5102 ‫ملخص االمتحانات لمادة إدارة التكاليف‬

‫ملخص االمتحانات لمادة إدارة التكاليف‬

Q1) What is The Advantage and Disadvantage of Analogous Estimating?

Q2) What is The Advantage and Disadvantage of Bottom-up Estimating?

Q3) What is Project Cost Management?

Project Cost Management includes the process involved in the planning, estimating, budgeting & controlling costs so
that the project can be completed within the approved budget. A project manager must:
 Estimate Costs
 Determine Budget
 Control Costs

Q4) What are the different Types of Costs?

 Sunk Costs: A cost that has already been incurred whether action is taken or not. Sunk
costs should not be considered when deciding whether to continue with a project.
 Variable Costs: Any cost that changes with the amount of work e.g. materials, wages
 Fixed Costs: Costs that do not change as production changes e.g. Set-up, rental etc
 Direct Costs: Costs directly associated with the project, Wages, team travel, cost of
materials.

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 Indirect Costs: Overhead items incurred for the benefit of more than 1 project.
Examples include Taxes, cleaning, lighting and so on.
Q5) What are the Input ,tools & Techniques and output of:
1. Estimate Costs

2. Determine Budget

3. Control Costs

Q6) Choose the correct answer?

1) One common way to compute estimate at completion (EAC) is to take the budget at completion (BAC) and:
A. Divide by SPI.
B. Multiply by SPI.
C. Multiply by CPI.
D. Divide by CPI.

2) Estimate at completion (EAC) is a periodic evaluation of:

A. The cost of work completed.
B. The value of work performed.
C. The anticipated total cost at project completion.
D. What it will cost to finish the job.

3) If earned value (EV) =350, actual cost (AC) =400, planned value (PV) =325, what is cost variance (CV)?
A. 350
B. -75
C. 400
D. -50

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4) The customer responsible for overseeing your project asks you to provide a written cost estimate that is 30
percent higher than your estimate of the project's cost. He explains that the budgeting process requires managers
to estimate pessimistically to ensure enough money is allocated for projects. What is the best way to handle
this?
A. Add the 30 percent as a lump sum contingency fund to handle project risks.
B. Add the 30 percent to your cost estimate by spreading it evenly across all project
activities.
C. Create one cost baseline for budget allocation and a second one for the actual
project management plan.
D. Ask for information on risks that would cause your estimate to be too low.

5) Analogous estimating:
A. Uses bottom-up estimating techniques.
B. Is used most frequently during the executing processes of the project.
C. Uses top-down estimating techniques.
D. Uses actual detailed historical costs.

6) All of the following are outputs of the Estimate Costs process EXCEPT:
A. An understanding of the cost risk in the work that has been estimated.
B. The prevention of inappropriate changes from being included in the cost baseline.
C. An indication of the range of possible costs for the project.
D. Documentation of any assumptions made during the Estimate Costs process.

7) The main focus of life cycle costing is to:

A. Estimate installation costs.
B. Estimate the cost of operations and maintenance.
C. Consider installation costs when planning the project costs.
D. Consider operations and maintenance costs in making project decisions.

8) Cost performance measurement is best done through which of the following?

A. Asking for a percent complete from each team member and reporting that in the
monthly progress report
B. Calculating earned value and using the indexes and other calculations to report past
performance and forecast future performance
C. Using the 50/50 rule and making sure the life cycle cost is less than the project cost
D. Focusing on the amount expended last month and what will be expended the
following month

9) A cost performance index (CPI) of 0.89 means:

A. At this time, we expect the total project to cost 89 percent more than planned.
B. When the project is completed, we will have spent 89 percent more than planned.
C. The project is only progressing at 89 percent of the rate planned.
D. The project is only getting 89 cents out of every dollar invested.

10) A schedule performance index (SPI) of 0.76 means:

A. You are over budget.

B. You are ahead of schedule.
C. You are only progressing at 76 percent of the rate originally planned.
D. You are only progressing at 24 percent of the rate originally planned.

11) Which of the following is not needed in order to come up with a project estimate?

A. A WBS
B. A network diagram
C. Risks
D. A change control system

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12) Which of the following is an example of a parametric estimate?

A. Dollars per module

B. Learning bend
C. Bottom-up
D. CPM

13) A rough order of magnitude estimate is made during which project management process group?

