Self Test

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1. 

Which one of the following best describes analogous estimating?

  1. Regression analysis

  2. Bottom-up estimating

  3. Less accurate

  4. More accurate

 c. analogous estimating is less accurate than other estimating methods. a is incorrect, as regression analysis is a type of parametric modeling. b is incorrect, as bottom-up estimating starts with zero and adds up the project costs. d is incorrect, as analogous estimating is not more accurate.

2. 

You are the project manager for GHG Project. You are about to create the cost estimates for the project. Which input to this process will help you the most?

  1. Parametric modeling

  2. WBS

  3. Project scope

  4. Requirements document

 b. the wbs is the input that can help you the most with the cost estimates. a is incorrect, as parametric modeling is a form of estimating, not an input. c is incorrect, as the project scope is not an input to the estimating process. d is incorrect, as the requirements document is also not an input to the estimating process.

3. 

You are the project manager for the JKH Project. You have elected to use parametric modeling in your cost estimating for the project. Which one of the following is an example of parametric modeling?

  1. $750 per ton

  2. Historical information from a similar project

  3. Estimates built bottom-up based on the WBS

  4. Estimates based on top-down budgeting

 a is correct; $750 per ton is an example of parametric modeling. b is incorrect, as historical information is analogous, not parametric. c and d are incorrect, as these do not describe parametric modeling.

4. 

You are the project manager for a new technology implementation project. Management has requested that your estimates be as exact as possible. Which one of the following methods of estimating will provide the most accurate estimate?

  1. Top-down estimating

  2. Top-down budgeting

  3. Bottom-up estimating

  4. Parametric modeling

 c. bottom-up estimating provides the most accurate estimates. the project manager starts at zero, the bottom, and accounts for each cost within the project. a , b , and d are all incorrect as they do not reflect the most accurate method to create an estimate.

5. 

Your company has been hired to install the tile in 1,000 hotel rooms. All rooms will be identical in nature and will require the same amount of materials. You calculate the time to install the tile in each hotel room as six hours. The cost for labor for each room is calculated at $700. Your Project Sponsor disagrees with your labor estimate. Why?

  1. You haven’t completed one hotel room yet so you don’t know how long the work will actually take.

  2. You have not factored in all of the effort applied to the work.

  3. You have not considered the law of diminishing returns.

  4. You have not considered the learning curve.

 d is the best choice. as the project team completes more and more units, the time to complete a hotel room should take less and less time. choices a , b , and c are incorrect as they do not answer the question as fully as answer d .

6. 

You are the project manager for a construction project to build 17 cabins. All of the cabins will be identical in nature. The contract for the project is set at a fixed cost, the incentive being the faster the project work is completed, the more the profitable the job. Management has requested that you study the work method to determine a faster, less costly, and better method to complete the project. This is an example of which one of the following?

  1. Time constraint

  2. Schedule constraint

  3. Value analysis

  4. Learning curve

 c. value analysis is a systematic approach to find less costly ways to complete the same work. a and b are not correct, as this situation does not describe a specific time or cost constraint. d is incorrect, as the learning curve happens as the project team completes the work. value analysis is a study of a process to complete the work faster and more affordably.

7. 

You are the project manager for a technical implementation project. The customer has requested that you factor in the after-the-project costs, such as maintenance and service. This is an example of which one of the following?

  1. Life cycle costs

  2. Scope creep

  3. Project spin off

  4. Operations

 a. the after-project costs are known as the life cycle costs. choices b and c are incorrect, though tempting, because they do not describe the process of calculating the ongoing expenses of the product the project is creating. d is incorrect; operations do not fully describe the expenses unique to the product.

8. 

Which one of the following provides the least accurate in estimating?

  1. Rough order of magnitude

  2. Budget estimate

  3. Definitive estimate

  4. WBS estimate

 a. the rough order of magnitude is the least accurate approach, as it may vary from 25 percent to +75 percent. choices b and c are more accurate estimates than the rough order of magnitude. choice d is not a valid answer for this question.

