Practice Test GeeksPMP - Project Management Professional Practice Test
← All PMP Flashcard Decks

Managing Budget and Costs Flashcards

7 cards from real PMP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Managing Budget and Costs flashcards as text

  1. What is the primary purpose of a cost baseline in project management?

    Answer: To serve as a reference point for measuring project cost performance

    The cost baseline is an approved version of the time-phased project budget used as a basis for comparison to actual results.

  2. Management reserves differ from contingency reserves in that management reserves are used for:

    Answer: Unknown unknowns or unplanned changes to scope

    Management reserves are set aside for unknown unknowns and are not included in the cost baseline, unlike contingency reserves.

  3. During project execution, a team member proposes a change that will reduce long-term operational costs but increase the project budget by 15%. What should the project manager do first?

    Answer: Submit the change through the integrated change control process

    All budget changes must be processed through the integrated change control process to evaluate impacts and obtain proper approvals.

  4. A project's To-Complete Performance Index (TCPI) based on BAC is 1.20. What does this mean?

    Answer: The project needs to perform 20% more efficiently going forward to meet the original budget

    TCPI > 1.0 means the team must achieve higher efficiency going forward than they have to date to meet the BAC.

  5. Which document authorizes the project manager to apply organizational resources to project activities and typically contains the project budget?

    Answer: Project Charter

    The Project Charter formally authorizes the project and may include a pre-approved financial budget at a summary level.

  6. A project manager is using bottom-up estimating. What is the main advantage of this approach?

    Answer: It provides the most accurate estimates due to detailed analysis

    Bottom-up estimating aggregates estimates for individual work packages, providing higher accuracy at the cost of more time and effort.

  7. Which type of cost is directly attributable to a specific project and would not exist if the project did not exist?

    Answer: Direct cost

    Direct costs are directly attributable to a specific project, such as salaries of dedicated team members or project-specific materials.