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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.

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  1. A project is 40% complete, has spent $80,000, and was planned to spend $70,000 for work completed. The BAC is $150,000. What is the Estimate to Complete (ETC) using the formula EAC = AC + (BAC - EV)?

    Answer: $90,000

    EV = 40% × $150,000 = $60,000; EAC = $80,000 + ($150,000 - $60,000) = $170,000; ETC = EAC - AC = $170,000 - $80,000 = $90,000.

  2. Which cost estimating tool uses expert judgment from multiple specialists who independently provide estimates that are later compiled and reviewed anonymously?

    Answer: Delphi technique

    The Delphi technique collects anonymous expert input through iterative rounds to reach consensus without the influence of group pressure.

  3. A project sponsor asks why the project budget is higher than the cost baseline. What is the most likely explanation?

    Answer: Management reserves are included in the budget but not the cost baseline

    The project budget includes both the cost baseline and management reserves, while management reserves are held outside the cost baseline.

  4. During cost control, a project manager identifies a significant variance. At what threshold should variances typically trigger corrective action?

    Answer: Variances beyond defined thresholds established in the cost management plan

    The cost management plan defines variance thresholds that trigger corrective action, ensuring focus on significant deviations.

  5. Which life-cycle costing concept considers the total cost of ownership, including acquisition, operation, and disposal costs?

    Answer: Life cycle cost

    Life cycle cost encompasses all costs associated with a deliverable over its entire life, from acquisition through disposal.

  6. A project manager wants to accelerate the schedule but has a fixed budget. Which cost technique evaluates the ratio of the cost of an activity to its schedule benefit?

    Answer: Crashing

    Crashing analyzes cost and schedule trade-offs to determine the least-cost way to compress the schedule by adding resources.

  7. In earned value management, what does the Planned Value (PV) represent?

    Answer: The authorized budget assigned to scheduled work

    Planned Value (PV) is the authorized budget assigned to scheduled work, representing what was planned to be accomplished by a point in time.