A. Planning
B. Closing
C. Executing
D. Initiating

14) A cost baseline is an output of which cost management process?

A. Estimate Activity Resources

B. Estimate Costs
C. Determine Budget
D. Control Costs

15) During which project management process group are budget forecasts created?

A. Monitoring and controlling

B. Planning
C. Initiating
D. Executing

16) Which type of cost is team training?

A. Direct
B. NPV
C. Indirect
D. Fixed

17) Project setup costs are an example of:

A. Variable costs.
B. Fixed costs.
C. Overhead costs.
D. Opportunity costs.

18) Value analysis is performed to get:

A. More value from the cost analysis.

B. Management to buy into the project.
C. The team to buy into the project.
D. A less costly way of doing the same work.

19) Who has the cost risk in a fixed price (FP) contract?

A. The team
B. The buyer
C. The seller
D. Management

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20) Which of the following represents the estimated value of the work actually accomplished?

A. Earned value (EV)

B. Planned value (PV)
C. Actual cost (AC)
D. Cost variance (CV)

21) Which of the following are ALL items included in the cost management plan?

A. The level of accuracy needed for estimates, rules for measuring cost
performance, specifications for how duration estimates should be stated.
B. Specifications for how estimates should be stated, rules for measuring cost
performance, the level of accuracy needed for estimates.
C. Rules for measuring team performance, the level of accuracy needed for
estimates, specifications for how estimates should be stated.
D. Specifications for how estimates should be stated, the level of risk needed for
estimates, rules for measuring cost performance.

22) Your project has a medium amount of risk and is not very well defined. The sponsor hands you a project charter
and asks you to confirm that the project can be completed within the project cost budget. What is the best method
to handle this?

A. Build the estimate in the form of a range of possible results.

B. Ask the team members to help estimate the cost based on the project charter.
C. Based on the information you have, calculate a parametric estimate.
D. Provide an analogous estimate based on past history.

23) The cost contingency reserve should be:

A. Hidden to prevent management from disallowing the reserve.

B. Added to each activity to provide the customer with a shorter critical path.
C. Maintained by management to cover cost overruns.
D. Added to the base costs of the project to account for risks.

24) The seller tells you that your activities have resulted in an increase in their costs. You should:

A. Recommend a change to the project costs.

B. Have a meeting with management to find out what to do.
C. Ask the seller for supporting information.
D. Deny any wrongdoing.

25) Your cost forecast shows that you will have a cost overrun at the end of the project. Which of the following
should you do?

A. Eliminate risks in estimates and re-estimate.

B. Meet with the sponsor to find out what work can be done sooner.
C. Cut quality.
D. Decrease scope.

26) A new store development project requires the purchase of various equipment, machinery, and furniture. the
department responsible for the development recently centralized its external purchasing process and
standardized its new order system. In which document can these new procedures be found?

A. Project scope statement

B. WBS
C. Staffing management plan
D. Organizational policies

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27) Early in the life of your project, you are having a discussion with the sponsor about what estimating techniques
should be used. You want a form of expert judgment, but the sponsor argues for analogous estimating. It would
be best to:

A. Agree to analogous estimating, as it is a form of expert judgment.

B. Suggest life cycle costing as a compromise.
C. Determine why the sponsor wants such an accurate estimate.
D. Try to convince the sponsor to allow expert judgment because it is typically
more accurate.

28) You have just completed the initiating processes of a small project and are moving into the planning processes
when a project stakeholder asks you for the project's budget and cost baseline. What should you tell her?

A. The project budget can be found in the project's charter, which has just been
completed.
B. The project budget and baseline will not be finalized and accepted until the
planning processes are completed.
C. The project management plan will not contain the project's budget and
baseline; this is a small project.
D. It is impossible to complete an estimate before the project management plan is
created.

29) The project manager is allocating overall cost estimates to individual activities to establish a baseline for
measuring project performance. What process is this?

A. Cost Management
B. Estimate Costs
C. Determine Budget
D. Control Costs

30) Monitoring cost expended to date in order to detect variances from the plan occurs during:

A. The creation of the cost change management plan.

B. Recommending corrective actions.
C. Updating the cost baseline.
D. Product performance reviews.

31) A cost management plan contains a description of:

A. The project costs.

B. How resources are allocated.
C. The budgets and how they were calculated.
D. The WBS level at which earned value will be calculated.

