Project Planning and Monitoring Budget & Cost Control

Question 1

What does Earned Value (EV) represent in project cost management?

Accepted Answer

The budgeted cost of work actually performed

Answer

Earned Value (EV) is the budgeted cost of work that has actually been completed, used to measure project performance.

Question 2

A project has a Cost Performance Index (CPI) of 0.85. What does this indicate?

Accepted Answer

The project is over budget

Answer

A CPI below 1.0 means the project is spending more than planned for the work completed, indicating it is over budget.

Question 3

Which budgeting technique requires each budget item to be justified from zero each period?

Accepted Answer

Zero-based budgeting

Answer

Zero-based budgeting starts from scratch each cycle, requiring justification for every expense rather than using prior-period figures.

Question 4

What is a Budget at Completion (BAC) used for in project monitoring?

Accepted Answer

It represents the total planned budget for the entire project

Answer

BAC is the total authorized budget for the project and serves as the baseline against which all cost performance is measured.

Question 5

Which formula correctly calculates Cost Variance (CV) in earned value management?

Accepted Answer

CV = EV minus AC

Answer

Cost Variance is EV minus AC; a positive value means under budget, while a negative value means over budget.

Project Planning and Monitoring Practice Test