9. 

Which one of the following is true?

  1. The cost management plan controls how change management affects the BAC.

  2. The cost management plan controls how cost variances will be managed.

  3. The cost management plan controls how the project manager may update the cost estimates.

  4. The cost management plan controls how the BAC may be adjusted.

 b. the cost management plan controls how cost variances will be managed. choices a , c , and d are incorrect descriptions of the cost management plan.

10. 

You have just started a project for a manufacturer. Project team members report they are 30 percent done with the project. You agree with their completion status but do not change any of the progress in your report to the customer. This is an example of which one of the following?

  1. 50/50 rule

  2. 0/100 rule

  3. Percent Complete Rule

  4. Poor project management

 b. this is an example of the 0/100 rule. this completion method allows for zero percent credit on an activity until it is 100 percent complete. choice a allows for 50 percent completion when the work begins and 50 percent when the work is completed. choices c and d are incorrect responses, as they do not describe the scenario.

11. 

You and your project team are about to enter a meeting to determine project costs. You have elected to use bottom-up estimating and will base your estimates on the WBS. Which one of the following is not an attribute of bottom-up estimating?

  1. People doing the work create the estimates.

  2. Creates a more accurate estimate.

  3. More expensive to do than other methods.

  4. Less expensive to do than other methods.

 d. using bottom-up estimating is not less expensive to do. a , b , and c are not correct choices, as these are attributes of a bottom-up estimating process.

12. 

What is the present value if the organization expects to make $100,000 four years from now and the annual interest rate is six percent?

  1. $100,000

  2. $58,000

  3. $25,000

  4. Zero

 b. the present value of $100,000 four years from now can be calculated through this formula: present value = fv/(1+r) n . fv is the future value, r is the interest rate, and n is the number of time periods. choices a , c , and d are all incorrect answers, as they do not reflect the present value.

13. 

You are the project manager for the construction of a new hotel. Before you begin the cost budgeting process, what is needed?

  1. Costs estimates and project schedule

  2. Cost estimates and supporting detail

  3. EAC and BAC

  4. Parametric model used to arrive at the costs submitted

 a. cost estimates and the project schedule are inputs to the cost budgeting process. choices b , c , and d are all incorrect as they are not inputs to cost budgeting.

14. 

You are the project manager of the MNJ Project. Your project is falling behind schedule and you have already spent $130,000 of your $150,000 budget. What do you call the $130,000?

  1. Planned value

  2. Present value

  3. Sunk costs

  4. Capital expenditure

 c. sunk costs are monies that have been spent. a is incorrect, as planned value is the amount the project should be worth at this point in the schedule. b is incorrect; present value is the current value of future monies. d is incorrect; a capital expenditure is money spent to purchase a long-term asset, such as a building.

15. 

You are the project manager of the JHD Project. Your project will cost your organization $250,000 to complete over the next eight months. Once the project is completed, the deliverables will begin earning the company $3,500 per month. The time to recover the costs of the project is which one of the following?

  1. Not enough information to know

  2. Eight months

  3. 72 months

  4. 5 years

 c. the time to recoup the monies from the project is 72 months. this is calculated by dividing the roi of $3,500 per month into the project cost. a is an incorrect answer. b is incorrect; eight months is the amount of time left in the project schedule. d , five years, is also incorrect.

16. 

You are the project manager for the consulting company. Your company has two possible projects to manage, but they can only choose one. Project KJH is worth $17,000, while Project ADS is worth $22,000. Management elects to choose Project ADS. The opportunity cost of this choice is which one of the following?

  1. $5,000

  2. $17,000

  3. $22,000

  4. Zero, as project ADS is worth more than Project KJH

 b. the opportunity cost is the amount of the project that was not chosen. a is incorrect; $5,000 is the difference between the two projects, it is not the opportunity cost. c is incorrect, as $22,000 is the amount of the project that was selected. d is an incorrect answer.

