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“Cost Management related Frequently Asked Questions in various Cost Management job Interviews by interviewer. The set of questions here ensures that you offer a perfect answer posed to you. So get preparation for your new job hunting”

49 Cost Management Questions And Answers

21⟩ You are managing a construction project that is currently being initiated. You met with the sponsors and several important stakeholders, and have started to work on the preliminary scope statement. You've documented several key assumptions that have been made, and identified project constraints and initial risks. Before you can finish the preliminary scope statement, you must make a rough order of magnitude estimate of both time and cost so that the sponsor can allocate the final budget. What is the range of a rough order of magnitude (ROM) estimate? A. -10% to +10% B. -50% to +50% C. -50% to +100% D. -100% to +200%

C. -50% to +100%

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22⟩ You are managing a project with a total budget of $450,000. According to the schedule, your team should have completed 45% of the work by now. But at the latest status meeting, the team only reported that 40% of the work has actually been completed. The team has spent $165,000 so far on the project. How would you best describe this project? A. The project is ahead of schedule and within its budget. B. The project is behind schedule and within its budget. C. The project is ahead of schedule and over its budget. D. The project is behind schedule and over its budget.

B. The project is behind schedule and within its budget.

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23⟩ You are the project manager for a railroad construction project. Your Sponsor has asked you for a forecast for the cost of project completion. The project has a total budget of $80,000 abd CPI of .95 . The project has spent $25,000 of its budget so far. How much more money do you plan to spend on the project? A. $59,210 B. $80,000 C $84,210 D $109,210

A. $59,210

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24⟩ A project manager needs to analyze the project costs to find ways to decrease costs. It would be BEST if the project manager looks at A. Variable costs and fixed costs B. Fixed costs and indirect costs C. Direct costs and variable costs D. Indirect costs and direct costs

C. Direct costs and variable costs

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25⟩ Cost risk means A. There are risks that will cost the project money B. The project is too risky from a cost aspect C. There is a risk that project costs could go higher than planned D. There is a risk that the cost of the project will be lower than planned

C. There is a risk that project costs could go higher than planned

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26⟩ You provide a project cost estimate for the project to the project sponsor. He is unhappy with the estimate, because he thinks the price should be lower. He asks you to cut 15 percent off the project estimate. What should you do? A. Start the project and constantly look for cost savings B. Tell all the team members to cut 15 percent from their estimates C. Inform the sponsor of the activities to be cut D. Add additional resources with low hourly rates

C. Inform the sponsor of the activities to be cut

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27⟩ The difference between the cost baseline and the cost budget can be BEST described as A. The management reserve B. The contingency reserve C. The project cost estimate D. The cost account

A. The management reserve

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28⟩ You are about to take over a project from another project manager and find out the following information about the project. Activity Z has an early start (ES) of day 15 and a late start (LS) of day 20. Activity Z is a difficult activity. The cost performance index (CPI) is 1.1. The schedule performance index (SPI) is 0.8. There are 11 stakeholders on the project. Based on this information, which of the following would you be the MOST concerned about? A. Schedule B. Float C. Cost D. The number of available resources

A. Schedule

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29⟩ Although the stakeholders thought there was enough money in the budget, halfway through the project the cost performance index (CPI) is 0.7. To determine the root cause, several stakeholders audit the project and discover the project cost budget was estimated analogously. Although the activity estimates add up to the project estimate, the stakeholders think something was missing in how the estimate was campleted. Which of the following describes what was missing? A. Estimated costs should be used to measure CPI B. SPI should be used, not CPI C. Bottom-up estimating should have been used D. Past history was not taken into account

C. Bottom-up estimating should have been used

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30⟩ Earned value analysis is an example of A. Performance reporting B. Planning control C. Ishikawa diagrams D. Integrating the project components into a whole

A. Performance reporting

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31⟩ The project manager is allocating overall cost estimates to individual activities to establish a baseline for measuring project performance. What process is this? A. Cost Management B. Estimate Costs C. Determine Budget D. Control Costs

C. Determine Budget

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32⟩ A cost management plan contains a description of A. The project costs B. How resources are allocated C. The budgets and how they were calculated D. The WBS level at which earned value will be calculated

D. The WBS level at which earned value will be calculated

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33⟩ Monitoring cost expended to date in order to detect variances from the plan occurs during A. The creation of the cost change management plan B. Recommending corrective actions C. Updating the cost baseline D. Product performance reviews

D. Product performance reviews

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34⟩ Early in the life of your project, you are having a discussion with the sponsor about what estimating techniques should be used. You want a form of expert judgment, but the sponsor argues for analogous estimating. It would be BEST to A. Agree to analogous estimating, as it is a form of expert judgment B. Suggest life cyde costing as a compromise C. Determine why the sponsor wants such an accurate estimate D. Try to convince the sponsor to allow expert judgment because it is typically more accurate

A. Agree to analogous estimating, as it is a form of expert judgment

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35⟩ You have just completed the initiating processes of a small project and are moving into the planning processes when a project stakeholder asks you for the projects budget and cost baseline. What should you tell her? A. The project budget can be found in the project's charter, which has just been completed B. The project budget and baseline will not be finalized and accepted until the planning processes are completed C. The project management plan will not contain the project's budget and baseline; this is a small project D. It is impossible to complete an estimate before the project management plan is created

B. The project budget and baseline will not be finalized and accepted until the planning processes are completed

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36⟩ A new store development project requires the purchase of various equipment, machinery, and furniture. The department responsible for the development recently centralized its external purchasing process and standardized its new order system. In which document can these new procedures be found? A. Project scope statement B. WBS C. Staffing management plan D. Organizational policies

D. Organizational policies

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37⟩ Your cost forecast shows that you will have a cost overrun at the end of the project. Which of the following should you do? A. Eliminate risks in estimates and reestimate B. Meet with the sponsor to find out what work can be done sooner C. Cut quality D. Decrease scope

A. Eliminate risks in estimates and reestimate

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38⟩ Your project has a medium amount of risk and is not very well defined. The sponsor hands you a project charter and asks you to confirm that the project can be completed within the project cost budget. What is the BEST method to handle this? A. Build the estimate in the form of a range of possible results B. Ask the team members to help estimate the cost based on the project charter C. Based on the information you have, calculate a parametric estimate D. Provide an analogous estimate based on past history.

A. Build the estimate in the form of a range of possible results

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39⟩ The seller tells you that your activities have resulted in an increase in their costs. You should A. Recommend a change to the project costs B. Have a meeting with management to find out what to do C. Ask the seller for supporting information D. Deny any wrongdoing

C. Ask the seller for supporting information

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40⟩ The cost contingency reserve should be A. Hidden to prevent management from disallowing the reserve B. Added to each activity to provide the customer with a shorter critical path C. Maintained by management to cover cost overruns D. Added to the base costs of the project to account for risks

D. Added to the base costs of the project to account for risks

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