32) A manufacturing project has a schedule performance index (SPI) of 0.89 and a cost performance index (CPI) of
0.91. Generally, what is the BEST explanation for why this occurred?

A. The scope was changed.

B. A supplier went out of business and a new one needed to be found.
C. Additional equipment needed to be purchased.
D. A critical path activity took longer and needed more labor hours to complete.

33) Although the stakeholders thought, there was enough money in the budget, halfway through the project the cost
performance index (CPI) is 0.7. To determine the root cause, several stakeholders audit the project and discover
the project cost budget was estimated analogously. Although the activity estimates add up to the project
estimate, the stakeholders think something was missing in how the estimate was completed. Which of the
following describes what was missing?

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A. Estimated costs should be used to measure CPI.
B. SPI should be used, not CPI.
C. Bottom-up estimating should have been used.
D. Past history was not taken into account.

34) Earned value analysis is an example of:

A. Performance reporting.
B. Planning control.
C. Ishikawa diagrams.
D. Integrating the project components into a whole.

35) You are about to take over a project from another project manager and find out the following information about
the project. Activity Z has an early start (ES) of day 15 and a late start (LS) of day 20. Activity Z is a difficult
activity. The cost performance index (CPI) is 1.1. The schedule performance index (SPI) is 0.8. There are 11
stakeholders on the project. Based on this information, which of the following would you be the MOST
concerned about?

A. Schedule.
B. Float.
C. Cost.
D. The number of available resources.

36) The difference between the cost baseline and the cost budget can be best described as:

A. The management reserve.

B. The contingency reserve.
C. The project cost estimate.
D. The cost account.

37) You provide a project cost estimate for the project to the project sponsor. He is unhappy with the estimate,
because he thinks the price should be lower. He asks you to cut 15 percent off the project estimate. What should
you do?

A. Start the project and constantly look for cost savings.

B. Tell all the team members to cut 15 percent from their estimates.
C. Inform the sponsor of the activities to be cut.
D. Add additional resources with low hourly rates.

38) Cost risk means:

A. There are risks that will cost the project money.

B. The project is too risky from a cost aspect.
C. There is a risk that project costs could go higher than planned.
D. There is a risk that the cost of the project will be lower than planned.

39) A project manager needs to analyze the project costs to find ways to decrease costs. It would be best if the
project manager looks at:

A. Variable costs and fixed costs.

B. Fixed costs and indirect costs.
C. Direct costs and variable costs.
D. Indirect costs and direct costs.

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40) Which type of project cost estimate is the most accurate?

A. Preliminary
B. Definitive
C. Order of magnitude
D. Conceptual

41) To assist in budget control, it is suggested that the estimate occur at the _____ ____ ______ level of the WBS

A. Highest
B. Lowest
C. Major work effort
D. Third

42) Cost Variance (CV) is which of the following equations?

A. CV = BCWP - BCWS
B. CV = BCWP - ACWP
C. CV = SV / BCWS
D. A and c

43) Cost budgeting can be best described by which of the following?

A. The process of developing the future trends along with the assessment of
probabilities, uncertainties, and inflation that could occur during the project
B. The process of assembling and predicting costs of a project over its life cycle
C. The process of establishing budgets, standards, and a monitoring system by
which the investment cost of the project can be measured and managed
D. The process of gathering, accumulating, analyzing, reporting, and managing
the costs on an on-going basis

44) Which of the following is a direct project cost?

A. Lighting and heating for the corporate office

B. Workers Compensation insurance
C. Piping for an irrigation project
D. A and B

45) Cost controls can be best described by which of the following?

A. The process of developing the future trends along with the assessment of
probabilities, uncertainties, and inflation that could occur during the project
B. The process of assembling and predicting costs of a project over its life cycle
C. The process of assembling and predicting costs of a project under its life cycle
D. The process of gathering, accumulating, analyzing, reporting, and managing
the costs on an on-going basis.

46) The BCWS = $250, the ACWP = $350, and the BCWP = $200. Calculate the Cost Variance.

A. -$150
B. $150
C. -$50
D. $50

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47) Life Cycle Costing is a term that is:

A. used when making decisions between alternatives

B. employed principally by the government
C. typically used in the construction industry
D. not used within the government
E. A and B

48) The project manager is making sure that the product of the project has been completed according to
the project management plan. What part of the project management process is he in?

