Project Scheduling and Costing Flashcards

A project manager is analyzing a project's performance and calculates the Cost Performance Index (CPI) to be 0.85 and the Schedule Performance Index (SPI) to be 1.15. Which of the following statements BEST describes the project's current status?

Answer: The project is over budget and ahead of schedule.

A CPI less than 1 indicates that the project is over budget (costing more than planned for the work accomplished). An SPI greater than 1 indicates the project is ahead of schedule (more work has been completed than was planned). Therefore, a CPI of 0.85 and an SPI of 1.15 means the project is over budget and ahead of schedule.

A project is facing significant delays, and the sponsor has demanded that the timeline be shortened. The project manager decides to have some project activities that were originally planned in sequence now work in parallel. This is an example of which schedule compression technique?

Answer: Fast Tracking

Fast tracking is a schedule compression technique where activities or phases normally done in sequence are performed in parallel for at least a portion of their duration. This approach is taken to shorten the overall project duration. Crashing involves adding resources, Resource Leveling aims to balance resource demand, and the Critical Chain Method focuses on managing buffer activities.

During the Determine Budget process, a project manager aggregates the estimated costs of individual activities or work packages to establish a total cost baseline. Which of the following is NOT typically included in the project budget but is part of the overall project funding requirements?

Answer: Management Reserves

Management reserves are funds set aside for unknown-unknowns—unforeseeable work that is outside the project scope. They are part of the overall project budget and funding requirements but are not included in the cost baseline. The cost baseline is the approved version of the time-phased project budget, which includes activity cost estimates and contingency reserves for known risks.

A project manager is using the Program Evaluation and Review Technique (PERT) to estimate the duration of a critical activity. The three estimates provided by the team are: Optimistic (O) = 8 days, Pessimistic (P) = 20 days, and Most Likely (M) = 11 days. What is the expected duration of this activity?

Answer: 12 days

The formula for a PERT three-point estimate is (Optimistic + 4 * Most Likely + Pessimistic) / 6. Using the provided values: (8 + 4 * 11 + 20) / 6 = (8 + 44 + 20) / 6 = 72 / 6 = 12 days. This weighted average gives more weight to the most likely estimate.

Which of the following is a key distinction between the Critical Path Method (CPM) and the Program Evaluation and Review Technique (PERT)?

Answer: CPM uses a deterministic, single-point estimate for activity durations, while PERT uses a probabilistic, three-point estimate.

The primary difference between CPM and PERT lies in how they estimate activity durations. CPM is a deterministic method that uses a single, fixed time estimate for each activity. PERT, on the other hand, is a probabilistic method that uses three time estimates (optimistic, pessimistic, and most likely) to account for uncertainty in activity durations.

A project has a total budget (BAC) of $200,000. At the current point in time, the team has spent $70,000 (AC) and has completed work valued at $60,000 (EV). The planned value (PV) for this point was $80,000. The project manager needs to calculate the Estimate at Completion (EAC) assuming the current cost performance will continue until the end of the project. What is the correct EAC?

Answer: $233,333

When assuming the current cost performance (CPI) will continue, the formula for EAC is BAC / CPI. First, calculate the CPI: CPI = EV / AC = $60,000 / $70,000 ≈ 0.857. Then, calculate the EAC: EAC = $200,000 / 0.857 ≈ $233,333. This forecast shows the expected total cost if the project continues to perform at the same cost efficiency.