Section 5: Cost Management

QUESTION 1
Which of the following does NOT assess the value a project brings to an organization?
A. Benefit cost analysis
B. Net present value
C. Value analysis
D. Needs assessment
Answer: C

Explanation:
Value analysis is a way of finding the least expensive way to do the work.
Source: PMP® Exam Prep Page: 232

QUESTION 2
You are in the middle of a new product development project for your publicly traded company when you discover that the previous project manager made a US $3,000,000 payment that was not approved in accordance with your company policies. Luckily, the project cost performance index (CPI) is 1.2. What should you do?
A. Contact your manager.
B. Put the payment in an escrow account.
C. Bury the cost in the largest cost center available.
D. Ignore the payment.
Answer: A
Explanation:
Project managers must deal with potentially unethical situations like the situation described. Choices B and C hide it. Choice D ignores it. Only choice A deals with it.
Source: PMP® Exam Prep Page: 487

QUESTION 3
While completing a project, a project manager realizes he needs to decrease project costs. After researching his options, he comes up with the following choices. Which choice would DECREASE project costs?
A. Change to component A from component B. Component A costs more to purchase, but has a lower life cycle cost than B.
B. Change activity A to be completed by resource B instead of resource C. Resource B is a more experienced worker.
C. Move activities B and H to occur concurrently, and accept a 30 percent increase in the risk that five more resources will be needed later.
D. Remove a test from the project management plan.
Answer: D
Explanation:
Getting tired yet? Get used to answering questions for four hours before you take the exam. Choice A will not decrease project costs, just costs over the life of the project. It will not solve the problem. Choice B will almost always lead to higher costs, and choice C could affect costs later, due to the increased risk. Though it may not be the first choice to think of, deleting a test would decrease costs, so it is the best answer. It may also decrease quality, but that is not the question.
Source: PMP® Exam Prep Page: 238

QUESTION 4
Which of the following payments on an international project is unacceptable?
A. Offering to pay the country officials for not awarding the project to a particular company
B. Payment for mail service
C. Payment for a "foreign workers application license" required in the country
D. Payment for police protection
Answer: A
Explanation:
Choice A is clearly a bribe.
Source: PMP® Exam Prep Page: 489

QUESTION 5
Payment for routine government action by a foreign official is:
A. A bribe.
B. Allowed.
C. Not payable upon violation of government law.
D. Allowed only if they process the project schedule.
Answer: B
Explanation:
This is the definition of what is NOT a bribe.
Source: PMP® Exam Prep Page: 489

QUESTION 6
While visiting the country where a new branch office is being built, you are told that you must pay a US $5,000 fee to the government permit officer to obtain the facility permit required by law to start construction.
The construction company tells you this is standard practice and is required by law. What should you do?
A. Pay the fee.
B. Refuse to pay the fee.
C. Have the construction company pay the fee.
D. Have the customer pay the fee.
Answer: A
Explanation:
This type of payment is not a bribe.
Source: PMP® Exam Prep Page: 489

QUESTION 7
Your company is in competition to win a major project for the government of a country. Your contacts in that country inform you that you must make a large payment to the foreign minister to be considered for the project. What should you do?
A. Inform your company’s management, and ask for direction.
B. Do not make the payment.
C. Have the local contact make the payment.
D. Make the payment.
Answer: B
Explanation:
Payments for non-routine government actions are bribes and should not be paid.
Source: PMP® Exam Prep Page: 489

QUESTION 8
A large, complex construction project in a foreign country requires coordination to move the required equipment through crowded city streets. To ensure the equipment is transported successfully, your contact in that country informs you that you will have to pay the local police a fee for coordinating traffic. What should you do?
A. Do not pay the fee because it is a bribe.
B. Eliminate the work.
C. Pay the fee.
D. Do not pay the fee if it is not part of the project estimate.
Answer: C
Explanation:
This is a fee for service paid to a government official and is therefore not a bribe.
Source: PMP® Exam Prep Page: 489

QUESTION 9
The success of your new project requires several of your people to work in a foreign country for six months.
The team informs you that in this country a payment is required to obtain visas. What should you do?
A. Cancel the project.
B. Make the payment.
C. Do not pay and see what happens.
D. Do not send your people.
Answer: B
Explanation:
This type of payment is common and allowable.
Source: PMP® Exam Prep Page: 489

QUESTION 10
Payment for any decision made or encouraged by a foreign official with respect to whether a company will be awarded business is BEST described as:
A. A common practice.
B. A sunk cost.
C. A bribe.
D. A progress fee.
Answer: C
Explanation:
Although it might be a common practice, it is best described as a bribe.
Source: PMP® Exam Prep Page: 489