Project Cost Management
1. What is the primary purpose of project cost management?
A) To ensure that the project is completed within the approved budget
B) To increase project costs
C) To develop the project schedule
D) To manage project risks
Answer: A
2. Which process involves estimating the costs required to complete project activities?
A) Cost Estimating
B) Cost Control
C) Cost Planning
D) Cost Budgeting
Answer: A
3. What does a “cost baseline” represent?
A) The approved version of the project budget, including all planned costs
B) A document outlining project milestones
C) A risk management plan
D) A detailed project schedule
Answer: A
4. Which of the following is a method for estimating project costs?
A) Analogous Estimating
B) Scope Verification
C) Risk Assessment
D) Resource Allocation
Answer: A
5. What is “earned value management” (EVM)?
A) A technique to assess project performance by comparing planned progress with actual progress
B) A method for developing a project schedule
C) A tool for estimating project costs
D) A technique for risk management
Answer: A
6. Which formula is used to calculate “Cost Performance Index” (CPI)?
A) CPI = EV / AC
B) CPI = PV / EV
C) CPI = AC / EV
D) CPI = EV / PV
Answer: A
7. What does “AC” stand for in earned value management?
A) Actual Cost
B) Actual Completion
C) Authorized Cost
D) Aggregate Cost
Answer: A
8. Which term describes the total amount of money allocated for a project?
A) Project Budget
B) Cost Baseline
C) Cost Estimate
D) Cost Control
Answer: A
9. What is the purpose of “cost control” in project management?
A) To monitor and manage project costs to ensure they stay within the budget
B) To develop a project schedule
C) To create a risk management plan
D) To allocate project resources
Answer: A
10. What is a “cost estimate”?
A) An approximation of the costs required to complete project activities
B) A detailed project schedule
C) A document outlining project risks
D) A project scope statement
Answer: A
11. Which method of cost estimation involves using historical data from similar projects?
A) Analogous Estimating
B) Parametric Estimating
C) Bottom-Up Estimating
D) Three-Point Estimating
Answer: A
12. What is “parametric estimating”?
A) A cost estimation technique that uses statistical relationships between historical data and other variables
B) A method for defining project scope
C) A technique for managing project risks
D) A process for developing project schedules
Answer: A
13. What is the main objective of “cost budgeting”?
A) To aggregate estimated costs of individual activities to establish an authorized cost baseline
B) To estimate individual project activities
C) To control and monitor project costs
D) To assess project performance
Answer: A
14. What does “PV” stand for in earned value management?
A) Planned Value
B) Project Value
C) Present Value
D) Planned Variance
Answer: A
15. Which document outlines the project costs, including estimates, budgets, and expenditures?
A) Cost Management Plan
B) Project Charter
C) Requirements Specification
D) WBS Dictionary
Answer: A
16. What is “bottom-up estimating”?
A) A cost estimation technique where costs are estimated for individual activities and then aggregated to get the total estimate
