Tag: Project Management Professional (PMP) Exam Practice

Project Management Professional (PMP) Exam Practice – Question1422

On your project, you need to assign costs to the time period in which they are incurred. To do this, you should______________


A. Identify the project components so that costs can be allocated
B. Use the project schedule as an input to determine budget
C. Prepare a detailed and accurate cost estimate
D. Prepare a cost performance plan

Correct Answer: B

Explanation:

Explanation:
Accurate project performance measurement depends on accurate cost and schedule information. The project schedule includes planned start and finish dates for all activities tied to work packages and control accounts. This information is used to aggregate costs
to the calendar period for which the costs are planned to be incurred.

Project Management Professional (PMP) Exam Practice – Question1421

As of the fourth month on the Acme project, cumulative planned expenditures were $100,000.

Actual expenditures totaled $120,000. How is the Acme project doing?


A. It is ahead of schedule.
B. It is in trouble because of a cost overrun.
C. It will finish within the original budget.
D. The information is insufficient to make an assessment.

Correct Answer: D

Explanation:

Explanation:
The information provided tells us that, as of the fourth month, more money has been spent than was planned. However, we need to know how much work has been completed to determine how the project is performing. In earned value terms, we are missing the
EV.

Project Management Professional (PMP) Exam Practice – Question1420

When you review cost performance data on your project, different responses will be required depending on the degree of variance or control thresholds from the baseline. For example, a variance of 10 percent might not require immediate action, whereas a
variance of 100 percent will require investigation. A description of how you plan to manage cost variances should be included in the______________


A. Cost management plan
B. Change management plan
C. Performance measurement plan
D. Variance management plan

Correct Answer: A

Explanation:

Explanation:
The management and control of costs focuses on variance thresholds. Certain variances are acceptable, and others, usually those falling outside a particular range, are unacceptable. They are typically expressed as percentage deviations from the baseline plan.
The actions taken by the project manager for variances are described in the cost management plan.

Project Management Professional (PMP) Exam Practice – Question1419

If operations on a work package were estimated to cost $1,500 and finish today but, instead, have cost $1,350 and are only two-thirds complete, the cost variance is______________


A. $150
B. -$150
C. -$350
D. -$500

Correct Answer: C

Explanation:

Explanation:
CV is calculated by EV -AC, or $1,500(2/3) -$1,350 = -$350.

Project Management Professional (PMP) Exam Practice – Question1418

Management has grown weary of the many surprises, mostly negative, that occur on your projects. In an effort to provide stakeholders with an effective performance metric, you will use the to-complete performance index (TCPI). Its purpose is to______________


A. Determine the schedule and cost performance needed to complete the remaining work within management's financial goal for the project
B. Determine the cost performance needed to complete the remaining work within management's financial goal for the project
C. Predict final project costs
D. Predict final project schedule and costs

Correct Answer: B

Explanation:

Explanation:
Determine the cost performance needed to complete the remaining work within management’s financial goal for the project The TCPI takes the value of work remaining and divides it by the value of funds remaining to obtain the cost performance factor needed to
complete all remaining work according to a financial goal set by management.

Project Management Professional (PMP) Exam Practice – Question1417

You are responsible for preparing a cost estimate for a large World Bank project. You decide to prepare a bottom-up estimate because your estimate needs to be as accurate as possible. Your first step is to______________


A. Locate a computerized tool to assist in the process
B. Use the cost estimate from a previous project to help you prepare this estimate
C. Identify and estimate the cost for each work package or activity
D. Consult with subject matter experts and use their suggestions as the basis for your estimate

Correct Answer: C

Explanation:

Explanation:
Bottom-up estimating is derived by first estimating the cost of the project’s elemental tasks at the lower levels of the WBS or for an activity and then aggregating those estimates at successively higher levels of the WBS for subsequent reporting and tracking
purposes.

Project Management Professional (PMP) Exam Practice – Question1416

If the cost variance is the same as the schedule variance and both numbers are greater than zero, then______________


A. The cost variance is due to the schedule variance
B. The variance is favorable to the project
C. The schedule variance can be easily corrected
D. Labor rates have escalated since the project began

Correct Answer: B

Explanation:

Explanation:
A positive schedule variance indicates that the project is ahead of schedule. A positive cost variance indicates that the project has incurred less cost than estimated for the work accomplished; therefore, the project is under budget.

Project Management Professional (PMP) Exam Practice – Question1415

You must consider direct costs, indirect costs, overhead costs, and general and administrative costs during cost estimating. Which of the following is NOT an example of a direct cost?


A. Salary of the project manager
B. Subcontractor expenses
C. Materials used by the project
D. Electricity

Correct Answer: D

Explanation:

Explanation:
Direct costs are incurred for the exclusive benefit of a project (for example, salary of the project manager, materials used by the project, and subcontractor expenses). Indirect costs, also called overhead costs, are allocated to a project by its performing
organization as a cost of doing business. These costs cannot be traced to a specific project and are accumulated and allocated equitably over multiple projects (for example, security guards, fringe benefits, and electricity).

Project Management Professional (PMP) Exam Practice – Question1413

You have now prepared your cost management plan so now you are preparing your project's cost estimate. You decided to use analogous estimating. Which of the following is NOT characteristic of analogous estimating?


A. Supports top-down estimating
B. Is a form of expert judgment
C. Has an accuracy rate of 10% of actual costs
D. Involves using the cost of a previous, similar project as the basis for estimating current project cost

Correct Answer: C

Explanation:

Explanation:
A frequently used method of estimate costs, the analogous technique relies on experience and knowledge gained to predict future events. This technique provides planners with some idea of the magnitude of project costs but generally not within10%.