17. 

You are the project manager for the CSR Training Project, and 21,000 customer service reps are invited to attend the training session. Attendance is optional. You have calculated the costs of the training facility, but the workbook expense depends on how many students register to the class. For every 5,000 workbooks created the cost is reduced a percentage of the original printing cost. The workbook expense is an example of which one of the following?

  1. Fixed costs

  2. Parametric costs

  3. Variable costs

  4. Indirect costs

 c. this is an example of variable costs. the more students that register to take the class the more the cost of the books will be. a is incorrect, as the cost of the book varies depending on the number of students that register for the class. b is incorrect, as the cost of each book diminishes as more books are created. a parametric cost would remain the same regardless of how many books were created. d is not correct, as this is not an example of an indirect cost.

18. 

You are the project manager of a construction project scheduled to last 24 months. You have elected to rent a piece of equipment for the duration of a project, even though you will need the equipment only periodically throughout the project. The costs of the equipment rental per month are $890. This is an example of ________________.

  1. Fixed costs

  2. Parametric costs

  3. Variable costs

  4. Indirect costs

 a. this is a fixed cost expense of $890 per month-regardless of how often the piece of equipment is used. b is incorrect, as a parametric cost is a value used to calculate cost per use, cost per metric ton, or cost per unit. while it may appear b is a correct choice, there is no historical information mentioned to base the parametric model on. c is incorrect, as the cost does not vary within the project. d is also incorrect; this is a cost attributed directly to the project work.

19. 

You are the project manager for the Hardware Inventory Project. You have a piece of equipment that was purchased recently for $10,000 and is expected to last five years in production. At the end of the five years the expected worth of the equipment is $1,000. Using straight-line deprecation, what is the amount that can be written off each year?

  1. Zero

  2. $1,000

  3. $1,800

  4. $2,000

 c. the straight-line depreciation takes the purchase value of the item, minus the salvage price of the item, divided by the number of time periods. in this instance, it would be $10,000 minus $1,000, or $9,000. the $9,000 is divided by five years and equates to $1,800 per year. a , c , and d are all incorrect, as they do not reflect the correct calculation.

20. 

You are the project manager of the LKG Project. The project has a budget of $290,000 and is expected to last three years. The project is now ten percent complete and is on schedule. What is the BAC?

  1. $29,000

  2. $290,000

  3. $96,666

  4. $9,666

 b. the bac is the budget at completion, which is $290,000. a is incorrect, as it describes the earned value for the project. c and d are both incorrect values.

21. 

Your project has a budget of $130,000 and is expected to last ten months, with the work and budget spread evenly across all months. The project is now in month three, the work is on schedule, but you have spent $65,000 of the project budget. What is your variance?

  1. $65,000

  2. $39,000

  3. $26,000

  4. $64,999

 c. $26,000 is the variance. this is calculated by subtracting the actual costs of $65,000 from the earned value of $39,000. ev is calculated by taking the 30 percent completion of the project against the bac. the project is considered to be 30 percent complete because it s slated for ten months, is currently in month three, and is on schedule. a , b , and d are all incorrect calculations for the problem.

22. 

You are the project manager of the Carpet Installation Project for a new building. Your BAC is $600,000. You are now 40 percent done with the project, though your plan called for you to be 45 percent done with the work at this time. What is your earned value?

  1. $240,000

  2. $270,000

  3. $30,000

  4. –$30,000

 a. the earned value is calculated by multiplying the percentage of completion, 40 percent, by the bac, which is $600,000, for a value of $240,000. b , c , and d are incorrect calculations of the earned value formula.

23. 

You are the project manager of the Carpet Installation Project for a new building. Your BAC is $600,000. You have spent $270,000 of your budget. You are now 40 percent done with the project, though your plan called for you to be 45 percent done with the work at this time. What is your CPI?

