PMP Questions cost estimate

You have always been asked by your management to cut your project cost estimates by 10 percent after you submitted them. The scope of your new project is unclear, and there are over 30 stakeholders. Management expects a 25 percent reduction in downtime as a result of the project. Which of the following is the best course of action in this situation?

Select one

Provide an accurate estimate of the actual costs and be able to support your estimate

Meet with the team to identify where you can find 10 percent savings

Reduce the estimate and note the change in the risk response plan

Replan to achieve a 35 percent improvement in downtime

A manufacturing company is implementing a project to produce a new product using new technology and processes. Details of the component work packages have been defined and constraints for each component have been identified. Management would like to obtain a precise cost estimate of the project. What estimating technique should the project manager use?

Select one

Bottom-up

Parametric

Three-point

Analogous

Lucy is currently preparing a high-level cost estimate for her project in the initiation phase. With the limited detail available to her, what would you expect the range of her estimate to be, and what would you call such an estimate?

Select one

-25 to +25%, Absolute Cost

-5 to +10%, Narrow

-1 to +1%, Definitive

-25 to +75%, Rough Order of Magnitude

You want to improve your cost estimates by taking into account estimation uncertainty and risk. Which of the following estimating techniques will you use?

Select one

Analogous estimates

Three-point estimating

Parametric estimates

Bottom-up estimates

Which of the following options is the key component of determining cost estimates and should be completed as early in the project as possible?

Select one

Scope definition

Resource requirements

Activity cost estimates

Basis of estimates

You are the project manager for Xylophone Phonics. It produces children's software programs that teach basic reading and math skills. You're performing cost estimates for your project and don't have a lot of details yet. Which of the following techniques should you use?

Select one

Analogous estimating techniques, because this is a form of expert judgment that uses historical information from similar projects

Bottom-up estimating techniques, because this is a form of expert judgment that uses historical information from similar projects

Monte Carlo analysis, because this is a modeling technique that uses simulation to determine estimates

Parametric modeling, because this is a form of simulation used to determine estimates

A project manager meets with a key set of experts within her project team. They express concerns over recent cost estimates produced, insisting that they have not sufficiently considered alternatives. It is still early in the project life cycle. Which of the following is a valid tool or technique that can aid the project manager in addressing the team’s concerns?

Select one

Analogous estimating

Expert judgment

Decision-making

Data analysis

You’ve derived cost estimates and allocated them to the activities of your project. You know that these estimates will be used to measure cost variances and performance throughout the remaining life of the project. The cost baseline has been established and becomes the expected cost of the project. Which process did you perform to arrive at the cost baseline?

Select one

Estimate Costs

Cost Control

Determine Budget

Develop Costs

Using a triangular distribution formula, calculate the cost estimate based on the following three-point estimates: Optimistic = $2,500, Most Likely = $3,500, Pessimistic = $7,200.

Select one

$4,400

$3,950

$13,200

$3,500

10.

You’ve gathered cost estimates for the activities of your current project. Most of the activities can be completed with existing staff resources. The summary cost estimate for existing resources is $535,000. You will also need to hire contractors to perform some of the activities that require specialized skills. You’ve received a bid from a local vendor for $137,000 for these services. Which of the following statements are true?

Select two

You’ve determined a quantitative estimate of the cost to the organization to perform the activities of the project.

The cost of the vendor services to your organization is considered pricing (from the buyer’s perspective), which is a business decision on their part.

The procurement SOW can be prepared by either the buyer or the seller, and it should be as accurate as possible, as you will use this SOW in the contract award.

You should use purchase price as the sole criterion for choosing among vendors when you have multiple qualified sellers from which to choose.

30 New PMP Questions & Answers with explanation