PMP Questions cost knowledge page 3

21.

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

22.

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?

Select one

A critical path activity took longer and needed more labor hours to complete.

A supplier went out of business and a new one needed to be found.

The scope was changed.

Additional equipment needed to be purchased.

23.

The planned announcement is a closely guarded secret, as the organization does not want the competition to attempt to steal secrets or deflect media attention the project is over budget to date. Which of the following is not a reason this could have occurred?

Select one

Work was done inefficiently

There was a cost increase from the supplier

More work than planned was accomplished

Work was delayed

24.

You are in the process of developing an approximation of the monetary resources needed to complete project work for a large-scale multinational project which will take at least seven years to complete. Your previous projects have all been domestic with short timeframes. As part of the process you are currently performing, what might you need to do differently compared with your past projects?

Select one

Create a stakeholder engagement assessment matrix

Develop a more robust risk management plan

Include additional organizational process assets

Consider additional enterprise environmental factors

25.

A project manager is developing a cost management plan and needs to determine the best source of funding for a project that is dictated by a legal requirement. The cost of capital is estimated at 9.7% for non-dividend paying equity, 6.7% for debt, and 5.1% for self-funding. The NPV of the project is $500,000 with an opportunity cost of $750,000. What is the project manager's best course of action?

Select one

Fund the project with equity since there are no dividend obligations

Select the self-funding option since it provides the lowest cost of capital

Recommend the termination of the project since another project has a higher NPV

Perform an alternatives analysis since there are multiple factors to consider

26.

A project team member runs an earned value analysis (EVA) report. There is an unexpected spike in actual costs over the last three weeks. The team member shows the report to the project manager and based on her analysis presents four possible reasons for the spike. Which reason is most probable?

Select one

There was a strike at the loading dock which delayed many needed steel shipments until today

Fewer employees are showing up for work the past two weeks causing a backlog of unfinished work

Much higher than expected quarterly bonuses were given to executives during that three week period

Soaring steel prices have impacted the fixed price with economic price adjustments procurement contracts

27.

While working to determine the budget for an avionics project, the company decides to hire a highly reputable financial analyst that has worked in the aviation industry for three decades. Halfway through the project, a series of unanticipated risk events occur, and the project cannot pay its invoices. What is most likely to be the cause?

Select one

The control accounts were not correctly established

The analyst did not identify risks properly

Funding limit reconciliation was done incorrectly

The management reserves were exhausted

28.

For the project with Earned Value (EV) = $350, Actual Cost (AC) = $300 and Planned Value (PV) = $400. The original project budget is $1,000. Assuming the remaining work will be impacted by the current cost performance and current schedule performance, what is the Estimate At Completion (EAC) of the project?

Select one

$1,280

$837

$987

$937

29.

For the project with Earned Value (EV) = $300, Actual Cost (AC) = $250 and Planned Value (PV) = $300. The original project budget is $1000. Assuming the project will continue to spend money at the same rate, what is the Estimate At Completion (EAC) of the project?

Select one

$933

$1,000

$1,033

$833

30.

For a project with Earned Value (EV) = $300, Actual Cost (AC) = $350 and Planned Value (PV) = $400. The overall project budget is $1,000. Assume that you will continue to spend at the same rate as you are currently spending. What is the Variance At Completion (VAC)?

196 New PMP Cost Questions & Answers with explanation