PMI Project Budgeting & Financial Control 4

Question 1

A project manager calculates the Estimate at Completion (EAC) assuming future work will be performed at the budgeted rate. Which formula applies?

Accepted Answer

EAC = AC + (BAC − EV)

Answer

When future work is assumed to proceed at the planned rate, EAC = AC + (BAC − EV), using remaining budget as the ETC.

Question 2

Which cost management output establishes how cost variances will be managed and what thresholds trigger corrective action?

Accepted Answer

Cost management plan

Answer

The cost management plan defines variance thresholds, reporting formats, and procedures for managing cost deviations.

Question 3

A project has BAC = $800,000, PV = $400,000, EV = $360,000, and AC = $420,000. What is the Schedule Performance Index (SPI)?

Accepted Answer

0.900

Answer

SPI = EV / PV = $360,000 / $400,000 = 0.90, indicating the project is progressing at 90% of the planned rate.

Question 4

When should a project manager create a new EAC rather than using a formula-based forecast?

Accepted Answer

When the original estimate is fundamentally flawed and actual costs are known

Answer

A ground-up EAC is appropriate when the original estimate is no longer valid and actual performance data enables a more reliable re-estimate.

Question 5

Which of the following BEST describes 'sunk costs' in project financial management?

Accepted Answer

Costs already incurred that should not influence future decisions

Answer

Sunk costs are past expenditures that cannot be recovered and should not factor into forward-looking project decisions.

(PMI) Project Management Institute Certified Practice Test