  1. 100

  2. 89

  3. .89

  4. .79

 c is the correct answer. the ev of $240,000 is divided by the ac of $270,000 for a value of .89. a and d are incorrect calculations. b is incorrect, as the value needs a decimal.

24. 

You are the project manager for the Facility Installation Project. The project calls for 1500 units to be installed into a new baseball stadium. Your team wants to know why you have not assigned the same amount of time for the last 800 units as you had for the first five hundred units. You tell them it is because of the learning curve. Which one of the following best describes this theory?

  1. Production increases as workers become more efficient with the installation procedure.

  2. Efficiency increases as workers become more familiar with the installation procedure.

  3. Costs decrease as workers complete more of the installation procedure.

  4. Time decreases as workers complete more of the installation procedure in the final phases of a project.

 b. the learning curve allows the cost to decrease as a result of decreased installation time as workers complete more of the installation procedure. choices a , c , and d are all incorrect choices, as they do not correctly describe the learning curve in relation to time and cost.

25. 

Of the following, which one is the most reliable source of information for estimating project costs?

  1. Historical information from a recently completed project

  2. An SME’s opinion

  3. Recollections of team members that have worked on similar projects

  4. Vendor’s white papers

 a. of the choices presented, historical information from a recently completed project is the most reliable source of information. b , while valuable, is not as proven as historical information. c is incorrect, as recollections are the least reliable source of information. d is also incorrect, though it may prove valuable in the planning process.

Answers

1. 

þ C. Analogous estimating is less accurate than other estimating methods.

ý A is incorrect, as regression analysis is a type of parametric modeling. B is incorrect, as bottom-up estimating starts with zero and adds up the project costs. D is incorrect, as analogous estimating is not more accurate.

2. 

þ B. The WBS is the input that can help you the most with the cost estimates.

ý A is incorrect, as parametric modeling is a form of estimating, not an input. C is incorrect, as the project scope is not an input to the estimating process. D is incorrect, as the requirements document is also not an input to the estimating process.

3. 

þ A is correct; $750 per ton is an example of parametric modeling.

ý B is incorrect, as historical information is analogous, not parametric. C and D are incorrect, as these do not describe parametric modeling.

4. 

þ C. Bottom-up estimating provides the most accurate estimates. The project manager starts at zero, the bottom, and accounts for each cost within the project.

ý A, B, and D are all incorrect as they do not reflect the most accurate method to create an estimate.

5. 

þ D is the best choice. As the project team completes more and more units, the time to complete a hotel room should take less and less time.

ý Choices A, B, and C are incorrect as they do not answer the question as fully as answer D.

6. 

þ C. Value analysis is a systematic approach to find less costly ways to complete the same work.

ý A and B are not correct, as this situation does not describe a specific time or cost constraint. D is incorrect, as the learning curve happens as the project team completes the work. Value analysis is a study of a process to complete the work faster and more affordably.

7. 

þ A. The after-project costs are known as the life cycle costs.

ý Choices B and C are incorrect, though tempting, because they do not describe the process of calculating the ongoing expenses of the product the project is creating. D is incorrect; operations do not fully describe the expenses unique to the product.

8. 

þ A. The rough order of magnitude is the least accurate approach, as it may vary from –25 percent to +75 percent.

ý Choices B and C are more accurate estimates than the rough order of magnitude. Choice D is not a valid answer for this question.

9. 

þ B. The cost management plan controls how cost variances will be managed.

ý Choices A, C, and D are incorrect descriptions of the cost management plan.

10. 

þ B. This is an example of the 0/100 rule. This completion method allows for zero percent credit on an activity until it is 100 percent complete.

ý Choice A allows for 50 percent completion when the work begins and 50 percent when the work is completed. Choices C and D are incorrect responses, as they do not describe the scenario.

11. 

þ D. Using bottom-up estimating is not less expensive to do.

ý A, B, and C are not correct choices, as these are attributes of a bottom-up estimating process.

