QUESTION: 85

You are the project manager of a project that has a budget of $675,000 and you have completed 40 percent of the project work. Your project is supposed to be 60 percent complete but you are actually only 40 percent complete. Due to some errors, however, you have actually spent $335,000 of the budget. Management wants to know what the project's cost performance index (CPI) is.
What value do you report?

-$135,000
.67
.81
-$65,000

Answer(s): C

Explanation:

Cost performance index (CPI) is used to calculate performance efficiencies. It is used in trend analysis to predict future performance. CPI is the ratio of earned value to actual cost. The CPI is calculated based on the following formula: CPI = Earned Value (EV) / Actual Cost (AC) If the CPI value is greater than 1, it indicates better than expected performance, whereas if the value is less than 1, it shows poor performance. The CPI value of 1 indicates that the project is right on target. In this instances it is $270,000 divided by $335,000 for a CPI of .81.
Answer option B is incorrect. .67 is actually the schedule performance index.
Answer option D is incorrect. -$65,000 is the cost variance for the project.
Answer option A is incorrect. -$135,000 is the schedule variance of the project.

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QUESTION: 86

Amy is working on a project which is forty percent complete though it was scheduled to be fifty percent complete as of today. Management has asked Amy to report on the schedule variance for her project. If Amy's project has a BAC of $750,000 and she has spent $485,000 to date, what is the schedule variance value?

-$75,000
-$42,000
-$45,000
-$65,000

Answer(s): A

Explanation:

The schedule variance is found by subtracting the planned value from the earned value. The earned value is the percentage of the project completeness multiplied by the BAC. Planned value is the percetage of where the project should be at this time multiplied by the BAC. Schedule variance (SV) is a measure of schedule performance on a project. The variance notifies that the schedule is ahead or behind what was planned for this period in time. The schedule variance is calculated based on the following formula: SV = Earned Value (EV) - Planned Value (PV) If the resulting schedule is negative, it indicates that the project is behind schedule. A value greater than 0 shows that the project is ahead of the planned schedule. A value of 0 indicates that the project is right on target. In this example, EV = 40% of BAC = 300,000, and PV = 50% of BAC = 375,000 SV = 300,000 - 375,000 = -75,000 Answer options C, B, and D are incorrect. These are not the correct values for the schedule variance.

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QUESTION: 87

You are the project manager of the GHE Project. You have identified the following risks with the characteristics as shown in the following figure: How much capital should the project set aside for the risk contingency reserve?

$142,000
$232,000
$41,750
$23,750

Answer(s): D

Explanation:

Contingency reserves are estimated costs to be used at the discretion of the project manager to deal with anticipated, but not certain, events. These events are "known unknowns" and are part of the project scope and cost baselines. The contingency reserve is calculated by multiplying the probability and the impact for the risk event value for each risk event. The sum of the risk events equals the contingency reserve for the project. Note that Risk D is a positive risk amount.
Answer option C is incorrect. This value is the sum of the risk events if you did not include Risk D as a positive risk value.
Answer option A is incorrect. This is a sum of the risk event.
Answer option B is incorrect. This is a sum of the risk events without including Risk D as a positive risk event.

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QUESTION: 88

Mary is the project manager for her company. She's working with the project team to compress the project schedule as the project must be completed by December 30. For some of the project activities, she and the project team have agreed to crash the project work.
What must be true of these project activities for crashing to be acceptable?

The activities must be of fixed duration.
The activities must be effort-drive.
The activities must not be susceptible to the Law of Diminishing Returns.
The activities must be risk-free.

Answer(s): B

Explanation:

Crashing is the addition of project resources to complete effort-driven activities in faster time. By adding more labor the activity can be completed faster.
Crashing is a schedule compression technique to obtain the greatest amount of compression for the least incremental cost. Crashing works
for activities where additional resources will shorten the duration. Approving overtime, bringing in additional resources, paying to expedite
delivery to activities on the critical path are examples of crashing.
Answer option A is incorrect. An activity of fixed duration, such as printing 100,000 brochures in a printing press, won't be completed faster by
adding more effort.

Answer option D is incorrect. Activities need not be risk-free to use project crashing.
Answer option C is incorrect. All effort-driven activities are susceptible to the Law of Diminishing Returns. By adding more labor the value of
the yield of the work decreases because of the cost of the labor added to the project work.

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