A. Planning
B. Executing
C. Monitoring and controlling
D. Closing

49) A project manager is employed by a construction company and is responsible for the furnishing of
the completed building. One of the first things that the project manager for this project should do is
to write a:

A. Work breakdown structure.

B. Budget baseline.
C. Project charter.
D. Project plan.

50) A cost performance index (CPI) of 0.89 means:

A. At this time, we expect the total project to cost 89 percent more than planned.
B. When the project is completed, we will have spent 89 percent more than
planned.
C. The project is only progressing at 89 percent of that planned.
D. the project is only getting 89 cents out of every dollar invested.

51) In which project management process group is the detailed project budget created?

A. Initiating
B. Before the project management process
C. Planning
D. Executing

52) A schedule performance index (SPI) of 0.76 means:

A. You are over budget.

B. You are ahead of schedule.
C. You are only progressing at 76 percent of the rate originally planned.
D. You are only progressing at 24 percent of the rate originally planned.

53) You have two possible projects to manage, but you can only choose one. Project MKTG is worth
$23,000, while Project SALESPTR is worth $25,000. Management elects to choose Project SALESPTR.
Which one of the following is the opportunity cost of this choice?
A. $23,000
B. $27,000
C. $50,000
D. $4000
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54) You are a project manager of a project. Till today you have actually completed $34,000 of work, but based on
the cost plan it should be $50,000. What is percentage Schedule Variance (SV) in this case?

A. -32%
B. -16%
C. 32%
D. None of the above

55) Your project has a budget of $10,000 and is expect to last for 1 year, with the work and budget spread evenly
across all months. Right now CPI is 0.8. What is Variance at Completion in this case?

A. -$2,500
B. $10,000
C. $12,500
D. $12,000

56) Your project has a budget of $12,000 and is expect to last for 1 year, with the work and budget spread evenly
across all months. The project is now in the fourth month, but till now total spending for this project is $5,000.
What is Variance at Completion in this case?

A. -$3,000
B. -$5,000
C. $12,000
D. $13,000

57) Project Cost Management includes all of the following except:

A. Resource leveling
B. Resource planning
C. Cost estimating
D. Cost budgeting
E. Cost control

58) Which of the following choices indicates that a project has a Cost Performance Index of 1.2?

A. The BCWS is 100 and the BCWP is 120.

B. The ACWP is 100 and the BCWP is 120.
C. The ACWP is 120 and the BCWP is 100.
D. The BCWP is 100 and the BCWS is 120.

59) The Input to Cost Budgeting includes all of the following except:

A. Cost estimates
B. Cost baseline
C. WBS
D. Project schedule

60) During the six month update on a 1 year, $50,000 project, the analysis shows that the BCWS is $25,000; the
BCWP is $20,000 and the ACWP is $15,000. What can be determined from these figures?

A. The project is behind schedule and over cost.

B. The project is ahead of schedule and under cost.
C. The project is ahead of schedule and over cost.
D. The project is behind schedule and under cost.

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61) Earned value is:

A. Actual cost of work performed.

B. Completed work value.
C. Budgeted cost of work performed.
D. Percent complete.
E. All except A.

62) Which of the following Cost Management processes are concerned with cost baseline?

A. Cost estimating
B. Cost budgeting
C. Cost control
D. B and C
E. A and B

63) Cost control is concerned with:

A. Allocating the overall estimates to individual work packages in order to

establish a cost baseline.
B. Influencing the factors, which create changes to the cost baseline to ensure
that changes are beneficial.
C. Determining that the cost baseline has changed.
D. B and C
E. A and B

64) Which of the following statements concerning bottom-up estimating is true?

A. The cost and accuracy of bottom-up estimating is driven by the size of the
individual work items.
B. Smaller work items increase both cost and accuracy.
C. Larger work items increase both cost and accuracy.
D. A and C
E. A and B

65) Percent complete is calculated by:

A. ACWP / BAC
B. BCWP - ACWP
C. BCWP / BAC
D. EAC / BAC

66) Life cycle costing:

A. Includes acquisition, operating, and disposal costs when evaluating various

alternatives.
B. Includes only the cost of the development or acquisition of a product or
service.
C. Does not take into consideration the effect of project decisions on the cost of
using the resulting product.
D. B and C

67) Analogous estimating:

A. Uses bottom-up estimating techniques.

B. Uses the actual costs from a previous, similar project.
C. Is synonymous with top-down estimating.
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D. A and B
E. B and C

