1.

When developing the cost management plan, what tool or technique would include reviewing
the different funding options that can be used to fund the project?
a. Meetings
b. Data Analysis
c. Expert Judgment
d. External Funding

Answer: B. Data analysis includes alternative analysis, which includes reviewing strategic
funding options. Meetings and expert judgment does not look at different funding options.
External funding is not a valid tool.

2. While working on a multinational project, the project manager has decided to represent the
project budget in American dollars even though the project will span nine different countries.
This will make it uniform and easier for the stakeholders to understand the budget. Where will
the project manager document the units of measurement for the budget?
a. Cost management plan
b. Funding management plan
c. Units of measurement plan
d. Currency format plan

Answer: A. The cost management plan can establish the units of measurement which would
include the currency format. All other choices are made-up plans.

3. Early in the planning phase of the project, the project team has determined that the costs to
install the server would be $15,000. This is a high level estimate and the team thinks it may costs
up to $10,000 more. What kind of estimate is this?
a. Definitive estimate
b. Rough order of magnitude estimate
c. Wide estimate
d. Plan estimate

Answer: B. A rough order of magnitude estimate has a range of -25% to +75%. A definitive
estimate is generally within the range of -5% to +10%. Wide and plan estimates are not
actual types of estimates.

4. Cost estimates for activities generally include the cost for labor, materials, equipment, services,
and facilities. Which of the following statements is false regarding costs estimates?
a. Cost estimates are progressively elaborated
b. Cost estimates are best done by the project team
c. Cost estimates also includes the operational cost of the product
d. Cost estimates also include the contingency costs

Answer: C. Cost estimates for project activities should not include operational cost of the
product, since that is operations and not a project. All other choices are true.

5. While working on a game design project, the project sponsor has inform the project manager
that to ensure his estimates are very precise. What estimating technique should the project
manager use?
 a. Analogous estimating
b. Bottom-up estimating
c. Three-point estimating
d. Accuracy estimating

Answer: B. Bottom-up estimating is when work packages are broken down and then rolled
back up to form an overall cost estimate. This can lead to a very precise estimate, although
it requires the most amount of work. Analogous estimation is a quick estimate that is based
on previous projects. Three-point estimating uses the PERT formula and may or may not be
accurate. Accuracy estimating is a made-up term.

6. The project manager and the project team has determined that the budget for the project will
be $60,000. That includes the cost for all the activities and all uncertainties that may have been
on the project. The project cost baseline is $60,000. The sponsor has determined that just in
case there is a need for additional funds, he will add an additional $5,000. The additional $5,000
represents?
a. Contingency Reserves
b. Risk Reserves
c. Management Reserves
d. Sponsor Reserves

Answer: C. Management reserves are added to the cost baseline in case the project exceeds
its budget. It is usually added by the company’s management and is not under the control of
the manager. Contingency reserves are part of the cost baseline. Risks and sponsor reserves
are made-up terms

7. The project manager has worked with an expert project team to create the estimates for cost on
the project. The project manager is very confident that the project will end at that budget.
Where should the project manager document confidence level of the costs estimate?
a. Cost baseline
b. Cost management plan
c. Risk register
d. Basis of estimates

Answer: D. The basis of the estimates will have an indication of the confidence level of the
final estimate. No other choice will document the confidence level of an estimate.

8. When determining the budget for a project, what tool with the project manager use in order to
sum up the cost of each work package to form the entire project budget?
a. Data analysis
b. Decision making
c. Cost aggregation
d. WBS aggregation

Answer: C. Cost aggregation is when you take the work packages and aggregate their
individual cost to find the entire project budget. Data analysis does not contain any cost
segregation and so does decision making. WBS aggregation is a made-up term.
9. The project manager has just been told by the project sponsor that due to a current recession in
the stock market the company will not be able to allocate all of the funds, the project will need
in order to be completed. What should the project manager do with this funding limit?
a. Implemented change requests
b. Reschedule the project work
c. Close the project
d. Seek external funding

Answer: B. In the process of determining budget, the tool of funding limit reconciliation is
handled by rescheduling of work. Implementing a change request may not help since the
organization will not have the money, closing the project will not resolve the funding
problems and seeking external funding may not be an option.

10. The project manager has completed the process of determining budget. He has created the cost
baseline which will be added to the project management plan. The Project manager is also
aware of the project budget. What is the difference between the project budget and cost
baseline?
a. The cost baseline includes the contingency and management reserves
b. The cost baseline only includes the management reserves
c. The cost baseline includes the contingency reserves and the project budget includes the
management reserves
d. The cost baseline includes the management reserves and the project budget includes
the contingency reserves

Answer: C. The cost baseline would includes the cost of all activities plus the contingency
reserves and the management reserves would include the cost baseline plus the
management reserves.

