PMP Budget & Ressources Management — Practice Quiz
PMP Budget & Resources Management — Practice Quiz
Chapter 9 · 20 questions · EVM & cost control included
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1
During project planning, you discover that the cost estimate significantly exceeds the budget stated in the project charter. As the project manager, what is the MOST appropriate next step?
A.Reduce the project scope to fit within the charter budget without informing the sponsor.
B.Present the estimate to the sponsor, explain the gap, and propose options to reduce costs or increase the budget.
C.Accept the constraint and plan to absorb the overrun using the management reserve.
D.Proceed with planning and address the budget issue when it becomes a real problem during execution.
Cost Management
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2
A construction project incurs costs for renting equipment used exclusively on that project, paying subcontractors, and contributing to the company's shared office overhead. Which classification correctly describes these three costs?
A.Variable direct, variable direct, indirect fixed
B.Fixed direct, variable direct, indirect fixed
C.Fixed indirect, variable direct, variable indirect
D.Variable direct, fixed direct, direct variable
Types of Cost
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3
A project has a BAC of $500,000. After six months, the PV is $200,000, the EV is $160,000, and the AC is $180,000. What are the CPI and SPI respectively, and what do they indicate?
A.CPI = 0.89, SPI = 0.80 — over budget and behind schedule
B.CPI = 0.89, SPI = 0.80 — under budget and behind schedule
C.CPI = 1.13, SPI = 1.25 — under budget and ahead of schedule
D.CPI = 0.80, SPI = 0.89 — behind schedule and over budget
EVM Calculation
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4
A project has BAC = $500,000, EV = $160,000, AC = $180,000, and CPI = 0.89. Assuming current cost performance will continue, what is the Estimate at Completion (EAC)?
A.$520,000
B.$540,000
C.$561,798
D.$500,000
EVM Calculation
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5
Your project has EV = $300,000, AC = $270,000, PV = $330,000, and BAC = $600,000. What is the TCPI based on the BAC, and what does it mean?
A.TCPI = 1.00 — the team must perform exactly as planned for the rest of the project.
B.TCPI = 1.03 — the team must perform slightly better than the current rate to finish on budget.
C.TCPI = 0.97 — the team can afford to slow down and still meet the budget.
D.TCPI = 1.10 — the team needs a significant performance improvement to finish within budget.
EVM Calculation
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6
A sponsor asks for a cost estimate during the initiation phase, before detailed planning. The project manager provides an estimate of '$2 million, with a range of -25% to +75%.' A team member challenges this wide range as unprofessional. How should the project manager respond?
A.Apologize and refine the estimate by performing a detailed bottom-up analysis immediately.
B.Explain that this is a standard Rough Order of Magnitude estimate appropriate for the initiation phase, and the range will narrow as planning progresses.
C.Narrow the range to -10% to +25% to appear more credible to the sponsor.
D.Refuse to provide an estimate until the WBS is complete and detailed estimates are available.
Estimate Ranges
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7
During execution, a risk that was identified during planning does not occur. The contingency reserve set aside for that risk is no longer needed. What should the project manager do?
A.Keep the reserve in the cost baseline in case other risks emerge.
B.Transfer the reserve to the management reserve to cover unknown risks.
C.Submit a formal change request to remove the reserve from the cost baseline and return the funds.
D.Use the reserve to fund scope enhancements requested by stakeholders.
Reserves
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8
A project manager is finalizing the project budget. She has aggregated all cost estimates and added contingency reserves. What is the key difference between the cost baseline and the total budget?
A.The cost baseline includes contingency reserves; the total budget additionally includes management reserves.
B.The total budget includes contingency reserves; the cost baseline does not.
C.The cost baseline and total budget are the same — both include all reserves.
D.The management reserve is part of the cost baseline but is tracked separately.
Budget Structure
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9
A project manager is about to start a new IT infrastructure project similar to one completed two years ago. The sponsor wants a quick estimate before resources are assigned and scope is fully defined. Which estimating method is MOST appropriate, and what is its key limitation?
A.Parametric estimating — most accurate but requires historical unit cost data.
B.Analogous estimating — quick and low-cost but less accurate and depends heavily on how similar the past project really was.
C.Bottom-up estimating — most accurate but requires a complete WBS.
D.Three-point estimating — accounts for uncertainty but still requires activity-level detail.
Estimating Methods
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10
An agile team has a monthly burn rate of $60,000 and is 6 months into the project. The backlog has 400 story points remaining and the team's average velocity is 50 story points/month. The original budget was $700,000. What is the total estimated cost, and is the project within budget?
A.$480,000 total; $120,000 remaining — within budget.
B.$840,000 total; $480,000 remaining — over budget.
C.$360,000 remaining; total will be $720,000 — slightly over budget.
D.$480,000 remaining; total will be $840,000 — over budget.
Agile Cost Management
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11
You are six weeks into a twelve-week project. Your earned value report shows: CPI = 0.75 and SPI = 1.15. A senior stakeholder asks you to summarize the project health. Which statement BEST reflects the current status?
