Chapter 7: Determining Costs, Budget, and Earned Value
42. As data are collected on , including portions of any committed cost, they need to be totaled by work
package so that they can be compared to the
a. planned cost, total budgeted cost.
b. budgeted cost of work scheduled, actual cost of work performed.
c. actual cost, cumulative budgeted cost.
d. cumulative earned value, total budgeted cost.
43. Earned value, the value of , is a key parameter that must be determined throughout the project.
a. the work scheduled
b. the resources used
c. the resources assigned
d. the work actually performed
Chapter 7: Determining Costs, Budget, and Earned Value
44. Determining the earned value involves collecting data on the percent complete for each work package and then
converting this percentage to a dollar amount by multiplying the of the work package by the percent
complete.
a. total budgeted cost (TBC)
b. cumulative budgeted cost (CBC)
c. cumulative earned value (CEV)
d. cumulative actual cost (CAC)
45. It’s important that the person estimating the percent complete not only assess how much work has been
performed but also consider
a. what work should have been done.
b. what work remains to be done.
c. what work others have to do on other projects.
d. the cost of the work.
Chapter 7: Determining Costs, Budget, and Earned Value
46. Consider a project that involves painting five similar houses over ten weeks (one house every two weeks) for a
total budgeted cost of $20,000. The budget is $4,000 per house. At of the end of week 5, you determine that
$10,000 has actually been spent and three houses have been painted completely. What is the earned value of the
project?
a. $10,000
b. $12,000
c. $4,000
d. $20,000
47. The is the sum of the estimated costs of all the specific activities that make up a work package or the
project.
a. total budgeted cost (TBC)
b. cumulative budgeted cost (CBC)
c. cumulative actual cost (CAC)
d. cumulative earned value (CEV)
Chapter 7: Determining Costs, Budget, and Earned Value
48. The is the amount that was budgeted to accomplish the work that was schedule to be performed up to that
point in time.
a. total budgeted cost (TBC)
b. cumulative budgeted cost (CBC)
c. cumulative actual cost (CAC)
d. cumulative earned value (CEV)
49. The is the amount that was actually spent to accomplish the work that was scheduled to be performed up to
that point in time.
a. total budgeted cost (TBC)
b. cumulative budgeted cost (CBC)
c. cumulative actual cost (CAC)
d. cumulative earned value (CEV)
Chapter 7: Determining Costs, Budget, and Earned Value
50. The is the product of the percent complete and the sum of the estimated costs of all the specific activities
that make up a work package or the project.
a. total budgeted cost (TBC)
b. cumulative budgeted cost (CBC)
c. cumulative actual cost (CAC)
d. cumulative earned value (CEV)
51. Plot curves on the same graph to reveal any trends toward improving or deteriorating cost performance.
a. AC, TBC, EV
b. actual cost and budgeted cost
c. CBC, CAC, and CEV
d. CBC, PV, and BCWS
Chapter 7: Determining Costs, Budget, and Earned Value
52. The cost performance index (CPI) is a measure of the cost efficiency with which the project is being performed.
If the cumulative earned value is greater than the cumulative actual costs, then
a. the CPI is greater than 1.0.
b. the CPI is less than 1.0.
c. CPI cannot be determined with CEV and CAC.
d. the CPI is negative.
53. If the cumulative earned value is $10 and the cumulative actual costs are $20, then the CPI is
a. $10.
b. –$10.
c. 0.5.
d. 2.0.
Chapter 7: Determining Costs, Budget, and Earned Value
54. Another indicator of cost performance is cost variance (CV). If the cumulative earned value is greater than the
cumulative actual costs, then
a. the CV is positive.
b. the CV is equal to the TBC.
c. CV cannot be determined with CEV and CAC.
d. the CV is negative.
55. Calculate the cost variance if the cumulative earned value is $10 and the cumulative actual costs are $20.
a. $10
b. –$10
c. 0.5
d. 2.0
Chapter 7: Determining Costs, Budget, and Earned Value
56. A method for calculating the forecasted cost at completion assumes that the work to be performed on the
remaining portion of the project or work package will be done at the same rate of efficiency as the work
performed so far. If the cost performance index is greater than 1.0, then
a. the FCAC is greater than the TBC.
b. the FCAC is less than the TBC.
c. the FCAC cannot be calculated with CPI.
d. additional information is needed to predict the FCAC.