11. In the process of control costs the project manager compares the project management plan
what other information?
a. Work performance data
b. Project funding requirements
c. Project documents
d. Work performance reports

Answer: A. In almost all monitoring and controlling processes, the project manager
compares the project plan with the work performance data to determine if the project is in
“control”.

12. The project manager is currently evaluating how well the project is meeting the project budget.
What earned value formula will be needed in order to determine if a project is on or over
budget?
a. PV
b. AC
c. SV
d. SPI
 Answer: B. In order to determine if a project is on or over budget, you will need to calculate
the CV or CPI which both uses the value of AC.

13. The budget manager has completed all the earned value analysis for the project. He has
concluded that the CPI of the project is .9. Which of the following statement best describes this
project?
a. Over budget by 10%
b. over budget by 90%
c. on the budget by 10%
d. under budget by 90%

Answer: A. The CPI or cost performance Index is a measurment of the cost efficiency of the
budgeted resources. When the number is at one, it represents the project is on budget. A
number below one illustrates the project is over budget. At .9, it would mean that the
project is 10% over budget.

14. The project manager has calculated the EV of the project to be $14,000 and the PV is $16,000.
The BAC is currently at $22,000. Which statement best describes this project?
a. The project is ahead of schedule
b. The project is on budget
c. The project is over budget
d. The project is behind schedule

Answer: D. If you are to calculate the SV on this project, you would have gotten a negative
number. To calculate SV you would take EV minus PV which is $14,000-$16,000 = -2,000.
This project is behind schedule by $2,000 worth of work.

15. While working on a multinational project with a budget of $90,000, the team has completed the
design aspect of the project. You have calculated that the AC is $30,000 and the EV is $32,000.
What is the EAC of this project?
a. $89,000
b. $92,804
c. $89,807
d. $84,906

Answer. D. To find out the EAC you will need the BAC and CPI. You currently have the BAC
which is $90,000. The CPI is equal to EV/AC = $32,000/$30,000 = 1.06. So, EAC is equal to
$90,000/1.06 = $84,906.

16. When creating the cost baseline, the project manager uses an S-curve graph to represent the
baseline. Which of the following statement is true about the s-curve?
a. It is a time phase view of the cost baseline
b. It is a time phase view of the project schedule
c. It is a time phase view of the project scope
d. It’s used to create the project schedule

Answer: A. The s-curve is a time phase view of the cost baseline which typically shows the
budget versus the actual spend on the project.
17. Which one of the following is FALSE about TCPI?
a. TCPI calculates the performance that must be achieved in order to meet financial or
schedule goals.
b. TCPI usually determines the status on the remaining work with respect to the funds
remaining.
c. If the cumulative CPI falls below the baseline plan, all future work must be performed at
the TCPI to achieve the planned BAC.
d. If the cumulative CPI falls below the baseline plan, all future work must be performed
below the TCPI to achieve the planned BAC.

Answer: D: TCPI calculates the performance that must be achieved in order to meet financial
or schedule goals and determines the status on the remaining work with respect to the
funds remaining. If the cumulative CPI falls below the baseline plan, all future work must be
performed at the TCPI to achieve the planned BAC.

18. Earned Value Management (EVM) will NOT be very beneficial in which situation?
a. To measure a project’s progress against the project scope, cost, and schedule baselines.
b. To forecast future performance and the project’s completion date and final cost.
c. To provide schedule and budget variances during the project.
d. To develop the project cost baseline.

Answer: D: Earned value analysis provides a means to determine cost and schedule
variances, not to develop the project cost baseline.

19. While developing complex software the project manager has decided to bill the company by
how many lines of codes it will take to write the software. What type of estimate best describes
this scenario?
a. Bottom-up estimating
b. Analogous estimating
c. Parametric estimating
d. Three-point estimating

Answer: C. Parametric estimating uses mathematical models based on historical records

20. Which of the following statements would be considered false about a project that has an SPI of
1.2 and the CPI of .7?
a. The project is being crashed to complete faster
b. The project is being fast-track to complete faster
c. The project is ahead of schedule and over budget
d. A change request may be needed to correct the budget

Answer: B. Of the choices, the only answer that maybe correct would be that the project is
being fast-track, since fast-track and generally results in a shorter schedule but does not
affect costs. All other choices are 100% true since the project is over budget but ahead of
schedule.