A.The project is performing well — it is ahead of schedule and saving money.
B.The project is delivering work faster than planned but spending significantly more than the value being produced.
C.The project is behind schedule but under budget, suggesting the team needs to accelerate.
D.The project is slightly behind schedule and slightly over budget — a minor corrective action is needed.
Control Costs
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12
A team member asks why the cost management plan defines 'control thresholds.' What is the BEST explanation?
A.Control thresholds set the maximum budget the project can spend before it is terminated.
B.Control thresholds define the acceptable variance range before the project manager is required to take action or escalate.
C.Control thresholds specify the frequency at which cost reports must be submitted to management.
D.Control thresholds are used to calculate the management reserve for the project.
Cost Management Plan
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13
Your project sponsor tells you to start work on an approved scope addition before the formal change request is processed: 'Just start and we'll get approvals later.' What should you do?
A.Start the work as instructed since the sponsor has authority over the project.
B.Inform the sponsor that work on the change cannot begin until it is formally approved through the integrated change control process.
C.Begin preliminary work while simultaneously submitting the change request.
D.Accept the verbal authorization from the sponsor and document it as a change to the cost baseline.
Integrated Change Control
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14
A team member reports that a work package is '80% complete.' The project manager is concerned about the reliability of this data. What is the MOST reliable method to assess true progress?
A.Ask a second team member to independently confirm the 80% claim.
B.Calculate EV based on the stated 80% and compare it to AC.
C.Compare the actual completion of planned activities within the work package against the time and cost estimates for each activity.
D.Accept the 80% figure and flag it as an assumption in the project risk register.
Progress Reporting
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15
Three months into a one-year project, the CPI is 0.82 due to significant rework caused by unclear requirements. Requirements are now fully clarified and the team is working efficiently. Which EAC formula is MOST appropriate?
A.EAC = BAC / CPI, because past performance is the best predictor of future performance.
B.EAC = AC + Bottom-up ETC, because the past inefficiency is atypical and a new estimate of remaining work is more accurate.
C.EAC = AC + (BAC − EV), because the remaining work will be done exactly at the budget rate.
D.EAC = BAC, because the problem has been resolved and the project will fully recover.
EAC Situational
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16
During a risk review, the team identifies a previously unknown technical risk that could add $50,000 in costs. The contingency reserve is fully allocated. What is the MOST appropriate course of action?
A.Draw from the contingency reserve by de-prioritizing a lower-ranked risk.
B.Absorb the cost from the project's existing budget without requesting additional funds.
C.Submit a formal change request to access the management reserve to cover this unknown risk.
D.Inform the sponsor that the project will likely exceed its budget and wait for their decision.
Reserves
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17
A project manager presents a bottom-up estimate that is 40% higher than the analogous estimate made during initiation. The sponsor questions the discrepancy. What is the MOST accurate explanation?
A.The project team padded the estimates to protect themselves from pressure during execution.
B.The analogous estimate was made with limited information and a wide range; the bottom-up estimate reflects a detailed understanding of the actual work required.
C.Bottom-up estimating is inherently unreliable because it depends on individual team members who are not neutral.
D.Both estimates are equally valid and the sponsor should choose the one that fits the budget.
Bottom-Up Estimating
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18
You are managing an agile project with a fixed budget and timeline. Midway through, the product owner wants to add several high-priority features. Velocity shows there is not enough time to complete all backlog items. What is the MOST appropriate response?
A.Increase the team size to absorb the additional scope within the existing budget.
B.Work with the product owner to reprioritize the backlog, deferring lower-priority items to a future release.
C.Reject the new features since the budget and timeline are fixed and cannot be changed.
D.Extend the timeline to accommodate the new features and present a revised budget to the sponsor.
Agile Scope & Cost
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19
A project manager notices that a major equipment purchase of $300,000 is scheduled for Month 3, but the finance department confirms the funds will not be available until Month 5. What is the impact and what should she do?
A.Nothing — cost baselines are theoretical and do not need to align with actual cash availability.
B.Use the management reserve to fund the gap and replenish it when funds become available in Month 5.
C.Work with finance to reschedule the purchase to Month 5 and adjust all dependent activities, submitting a change request if the schedule baseline is affected.
D.Procure the equipment on credit and absorb the financing cost as an indirect project cost.
Cash Flow
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20
Your project is in the final 20% of execution. The CPI has been consistently 0.91 throughout the project. The sponsor asks if the project can still be completed within the original BAC. EAC = BAC / CPI shows a projected overrun of $85,000. What is the MOST professional response?
A.Assure the sponsor the team will work harder in the final phase to recover the overrun.
B.Present the EAC, explain that the cost trend has been consistent and recovery is unlikely, and propose options such as scope reduction or budget adjustment.
C.Withhold the EAC and present the BAC as the forecast to avoid alarming the sponsor at this late stage.
D.Crash the remaining activities to reduce duration and absorb the cost overrun through schedule savings.
EVM Situational
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