68) Estimate at Completion is determined by:

A. ETC + ACWP
B. BAC - ETC
C. BAC / CPI
D. A and C
E. A and B

69) Parametric cost estimating involves:

A. Calculating individual cost estimates for each work package.

B. Using rates and factors based on historical experience to estimate costs.
C. Using the actual cost of a similar project to estimate total project costs.
D. A and B
E. B and C

70) A cost management plan is:

A. A plan for describing how cost variances will be managed.

B. A subsidiary element of the project charter.
C. An input to the Cost Estimating process.
D. A and C
E. A and B

71) Cost estimating:

A. Involves developing an estimate of the costs of the resources needed to

complete project activities.
B. Includes identifying and considering various costing alternatives.
C. Involves allocating the overall estimates to individual work items.
D. A and C
E. A and B

72) Which process is not included in Project Cost Management

A. Resource planning
B. Estimating
C. Budgeting
D. Control
E. Closeout

73) BCWS is the sum of the approved cost estimate for activities scheduled to be performed during a given period

A. True
B. False

74) The relationship between the budgeted actual cost, actual work completed, and work planned will determine
the:

A. Schedule estimate at completion

B. Cost estimate at completion
C. Cost Performance Index
D. Schedule Performance Index

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75) All work packages are complete:

A. at EAC time
B. when BAC is equal to EAC
C. when BCWP intersects BCWS
D. when schedule variance is zero
E. C and D

76) Earned value is:

A. the base line plan

B. completed work value
C. cost / cost variance
D. percent over o under budget
E. A and B

77) Richard was so concerned about his project that he woke up dreaming about it. He thought to himself, "Well,
our BCWP is 2, our ACWP is 4, and our BCWS is 6, so that means

A. Our productivity was less than planned

B. Our cost estimate at completion is 6
C. Our CPI and SPI are both positive
D. Our cost variance is negative
E. A, C, and D

78) The measurement which best shows the difference between actual work and actual costs is

A. Cost variance
B. Percent Over or under
C. Schedule variance
D. CPI

79) Rework costs _______ times budgeted costs

A. +75, -25
B. +25, -10
C. 85
D. 10 to 15
E. 25 to 50

80) If the ACWP exceeds the BCWP, the cost estimate at completion will

A. Increase
B. Decrease
C. Depend on the BCWS
D. Exceed the schedule estimate at completion
E. A and D

81) If the BCWS = $1,000,000, the BAC = $2,000,000, the ACWP = $1,500,00 the BCWP = $500,000 and you
are halfway through the project after two years, what is the cost estimate at completion?

A. $2,000,000
B. $4,000,000
C. $6,000,000
D. $8,000,000

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82) The cost estimate that has a range for error of minus 10 percent to plus 25 percent is the _________ estimate.

A. Budget
B. Definitive
C. Parametric
D. Analogy
E. Contingency

83) In the earned values system, the focus is on "cost of work," which is divided into "scheduled" and "performed"
work. This is further defined as "budgeted" and "actual" work. The formula "BCWP - BCWS" provides the
__________.

A. cost difference
B. schedule variance
C. overrun conditions
D. schedule difference
E. cost variance

84) Indices can provide an indication of the status of a project. In the earned values system, there are two indices:
Cost Performance Index (CPI) and Schedule Performance Index (SPI). The formula for CPI is _________.

A. ACWP / BCWS
B. ACWP / BCWP
C. BCWP / ACWP
D. BCWS / ACWP
E. BCWS / BCWS

85) Suppose that in the earned value system, the status of the project is reported as BCWS = 100, ACWP = 110,
BCWP = 95. The project is now __________.

A. underspent and behind schedule

B. overspent and ahead of schedule
C. underspent and ahead of schedule
D. overspent and behind schedule
E. cannot be determined from available data

86) Projects have direct and indirect costs that the project manager must track to ensure the budget is not exceeded.
The project manager has the most control over direct costs such as __________.

A. bonuses, fees, and awards

B. labor, materials, and equipment
C. labor, supervision, and fees
D. overhead, G&A, and fees
E. G&A, facilities, and transportation

87) Suppose the corporate CEO has decided to delay the start of a major project by one year and you have been
asked to compute the difference in cost to complete the three-year project. The only major increase will be in
the labor and material costs. Assume the labor is level for the entire three years and the material will be
purchased at the midpoint (i.e. 18 months after project start). The project was to start immediately with a cost
for labor at $12,000,000 per year, and total material cost is:

A. $1,250,000
B. $770,000
C. $1,289,168
D. $5,191,682
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88) The most accurate estimates (and the most expensive to produce) are __________.

