitoring and control.

Question 5

The cost performance index (CPI) is 1.1 and the schedule performance index (SPI) is 0.95, according to a project manager who is preparing a project status update. What is the progress of the project?

Accepted Answer

under budget and behind schedule

Answer

A Cost Performance Index (CPI) of 1.1, being greater than 1, indicates that the project is under budget, meaning it is getting $1.10 of value for every $1 spent. A Schedule Performance Index (SPI) of 0.95, being less than 1, indicates that the project is behind schedule, meaning it has completed only 95% of the work planned for the elapsed time. Therefore, the project is under budget and behind schedule.

Finance for Non-Finance Managers Practice Test

Finance for Non-Finance Managers Practice Test

FREE Cost Management Questions and Answers