Chapter 7: Determining Costs, Budget, and Earned Value
57. A second method for determining the forecasted cost at completion assumes that, regardless of the efficiency
rate the project or work package has experienced in the past, the work to be performed on the remaining portion
of the project or work package will be done according to budget. If the cumulative actual cost is greater than the
cumulative earned value, then
a. the FCAC is greater than the TBC.
b. the FCAC is less than the TBC.
c. the FCAC cannot be calculated with the values given.
d. additional information is needed to predict the FCAC.
Chapter 7: Determining Costs, Budget, and Earned Value
58. A third method for determining the forecasted cost at completion is to re-estimate the costs for all the remaining
work to be performed and then add this re-estimate to the cumulative actual cost. If the amount of cumulated
actual costs is less than difference between the total budgeted cost and the re-estimate, then
a. the FCAC is greater than the TBC.
b. the FCAC is less than the TBC.
c. the FCAC cannot be calculated with the values given.
d. additional information is needed to predict the FCAC.
59. Calculate the forecasted cost at completion if the total budgeted cost = $10,000, the CEV is $8,000, and the CAC
is $4,000.
a. FCAC = $5,000
b. FCAC = $20,000
c. FCAC = $6,000
d. FCAC = $4,000
Chapter 7: Determining Costs, Budget, and Earned Value
60. Calculate the forecasted cost at completion if the total budgeted cost is $15,000, the cumulative actual cost is
$10,000, and the cumulative earned value is $12,000.
a. FCAC = $7,000
b. FCAC = $17,000
c. FCAC = $13,000
d. FCAC = $37,000
61. Calculate the forecasted cost at completion if the cumulative actual cost is $10,000 and the re-estimate of
remaining work to be performed is $5,000.
a. FCAC = $5,000
b. FCAC = $15,000
c. FCAC = 2
d. FCAC = 0.5
Chapter 7: Determining Costs, Budget, and Earned Value
62. It’s crucial that cost variances and inefficiencies be identified early so that
a. corrective action can be taken before the situation gets worse.
b. negotiations can take place for the contract.
c. the project can be monitored for self-correction.
d. time is not applied to the project.
63. involves the following: Analyzing cost performance to determine which work packages may require
corrective action; Deciding what specific corrective action should be taken; and Revising the project plan,
including time and cost estimates, to incorporate the planned corrective action.
a. Resource analysis
b. CPI monitoring
c. Cost control
d. Problem solving
Chapter 7: Determining Costs, Budget, and Earned Value
64. When evaluating work packages that have a negative cost variance, you should focus on taking corrective actions
to reduce the costs of:
a. activities that will be performed in the near term.
b. activities that will be performed in the towards the end of the project.
c. activities that will be performed at the end of the project.
d. all the activities in the project.
65. When evaluating work packages that have a negative cost variance, you should focus on taking corrective actions
to reduce the costs of:
a. activities that have a small cost estimate.
b. activities that have a moderate cost estimate.
c. activities that have a large cost estimate.
d. all the activities in the project.
Chapter 7: Determining Costs, Budget, and Earned Value
66. Which of the following is not a way to reduce the costs of activities:
a. reduce the scope or requirements.
b. substitute less expensive materials.
c. assign a person with less expertise or less experience to perform or help with the activity.
d. increase productivity through improved methods or technology.
67. Managing cash flow involves making sure that sufficient payments are received from the customer in time so that
a. you have enough money to cover the costs of performing the project.
b. you hold a reserve of funds instead of paying bills.
c. payroll can be paid and suppliers are delayed indefinitely.
d. deposits can be made in several different accounts.
Chapter 7: Determining Costs, Budget, and Earned Value
68. The contractor might try to negotiate payment terms that require the customer to do one or more of the following
except
a. provide frequent payments, such as weekly or monthly payments rather than quarterly payments.
b. make equal monthly payments based on the expected duration of the project.
c. make a single payment at the end of the project.
d. provide a down payment at the start of the project.
69. The contractor’s outflow of cash can be controlled by
a. paying a bill as soon as it is received.
b. delaying payment until cash is received to pay the bill.
c. delaying payment until it is due.
d. never paying bills.