12. 

þ B. The present value of $100,000 four years from now can be calculated through this formula: Present Value = FV/(1+R)n. FV is the future value, R is the interest rate, and n is the number of time periods.

ý Choices A, C, and D are all incorrect answers, as they do not reflect the present value.

13. 

þ A. Cost estimates and the project schedule are inputs to the cost budgeting process.

ý Choices B, C, and D are all incorrect as they are not inputs to cost budgeting.

14. 

þ C. Sunk costs are monies that have been spent.

ý A is incorrect, as planned value is the amount the project should be worth at this point in the schedule. B is incorrect; present value is the current value of future monies. D is incorrect; a capital expenditure is money spent to purchase a long-term asset, such as a building.

15. 

þ C. The time to recoup the monies from the project is 72 months. This is calculated by dividing the ROI of $3,500 per month into the project cost.

ý A is an incorrect answer. B is incorrect; eight months is the amount of time left in the project schedule. D, five years, is also incorrect.

16. 

þ B. The opportunity cost is the amount of the project that was not chosen.

ý A is incorrect; $5,000 is the difference between the two projects, it is not the opportunity cost. C is incorrect, as $22,000 is the amount of the project that was selected. D is an incorrect answer.

17. 

þ C. This is an example of variable costs. The more students that register to take the class the more the cost of the books will be.

ý A is incorrect, as the cost of the book varies depending on the number of students that register for the class. B is incorrect, as the cost of each book diminishes as more books are created. A parametric cost would remain the same regardless of how many books were created. D is not correct, as this is not an example of an indirect cost.

18. 

þ A. This is a fixed cost expense of $890 per month—regardless of how often the piece of equipment is used.

ý B is incorrect, as a parametric cost is a value used to calculate cost per use, cost per metric ton, or cost per unit. While it may appear B is a correct choice, there is no historical information mentioned to base the parametric model on. C is incorrect, as the cost does not vary within the project. D is also incorrect; this is a cost attributed directly to the project work.

19. 

þ C. The straight-line depreciation takes the purchase value of the item, minus the salvage price of the item, divided by the number of time periods. In this instance, it would be $10,000 minus $1,000, or $9,000. The $9,000 is divided by five years and equates to $1,800 per year.

ý A, C, and D are all incorrect, as they do not reflect the correct calculation.

20. 

þ B. The BAC is the budget at completion, which is $290,000.

ý A is incorrect, as it describes the earned value for the project. C and D are both incorrect values.

21. 

þ C. $26,000 is the variance. This is calculated by subtracting the actual costs of $65,000 from the earned value of $39,000. EV is calculated by taking the 30 percent completion of the project against the BAC. The project is considered to be 30 percent complete because it’s slated for ten months, is currently in month three, and is on schedule.

ý A, B, and D are all incorrect calculations for the problem.

22. 

þ A. The earned value is calculated by multiplying the percentage of completion, 40 percent, by the BAC, which is $600,000, for a value of $240,000.

ý B, C, and D are incorrect calculations of the earned value formula.

23. 

þ C is the correct answer. The EV of $240,000 is divided by the AC of $270,000 for a value of .89.

ý A and D are incorrect calculations. B is incorrect, as the value needs a decimal.

24. 

þ B. The learning curve allows the cost to decrease as a result of decreased installation time as workers complete more of the installation procedure.

ý Choices A, C, and D are all incorrect choices, as they do not correctly describe the learning curve in relation to time and cost.

25. 

þ A. Of the choices presented, historical information from a recently completed project is the most reliable source of information.

ý B, while valuable, is not as proven as historical information. C is incorrect, as recollections are the least reliable source of information. D is also incorrect, though it may prove valuable in the planning process.



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PMP Project Management Professional Study Guide
PMP Project Management Professional Study Guide, Third Edition (Certification Press)
ISBN: 0071626735
EAN: 2147483647
Year: 2004
Pages: 209

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