PMI Project Budgeting & Financial Control 2

Question 1

A project manager notices that the Cost Performance Index (CPI) is 0.85. What does this indicate?

Accepted Answer

The project is getting $0.85 in value for every $1 spent

Answer

A CPI of 0.85 means the project is over budget, receiving only $0.85 of earned value for every dollar spent.

Question 2

Which reserve type is set aside for unknown-unknown risks and is controlled by senior management, not the project manager?

Accepted Answer

Management reserve

Answer

Management reserve covers unknown-unknown risks and requires senior management approval to access.

Question 3

A project has a BAC of $500,000, EV of $200,000, and AC of $250,000. What is the Estimate to Complete (ETC) using the typical EAC formula?

Accepted Answer

$375,000

Answer

EAC = BAC/CPI = $500,000/0.80 = $625,000; ETC = EAC − AC = $625,000 − $250,000 = $375,000.

Question 4

During project execution, the sponsor asks for additional features not in scope. The PM must update the cost baseline. Which process governs this?

Accepted Answer

Perform Integrated Change Control

Answer

Perform Integrated Change Control evaluates all change requests and authorizes updates to baselines including the cost baseline.

Question 5

What is the primary purpose of a funding limit reconciliation in project cost management?

Accepted Answer

To align project expenditures with funding availability constraints

Answer

Funding limit reconciliation adjusts the schedule of work to match when funds are actually available, preventing cash flow problems.

(PMI) Project Management Institute Certified Practice Test