Project Management Project Cost Management 5 — Questions and Answers
Question 1: Which of the following is a tool and technique used in the Control Costs process?
- Analogous estimating
- Earned value analysis (Correct answer)
- Cost aggregation
- Funding limit reconciliation
Correct answer: Earned value analysis
Earned value analysis is a primary tool used in Control Costs to measure project performance and progress against the baseline.
Question 2: A project team is using value engineering during planning. The primary goal of value engineering is to:
- Reduce project scope to cut costs
- Find a less costly way to accomplish the same scope (Correct answer)
- Increase product quality without increasing cost
- Eliminate non-critical activities from the schedule
Correct answer: Find a less costly way to accomplish the same scope
Value engineering seeks to optimize costs by finding alternative approaches that deliver equivalent or better results at lower cost.
Question 3: If a project's TCPI (based on BAC) is 1.25, what does this indicate?
- The project must perform 25% more efficiently than originally planned to finish on budget (Correct answer)
- The project is 25% over budget and needs corrective action
- Future work must cost 25% less than currently spending to meet EAC
- The project has a 25% cost efficiency surplus
Correct answer: The project must perform 25% more efficiently than originally planned to finish on budget
TCPI of 1.25 means remaining work must be done at 1.25 times the planned efficiency to stay within the original BAC — very challenging.
Question 4: Which of the following best describes 'cost of quality' in project management?
- The cost of purchasing quality materials for deliverables
- All costs incurred to prevent defects plus the cost of failures (Correct answer)
- The budget allocated to the quality management plan
- The cost of quality audits and inspections only
Correct answer: All costs incurred to prevent defects plus the cost of failures
Cost of quality includes conformance costs (prevention and appraisal) plus non-conformance costs (internal and external failure costs).
Question 5: During project execution, the sponsor asks the project manager what the total project will cost if current efficiency continues. Which metric answers this question?
- Cost Variance (CV)
- Estimate at Completion (EAC) (Correct answer)
- Variance at Completion (VAC)
- To-Complete Performance Index (TCPI)
Correct answer: Estimate at Completion (EAC)
EAC (Estimate at Completion) is the expected total project cost when completed, factoring in current performance trends.
Question 6: A project manager discovers that resource costs were not properly allocated to the WBS during planning, causing cost overruns. Which planning output was likely inadequate?
- Resource breakdown structure
- Cost baseline
- Activity cost estimates (Correct answer)
- Cost management plan
Correct answer: Activity cost estimates
Activity cost estimates map resource costs to specific activities; inadequate estimates result in a flawed cost baseline and eventual overruns.
Question 7: Variance at Completion (VAC) is calculated as:
- BAC - EAC (Correct answer)
- EV - AC
- BAC - AC
- EAC - BAC
Correct answer: BAC - EAC
VAC = BAC - EAC; a negative VAC indicates the project is projected to finish over budget.
Project Management Project Cost Management 5
Which of the following is a tool and technique used in the Control Costs process?