A. analogous estimates
B. parametric estimates
C. top-down estimates
D. bottom-up estimates
E. function point estimates

89) The __________ identifies the project elements that cost will be allocated to.

A. work breakdown structure

B. PERT estimates
C. earned value
D. order of magnitude estimate
E. BCWR

90) The EAC is a forecasting technique based on past project performance. It can be calculated using the formula
__________.

A. cumulative actuals + (ETC x CPI)

B. cumulative actuals + new estimate for cost of work remaining
C. cumulative actuals + remaining budget
D. all of the above
E. none of the above

91) Which of the following is not a key input to cost budgeting?

A. Project cost estimates

B. Project schedule
C. The WBS
D. Staff availability

92) The cost change control system :

A. Should not be integrated with the integrated change control system

B. Compensates for inaccurate project cost estimates
C. Defines the procedures by which the cost baseline may be changed
D. Describes how cost variances will be managed

93) Which of the following is used to determine how efficient the project team must be to complete the remaining
work within the remaining money?

A. Schedule Performance Index ( SPI )

B. Percent Complete ( PC )
C. To-Complete Performance Index ( TCPI )
D. cost Performance Index ( CPI )

94) Analogous Cost Estimating is

A. Generally Accurate
B. Generally less accurate
C. Uses statistical relationship between historical data and other variables
D. Bottom-up estimating

95) Which is NOT true about Analogous Cost Estimating

A. Uses Expert Judgment

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B. Used when reference projects are similar
C. Does not require high expertise on part of estimators as estimates are based on
previous projects
D. Useful in early phases of the project

96) You are creating your Cost Performance Baseline. What process are you in?

A. Determine Budget
B. Control Costs
C. Estimate Costs
D. Cost Base lining

97) If AC (ACWP) is greater than your EV (BCWP), what does this mean?

A. The project is under budget

B. The project is over budget
C. The project is ahead of schedule
D. The project is behind schedule

98) A junior project manager is studying for her PMP exam, and asks you for advice. She’s learning about Earned
Value Management, and wants to know which of the variables represents the difference between what you
expect to spend on the project and what you’ve actually spent so far. What should you tell her?

A. Actual Cost (AC)

B. Cost Performance Index (CPI)
C. Earned Value (EV)
D. Cost Variance (CV)

99) Project A has a NPV of $75,000, with an internal rate of return of 1.5% and an initial investment of $15,000.
Project B has a NPV of $60,000 with a BCR of 2:1. Project C has a NPV of $80,000, which includes an
opportunity cost of $35,000. Based on these projects, which is the BEST one to select:

A. Project A
B. Project B
C. Project C
D. There is not enough information to select a project

100) You are managing a project for a defense contractor. You know that you’re over budget, and you need to tell
your project sponsor how much more money it’s going to cost. You’ve already given him a forecast that
represents your estimate of total cost at the end of the project, so you need to take that into account. You now
need to figure out what your CPI needs to be for the rest of the project. Which of the following BEST meets
your needs?

A. BAC
B. ETC
C. TCPI (BAC calculation)
D. TCPI (EAC calculation)

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Q7) The following table for five tasks with values of BCWS, ACWP, BCWP:

Task BCWS ACWP BCWP

1 9,500 10,000 9,500
2 15,000 13,000 11,000
3 13,000 13,000 13,000
4 8,000 8,000 9,000
5 10,000 10,000 9,000

1) Which task is most over budget?

A. Task 1
B. Task 2
C. Task 3
D. Task 4
E. Task 5

2) Which task is ahead of schedule and under cost?

A. Task 1
B. Task 2
C. Task 3
D. Task 4
E. Task 5

3) Which task is on schedule with a cost variance of $0?

A. Task 1
B. Task 2
C. Task 3
D. Task 4
E. Task 5

4) Which task has the greatest schedule variance?

A. Task 1
B. Task 2
C. Task 3
D. Task 4
E. Task 5

Q8) what does the next terms mean?

