Interactive: Cost Management

This eLearning course will quiz you on the knowledge contained in the Cost lesson and help identify your weak areas.

You should know and understand the Fundamental concepts of Cost Management as presented in Chapter 7 of the PMBOK and the PMP Exam Content Outline available from www.pmi.org

Which of the following are True or False about Cost Management?

The Following are True:

It involves estimating, budgeting, financing, funding, managing, and controlling costs

Cost Planning produces the Cost Baseline

The Cost Baseline is a time-phased spending plan

  • It takes place in these Process Groups: Planning, Executing, and Monitoring & Controlling
  • It involves estimating, budgeting, financing, funding, managing, and controlling costs
  • Cost Planning produces the Cost Baseline
  • Cost Baseline and BAC are synonymous terms
  • The Cost Baseline is a time-phased spending plan

Place the terms where they belong.

  • Cost
  • Project Charter
  • Develop Project Charter
  • Accuracy
  • Units
  • Analytical Techniques

Place the terms where they belong.

  • Budget
  • Basis of Estimates
  • Cost Baseline
  • Planning
  • Register
  • Scope
  • 3
  • Analagous
  • Quality
  • Schedule

Which of the following is True or False about Reserve Analysis?

Answers:

Contingency Reserve is $ set aside to deal with “Known-Unknowns”

Management Reserve is not part of the Cost Baseline

Management Reserve is $ set aside to deal with “Unknown-Unknowns”

  • Contingency Reserve is $ set aside to deal with “Known-Unknowns”
  • Management Reserve is under control of the PM
  • Contingency Reserve is not part of the Cost Baseline
  • Management Reserve is not part of the Cost Baseline
  • Contingency Reserve is not under control of the PM
  • Management Reserve is $ set aside to deal with “Unknown-Unknowns”

Match the Cost terms to their definition.

Answers:

Life-Cycle Costing - Project decisions should consider the cost of ownership after the project is transitioned over the life of the deliverable

Fixed Costs - Costs that do not change as production changes: set-up, rental, leases

Variable Costs - Costs that change with amount of production or amount of work: materials, wages, supplies

Value Engineering - Accomplishing the same thing with less cost; decreasing cost, but keeping scope constant. Expanding use of benefit

Sunk Cost - Money that has already been spent and cannot be recovered: payroll, non-returnable material, taxes, insurance.

Indirect Costs - Overhead items or costs incurred for the benefit of more than one project: taxes, fringe benefits, janitorial services

Direct Costs - Attributable to work on the project: team travel, team wages, costs of material

  • Life-Cycle Costing
    Project decisions should consider the cost of ownership after the project is transitioned over the life of the deliverable
  • Fixed Costs
    Costs that do not change as production changes: set-up, rental, leases
  • Variable Costs
    Costs that change with amount of production or amount of work: materials, wages, supplies
  • Value Engineering
    Accomplishing the same thing with less cost; decreasing cost, but keeping scope constant. Expanding use of benefit
  • Sunk Cost
    Money that has already been spent and cannot be recovered: payroll, non-returnable material, taxes, insurance.
  • Indirect Costs
    Overhead items or costs incurred for the benefit of more than one project: taxes, fringe benefits, janitorial services
  • Direct Costs
    Attributable to work on the project: team travel, team wages, costs of material

Which of the following are True and False about Cost estimates?

The Following are True:

A Definitive Estimate is given after some execution of the project has occurred and actual cost (AC) information is available

A Budget Estimate is given during the planning of the project

A Definitive Estimate has an accuracy range of -5 to 10% range

A ROM has an accuracy range of -25% to +75%

A ROM is given during the initiating of the project

  • A ROM is given during the planning of the project
  • A Budget Estimate has an accuracy range of -25% to +75%
  • A Definitive Estimate is given after some execution of the project has occurred and actual cost (AC) information is available
  • A Budget Estimate is given during the planning of the project
  • ROM stands for Random Opportunity of Magnitude
  • A Definitive Estimate has an accuracy range of -5 to 10% range
  • A ROM has an accuracy range of -10 to 25%
  • A ROM has an accuracy range of -25% to +75%
  • A ROM is given during the initiating of the project

Place the terms where they belong.

  • Cost Mgt Plan
  • Scope
  • Schedule
  • Aggregation
  • Funding
  • Baseline
  • Cost
  • Time-Phased
  • Activity
  • Sponsor's

Place the terms where they belong on the Cost Aggregation example.

  • Management Reserve
  • Contingency Reserve
  • Activities
  • Cost Baseline
  • Work Package
  • Control Account
  • Project

Which is True of False about Funding Limit Reconciliation?

The Following are True:

Some activities may need to be rescheduled

A variance between planned spending and cash flow will necessitate Funding Limit Reconciliation

Project spending must match the sponsor's cash-flow capability

  • It will move the project completion date
  • Some activities may need to be rescheduled
  • The PM determines what the funding limits are
  • A variance between planned spending and cash flow will necessitate Funding Limit Reconciliation
  • It could result in an over-budget situation
  • Project spending must match the sponsor's cash-flow capability

Place the terms where they belong on the Cost Baseline graph.

  • Management
  • Contingency
  • Funding Requirements
  • BAC
  • Cost Baseline
  • Expeditures

Which are True and False about the project budget?

The Following are True:

The Cost Baseline forms a gentle S curve on a graph

Contingency Reserve is the difference between the Cost Baseline and actual expenditures

Funding Requirements form a stair-step shape on a graph

  • The Cost Baseline forms a gentle S curve on a graph
  • Management Reserve is the difference between actual expenditures and the BAC
  • Funding Requirements are the difference between the Cost Baseline and the BAC
  • Contingency Reserve is the difference between the Cost Baseline and actual expenditures
  • Funding Requirements form a stair-step shape on a graph
  • The Cost Baseline is what the Sponsor pays for the project

Place the terms where they belong.

  • Control
  • Earned Value Management
  • Reserve
  • Spent
  • Forecasts
  • Contingency
  • Reviews
  • PM Plan
  • Variance
  • Funding
  • EV