PMP Managing Budget and Costs 3

Question 1

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

Accepted Answer

To serve as a reference point for measuring project cost performance

Answer

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

Question 2

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

Accepted Answer

Unknown unknowns or unplanned changes to scope

Answer

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

Question 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?

Accepted Answer

Submit the change through the integrated change control process

Answer

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

Question 4

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

Accepted Answer

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

Answer

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

Question 5

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

Accepted Answer

Project Charter

Answer

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

PMP - Project Management Professional Practice Test

PMP - Project Management Professional Practice Test

PMP Managing Budget and Costs 3