B) A method for developing a project schedule
C) A technique for defining project scope
D) A process for managing project risks
Answer: A
17. What is the “Cost Variance” (CV) in earned value management?
A) The difference between the earned value and the actual cost
B) The difference between planned value and earned value
C) The difference between actual cost and planned value
D) The difference between earned value and budget at completion
Answer: A
18. Which term refers to the process of forecasting future project costs based on current performance?
A) Cost Forecasting
B) Cost Estimating
C) Cost Budgeting
D) Cost Control
Answer: A
19. What is the “Cost Performance Index” (CPI)?
A) A measure of cost efficiency of a project, calculated as EV divided by AC
B) A measure of project schedule performance
C) A method for estimating project costs
D) A technique for managing project risks
Answer: A
20. What does “BAC” stand for in project cost management?
A) Budget at Completion
B) Budget Allocation Cost
C) Budgeted Actual Cost
D) Basic Allocation Cost
Answer: A
21. What is the purpose of “cost management plan”?
A) To define how costs will be estimated, budgeted, managed, and controlled throughout the project
B) To create a detailed project schedule
C) To identify project risks
D) To develop a project scope statement
Answer: A
22. Which process involves monitoring project costs to ensure they align with the cost baseline?
A) Cost Control
B) Cost Estimating
C) Cost Budgeting
D) Cost Forecasting
Answer: A
23. What is “three-point estimating”?
A) A cost estimation technique that considers three scenarios: optimistic, pessimistic, and most likely
B) A method for defining project scope
C) A process for developing a project schedule
D) A technique for risk management
Answer: A
24. What does “EAC” stand for in earned value management?
A) Estimate at Completion
B) Earned Actual Cost
C) Estimated Actual Cost
D) Estimate Allocation Cost
Answer: A
25. Which of the following is NOT a cost estimation technique?
A) Parametric Estimating
B) Expert Judgment
C) Analogous Estimating
D) Risk Assessment
Answer: D
26. What is the “Estimate to Complete” (ETC)?
A) The expected cost required to complete the remaining work
B) The total cost of the project
C) The cost incurred so far
D) The planned cost of the project
Answer: A
27. Which of the following techniques is used to determine the project budget?
A) Aggregating cost estimates of individual activities
B) Forecasting future costs
C) Assessing project risks
D) Creating a project scope statement
Answer: A
28. What does “TCPI” stand for in project cost management?
A) To-Complete Performance Index
B) Total Cost Performance Index
C) Task Cost Performance Index
D) Time-Cost Performance Index
Answer: A
29. Which document provides a detailed breakdown of all project costs, including direct and indirect costs?
A) Cost Breakdown Structure
B) Risk Register
C) Project Schedule
D) WBS Dictionary
Answer: A
30. What is the “Cost of Quality” (CoQ)?
A) The total cost associated with ensuring that the project meets quality standards
B) The cost of project scope changes
C) The budget allocated for project risks
D) The cost of project scheduling
Answer: A
31. What is “cost budgeting” used for?
A) To aggregate estimated costs and establish an authorized cost baseline
B) To forecast future project costs
C) To manage and control project costs
D) To develop a detailed project schedule
Answer: A
32. Which of the following is a direct cost?
A) Salaries of project team members
B) Overhead expenses
C) Utilities and office rent
D) Administrative costs
Answer: A
33. What does “cost variance” measure?
A) The difference between the earned value and actual cost
B) The difference between planned value and earned value
C) The difference between budgeted cost and planned cost
D) The difference between actual cost and budgeted cost
Answer: A
34. What is the purpose of “reserve analysis” in project cost management?
A) To evaluate the contingency reserves for dealing with unforeseen costs
B) To develop a detailed project schedule
C) To estimate project costs
D) To control and monitor project costs
Answer: A
35. What is a “contingency reserve”?
A) Budget allocated for unexpected costs and risks
B) Fixed budget allocated for specific project activities
C) Budget reserved for project scope changes
D) Budget for project administrative expenses
Answer: A
36. Which of the following is an indirect cost?
A) Utilities and office rent
B) Salaries of project team members
C) Project-specific materials
D) Equipment costs
Answer: A
37. What does “cost forecasting” involve?
A) Predicting future project costs based on current performance and trends
B) Estimating initial project costs
C) Allocating project resources
D) Creating a detailed project scope
Answer: A
38. What is the main goal of “cost management” in a project?
A) To ensure the project is completed within the approved budget
B) To increase project costs
C) To develop the project schedule
D) To manage project risks
Answer: A
39. Which technique involves estimating costs based on a quantitative model and historical data?
A) Parametric Estimating
B) Analogous Estimating
C) Bottom-Up Estimating
D) Three-Point Estimating
Answer: A
40. What is “cost performance management”?
A) The process of tracking and managing project costs
B) A technique for defining project scope
C) A method for developing a project schedule
D) A process for assessing project risks
Answer: A