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Q9) Given the following problem:

Work Unit Completion Date Budget Work Performed Actual Cost

(in $M) ($M) (in $M)
A Jan. 31 10 10 12
B Feb. 28 5 4 5
C Mar. 31 6 8 8
D May 12 15 13 12
E June 30 20 20 30
F July 18 3 0 0
G Aug. 30 35 0 0
H Sept. 22 22 0 0
I Oct. 29 12 0 0
J Nov. 30 9 0 0

Today is June 30th.

1. What is the Cost Variance?
2. What is the Schedule Variance?
3. What is the CPI?
4. What is the SPI?
5. What is the EAC?
6. What is the ETC?
7. What is the Percent Complete?
8. What is the Percent Spent?
9. What can be said about this project?

Solution

Today is June 30th.

BAC = Sum of the Budgets for all of the work units = $137

1. What is the Cost Variance?

Work Performed (EV) - Actual Costs $55 - $67 = -$12

2. What is the Schedule Variance?

Work Performed (EV) - Budget (PV) $55 - $56 = -$1

3. What is the CPI?

EV/AC $55/$67 = 0.82

4. What is the SPI?

EV/PV $55/$56 = 0.98

5. What is the EAC?

AC + (BAC - EV)/CPI $67 + ($137-$55)/.82 = $167 or BAC/CPI $137/.82 = $167

6. What is the ETC?

EAC - AC $167 - $67 = $100

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7. What is the Percent Complete?
EV/BAC $55/$137 = 40%

8. What is the Percent Spent?

AC/BAC $67/$137 = 49%

9. What can be said about this project?

Over cost, a little behind schedule
_______________________________________________________________________________________

Q10) Given the following problem:

1) What is the present value of $1000 at 12% at the end of 5 years?

2) What is the present value of an annual income flow of $1600 at 10% over the next 3 years?
3) Management is considering buying a machine for $10,000, which is expected to save $4,000 over the next 3
years. If the desired rate of return is 15% per annum, should the machine be bought? May use the following
table to simplify the calculations.
Yr 1/(1+.15)**t
1 0.870
2 0.756
3 0.658
4) For problem #3 above make the assumption that the company didn’t have to pay for the machine until the third
year. Compute the net present value and determine if the company should buy the machine.

Solution

1)
PV (5) = $1000/ (1.12) **5 = $567.44
So, if $567.44 is invested at a rate of 12%/year for 5 years, we will have $1000 at the end of the fifth year.

2)
Yr 1/(1+.10)**t PV
1 .909 $1600*.909 = $1454.55
2 .826 $1600*.826 = $1322.31
3 .751 $1600*.751 = $1202.10

PV = $1454.55 + $1322.31 + $1202.10 = $3978.96

3)

NPV = PV (1) + PV (2) + PV (3) - Sum of Investment Cost

NPV = $4000(0.87) + $4000(.756) + $4000(.658) - $10,000
NPV = $3480 + $3024 + $2632 - $10,000 = -$864
NPV is negative; therefore, this is not considered a good investment.

4)

NPV = PV(1) + PV(2) + PV(3) - Sum of Investment Cost

NPV = $4000(0.87) + $4000(.756) + $4000(.658) - $10,000(.658)
NPV = $3480 + $3024 + $2632 - $6,580 = $2,556
NPV is positive; therefore, this is considered a good investment.
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5102 ‫ملخص االمتحانات لمادة إدارة التكاليف‬
Q11) Given the following problem:

Yrs Revenue PV(r) Cost PV(c)

0 0 50,000
1 3,000 35,000
2 13,500 15,000
3 30,000 5,000
4 40,000 5,000
5 50,000 5,000
6 50,000 10,000
7 50,000 15,000

A. Calculate the present value of both revenue and cost assuming a 10% interest rate.
B. Calculate the benefit-cost ratio.
C. Based on the BCR and profitability alone, would you do this project?

Solution

Yrs Revenue PV(r) Cost PV(c)

0 0 05 0,000 50,000
1 3,000 2,727 35,000 31,818
2 13,500 11,157 15,000 12,397
3 30,000 22,539 5,000 3,757
4 40,000 27,321 5,000 3,415
5 50,000 31,046 5,000 3,105
6 50,000 28,224 10,000 5,644
7 50,000 25,658 15,000 7,697
48,672 117,833
B)

BCR = PV(r)/PV(c)
BCR = 148,672/117,833 = 1.26
C)
Depends on who you ask. Should be 1.3 x cost before considering.

_______________________________________________________________________________________

2015

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