Project Management Project Cost Management 4

Question 1

A project's EAC using the formula EAC = AC + (BAC - EV) / CPI assumes:

Accepted Answer

Future work will continue at the current CPI

Answer

EAC = AC + (BAC - EV) / CPI assumes the current cost efficiency (CPI) will persist for all remaining work.

Question 2

What is the difference between contingency reserves and management reserves?

Accepted Answer

Contingency reserves are for known unknowns; management reserves are for unknown unknowns

Answer

Contingency reserves address identified risks (known unknowns), while management reserves cover unforeseen situations (unknown unknowns).

Question 3

Which document authorizes spending on a project and links the project to the organization's ongoing work?

Accepted Answer

Project charter

Answer

The project charter formally authorizes the project and gives the project manager authority to apply resources, including budget.

Question 4

Life cycle costing considers:

Accepted Answer

Total cost of ownership including operation and maintenance

Answer

Life cycle costing evaluates the total cost of ownership over the product's entire life, including acquisition, operations, and disposal.

Question 5

A project manager applies earned value analysis and finds Cost Variance (CV) = +$15,000. This means:

Accepted Answer

The project is $15,000 under budget

Answer

CV = EV - AC; a positive CV means earned value exceeds actual cost, so the project is under budget.

Project Management Practice Test