Section 5: Cost Management

QUESTION 41
The approximate resource costs necessary for completing project activities are compiled during which project management process?
A. Cost Reserve Analysis
B. Estimate Costs
C. Cost Aggregation
D. Forecasting
Answer: B

Explanation:
Choices A and C occur during Determine Budget. Choice D occurs as part of Control Costs.
Source: PMP® Exam Prep Page: 232

QUESTION 42
Which estimating method tends to be MOST costly for creating a project cost estimate?
A. Bottom-up
B. Analogous
C. Parametric
D. 50/50 rule
Answer: A
Explanation:
Because one needs project details to estimate this way, the effort expended will be greater with bottom-up estimating.
Source: PMP® Exam Prep Page: 236

QUESTION 43
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
Answer: C
Explanation:
Choice A is too general. The estimates are already created in this example, so the answer is not choice B.
The answer is not D, Control Costs, because the baseline has not yet been created. The correct answer is choice C.
Source: PMP® Exam Prep Page: 237

QUESTION 44
You are having difficulty estimating the cost of a project. Which of the following BEST describes the most probable cause of your difficulty?
A. Inadequate scope definition
B. Unavailability of desired resources
C. Lack of historical records from previous projects
D. Lack of company processes
Answer: A
Explanation:
Although all choices could cause difficulty, only choice A makes estimating impossible.
Source: PMP® Exam Prep Page: 233

QUESTION 45
During project executing, a new project manager is assigned to the project and finds that the activity cost estimates for the project have rarely been accurate. Which of the following was MOST probably not done?
A. Obtain a cost constraint from management, create a work breakdown structure, and develop a project management plan
B. Obtain a cost constraint from management, perform a risk assessment, and form a team
C. Form a team, create a work breakdown structure, and use historical records from previous projects
D. Form a team, develop a project management plan, and perform a risk assessment
Answer: C
Explanation:
To find the answer, look for things that would cause a poor estimate. A project management plan (choices A and D) comes after the creation of estimates. Risk assessments (choices B and D) normally occur after estimating.
Source: PMP® Exam Prep Page: 233

QUESTION 46
The main focus of life cycle costing is to:
A. Estimate installation costs.
B. Estimate the cost of operations and maintenance.
C. Consider installation costs when planning the project costs.
D. Consider operations and maintenance costs in making project decisions.
Answer: D
Explanation:
Life cycle costing looks at operations and maintenance costs and balances them with the project costs to try to reduce the cost across the entire life of the project.
Source: PMP® Exam Prep Page: 231

QUESTION 47
You have been assigned as the project manager on a new project. The organization uses a strong matrix structure. Computers needed to complete the project are an example of:
A. Limited cost.
B. Diminishing cost.
C. Fixed cost.
D. Indirect cost.
Answer: C
Explanation:
A fixed cost is a non-recurring cost that will not change as the project progresses. Note the additional information unrelated to the question. It was added as a distracter.
Source: PMP® Exam Prep Page: 233

QUESTION 48
The project budget is proving to be inaccurate. The SPI is 1.1. The team has had negative deviation from the activity attributes, and the sponsor has inserted herself on the change control board. What is the BEST thing for the project manager to do?
A. Try to encourage the sponsor to remove herself from the change control board.
B. Recompute the project schedule.
C. Reestimate the activity attributes.
D. Calculate the cost performance index.
Answer: D
Explanation:
The only problem in the data provided is the cost. Therefore choice D is the best choice.
Source: PMP® Exam Prep Page: 241

QUESTION 49
If a project manager is completing detailed estimating, which type of estimating is MOST likely being used?
A. Bottom-up
B. Analogous
C. Parametric
D. 50/50 rule
Answer: A
Explanation:
Bottom-up refers to estimating based on the details of the activities.
Source: PMP® Exam Prep Page: 234

QUESTION 50
An estimate that is +/-50 percent of actual is considered a:
A. Budget estimate.
B. Rough order of magnitude estimate.
C. Definitive estimate.
D. Parametric estimate.
Answer: B
Explanation:
The rough order of magnitude estimate has this range and is done during the initiating process group.
Source: PMP® Exam Prep Page: 237