Project Cost Management
Here is a list of sample questions which would help you to understand the pattern of questions on Project Cost Management being asked in PMP Certification Exams.
(1) Which type of project cost estimate is the most accurate?
Preliminary
Definitive
Order of magnitude
Conceptual
Answer−B
Hint− Definitive estimates are in range -5% to 10% in accuracy. Page 201, PMBOK 5
(2) Which of the following type of contracts is most preferable to the contractor doing the project work?
Answer− A
Hint− Cost plus fixed fee covers the actual cost
(3) ) To assist in budget control, it is suggested that an estimate be created at the _____ ____ ______ level of the WBS
Highest
Lowest
Major work effort
Third
Answer− B
Hint− Work package is the lowest unit of work to estimate cost and duration.
(4) Cost Variance (CV) is which of the following equations?
CV = EV − PV
CV = EV − AC
CV = EV / AC
A and C
Answer−B
Hint− Cost variance, Page 218, PMBOK 5
(5) Determining budget can be best described by which of the following?
The process of developing the future trends along with the assessment of probabilities, uncertainties, and inflation that could occur during the project
The process of accumulating costs of individual activities to establish a cost baseline.
The process of establishing budgets, standards, and a monitoring system by which the investment cost of the project can be measured and managed
The process of gathering, accumulating, analyzing, reporting, and managing the costs on an on-going basis
Answer−B
Hint− Page 193, PMBOK 5
(6) Which of the following is a direct project cost?
Lighting and heating for the corporate office
Workers Compensation insurance
Piping for an irrigation project
A and B
Answer− C
Hint− cost of resources used in a project. See Page 202, PMBOK 5
(7) Control Costs can be best described by which of the following?
The process of developing the future trends along with the assessment of probabilities, uncertainties, and inflation that could occur during the project
The process of assembling and predicting costs of a project over its life cycle
The process of assembling and predicting costs of a project over its life cycle
The process of monitoring the status of the project to update project costs and managing changes to the cost baseline.
Answer − D
Hint − Control Costs, Page 193, PMBOK 5
(8) The PV = $250, the AC = $350, and the EV = $200. Calculate the Cost Variance.
Answer − A
Hint − CV=EV−AC
(9) One of the types of cost estimation is Rough Order of Magnitude. This estimate −
is performed when detailed information is available
is performed after the scope is clearly defined
is a near perfect estimate
Usually made before the project is designed, and must therefore rely on the cost data of similar projects built in the past.
Answer − D
Hint − Page 201, PMBOK 5
(10) The sum of all budgets established for the work to be performed is known as −
Planned Value
Aggregated Planned Value
Budget at Completion
Estimate at Completion
Answer − C
Hint − Refer Table 7-1, Page 224, PMBOK 5
(11) The processes involving planning, estimating, budgeting, financing, funding, managing, and controlling costs so that the project can be completed within the approved budget fall under
Answer − A
Hint − Read First para, Page 193, PMBOK 5
(12) The process that establishes the policies, procedures and documentation for planning, managing, expending, and controlling project costs is known as
Control Costs
Estimate Costs
Plan Cost Management
Determine Budget
Answer − C
Hint − Page 193, PMBOK 5
(13) The process of monitoring the status of the project to update the project costs and managing changes to the cost baseline is called
Determine Budget
Control Costs
Estimate Costs
Plan Cost Management
Answer − B
Hint − Page 193, PMBOK 5
(14) The Project Cost Management Process comprises the following activities−
a. Determine Budget
b. Plan Cost Management
c. Estimate Costs
d. Control Costs
What is the correct sequence?
a−b−c−d
c−a−b−d
b−c−a−d
a−c−b−d
Answer − C
Hint − See Figure 7−1, Page 194, PMBOK 5
(15) The process of developing an approximation of the monetary resources needed to complete project activities is known as
Estimate Costs
Determine Budget
Both A & B
None of the above
Answer − A
Hint − Page 193, PMBOK 5
(16) Which one of the following is not an input used in the process of Estimate Costs?
Answer − D
Hint − See Figure 7−1, Page 194, PMBOK 5
(17) The tools and techniques used in the process of Determine Budget includes all but
Cost Aggregation
Cost of Quality
Expert Judgement
Historical Relationships
Answer − B
Hint − See Figure 7−1, Page 194, PMBOK 5
(18) Which of the following output of Determine Budget process is not used as an input in the Control Costs Process?
Answer − B
Hint − See Figure 7-1, Page 194, PMBOK 5
(19) Which of the following is not an output of the Control Costs process?
Answer − C
Hint − See Figure 7−1, Page 194, PMBOK 5
(20) The tools and techniques used in Control costs includes all but
Answer − D
Hint − See Figure 7−1, Page 194, PMBOK 5
