PROJECT MANAGEMENT – Cost

Assignment #1 – 10 August 2019

Instructions: Choose the most suitable answer for each multiple-choice question.
Include an explanation as to how you arrived at your answer (computation, or reasoning).

You are using Earned Value progress reporting for your current project in an effort to each your software
developers the benefits of earned value. You plan to display project results on the team’s bulletin board
so that the team knows how the project is progressing.

Use the following status information listed below, to answer questions #1 to 4.

PV = $2,200
EV = $2,000
AC = $2,500
BAC = $10,000

1. According to Earned Value analysis, the SV and status of the project described above is:

a. - $300; the project is ahead of schedule

b. +$8,000; the project is on schedule
c. +$200; the project is ahead of schedule
d. -$200; the project is behind schedule

2. What is the CPI for this project and what does it tell us about the current cost performance?

a. 0.20; the actual costs are exactly as planned

b. 0.80; the actual costs have exceeded planned costs
c. 0.80; the actual costs are less than planned costs
d. 1.25; the actual costs have exceeded planned costs

3. The CV is:
a. +$300
b. -$300
c. +$500
d. -$500

4. What is the EAC for this project, and what does it represent?
a. $12,500; the revised estimate for total project cost (based on the performance thus far)
b. $10,000; the revised estimate for total project cost (based on performance thus far)
c. $12,500; the original project budget
d. $10,000; the original project budget

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PROJECT MANAGEMENT – Cost
Assignment #1 – 10 August 2019

5. Consider the following information:

PHASE ESTIMATE
Concept $15,000
Initiation $10,000
Design $10,000
Development $30,000
Finish $8,000
Operations and Maintenance $40,000
Disposition $12,000

What is the total project life-cycle costs?

a. $58,000
b. $73,000
c. $98,000
d. $125,000

6. As the fourth month on the CERULEAN project, cumulative planned expenditures were $100,000.
Actual expenditures totaled $120,000. How is the CERULEAN project doing?

a. It is ahead of schedule
b. It is in trouble because of cost overrun
c. It will finish within the original budget
d. The information is insufficient to make an assessment

7. You receive a frantic phone call from your vice-president as she will be meeting with a prospective
client in 15 minutes to discuss a large and complex project. She asks you how much the project will
cost. You quickly think of some similar past projects, factor in a few unknowns and give her a number.
What type of estimate did you just provide?

a. Definitive
b. Budget
c. Order of magnitude
d. Detailed

8. Which of the following calculations cannot be used to determine EAC?

a. EV to date plus the remaining budget

b. AC to date plus a new estimate for all remaining work
c. AC to date plus the remaining budget
d. AC to date plus the remaining budget modified by a performance factor

9. You are working on a project with an SPI of 0.72 and a CPI of 1.1. Which of the following BEST
describes your project?

a. Your project is ahead of schedule and under budget

b. Your project is behind schedule and over budget
c. Your project is behind schedule and under budget

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PROJECT MANAGEMENT – Cost
Assignment #1 – 10 August 2019

d. Your project is ahead of schedule and over budget

10. Project PRUSSIAN has an NPV of $75,000 with an internal rate of return (IRR) of 1.5% and an initial
investment of $15,000. Project LEMON has an NPV of $60,000 with a BCR of 2:1. Project CRIMSON
has an NPV of $80,000, which includes an opportunity cost of $35,000. Based on these projects,
which is the BEST one to select:

a. Project PRUSSIAN
b. Project LEMON
c. Project CRIMSON
d. There is not enough information to select a project

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