Chapter 5
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Questions and Answers

What is the schedule variance for the project described?

  • Twelve weeks
  • $50,000
  • Three weeks
  • $40,000 (correct)
  • What do a CPI value of 1.25 and an SPI value of 1.33 for a project indicate?

  • The project is making slower progress and is costing more than planned.
  • The project is making slower progress and is costing less than planned.
  • The project is making faster progress and is costing more than planned.
  • The project is making faster progress and is costing less than planned. (correct)
  • Which aspects of a project may be influenced by a budget cut due to economic downturn?

  • Scope, schedule, quality, and resources
  • Scope, schedule, quality, resources, risk, and possibly some other aspects (correct)
  • Scope, schedule, and quality only
  • Scope and schedule only
  • If an influential stakeholder requests to complete the project earlier than planned, which two parameters are most likely to be affected by this change?

    <p>Schedule and deliverables</p> Signup and view all the answers

    Assume that a project manager wants to compress the schedule. Which technique could they utilize to achieve this goal effectively?

    <p>Crashing</p> Signup and view all the answers

    What does a negative schedule variance (SV) indicate?

    <p>The project is behind schedule</p> Signup and view all the answers

    How is the Schedule Performance Index (SPI) calculated?

    <p>EV / PV</p> Signup and view all the answers

    What does a Schedule Performance Index (SPI) of 0.75 imply?

    <p>The project is progressing at 75% of the planned pace</p> Signup and view all the answers

    Why is the Schedule Performance Index (SPI) important in project management?

    <p>To assess how well the project is adhering to the planned schedule</p> Signup and view all the answers

    How can a project manager use the graphical representation of performance variables over time?

    <p>To visualize the project's progress against planned values</p> Signup and view all the answers

    Which of the following is true about the Triple Constraint in project management?

    <p>Scope, schedule, and cost are the three sides of the constraint triangle that cannot all change simultaneously.</p> Signup and view all the answers

    What does the term 'schedule' refer to in project management?

    <p>The work performed over a certain time period</p> Signup and view all the answers

    In a situation where a project is behind schedule with no extra resources available, what must change according to the Triple Constraint?

    <p>Scope, schedule, or cost - at least one of them must change.</p> Signup and view all the answers

    Which of the following parameters are fundamental in Earned Value Management (EVM)?

    <p>Planned value (PV), earned value (EV), actual cost (AC)</p> Signup and view all the answers

    What approach can a project manager take to meet a deadline approaching within a week when the project is behind schedule?

    <p>Modify the scope of the project by prioritizing features to be implemented.</p> Signup and view all the answers

    How does the 'time is money' principle relate to the relationship between cost and schedule?

    <p>It shows that performing a schedule activity incurs a cost</p> Signup and view all the answers

    Which parameter might need to change if a project manager wants to meet a deadline but does not have extra resources available?

    <p>Project scope by reducing the number of planned features.</p> Signup and view all the answers

    What does the Triple Constraint indicate about making changes in project management?

    <p>Changes in one aspect of a project will affect at least one other aspect.</p> Signup and view all the answers

    In the context of a project, what does the term 'triple constraint' refer to?

    <p>The relationship between time, cost, and performance</p> Signup and view all the answers

    Which project management objective does the Earned Value Technique (EVT) help in monitoring?

    <p>Tracking project schedule and cost performance</p> Signup and view all the answers

    In project management, contingency reserves are primarily used for what purpose?

    <p>Dealing with uncertainties in schedule duration and cost estimates</p> Signup and view all the answers

    Which type of estimation is less time-consuming but also less accurate than parametric and bottom-up estimation?

    <p>Analogous estimation</p> Signup and view all the answers

    What formula is used for Cost Performance Analysis in project management?

    <p>CPI = EV / AC</p> Signup and view all the answers

    What formula is used for Schedule Performance Analysis in project management?

    <p>PV = BAC ⫻ (Time passed / Total schedule time)</p> Signup and view all the answers

    When putting contingency reserves into project plans, which of the following statements about contingency reserves is NOT true?

    <p>Contingency reserves are meant solely for stakeholder expectations</p> Signup and view all the answers

    What is the purpose of controlling costs in project management?

    <p>To keep cost overruns within planned acceptable limits.</p> Signup and view all the answers

    Which document describes how the cost will be monitored and controlled in a project?

    <p>Cost management plan</p> Signup and view all the answers

    What is the purpose of the cost performance baseline in project management?

    <p>To compare actual performance with planned cost</p> Signup and view all the answers

    Why must any change to the budget be approved before implementation?

    <p>To prevent unapproved changes from occurring</p> Signup and view all the answers

    What are the input items to the Control Cost process in project management?

    <p>Cost management plan and work performance information</p> Signup and view all the answers

    What is planned value (PV) in project management?

    <p>The value that was planned to create in the time spent so far</p> Signup and view all the answers

    How is planned value (PV) calculated in project management?

    <p>$600,000 ⫻ (4 weeks / 12 weeks)</p> Signup and view all the answers

    What does PV represent in project management?

    <p>The planned schedule in terms of cost</p> Signup and view all the answers

    Which formula is used to calculate the planned value for a project?

    <p>$600,000 ⫻ (time passed / total schedule time)</p> Signup and view all the answers

    What does schedule variance (SV) measure in project management?

    <p>The difference between earned value and planned value</p> Signup and view all the answers

    Why is it important to calculate planned value (PV) in project management?

    <p>To determine if the project is on track in terms of cost and schedule</p> Signup and view all the answers

    How does planned value relate to budget at completion (BAC) in project management?

    <p>Planned value is equal to BAC at any given stage of the project</p> Signup and view all the answers

    What is the main purpose of calculating schedule variance (SV) in project management?

    <p>To measure the difference between earned value and planned value</p> Signup and view all the answers

    From the provided text, what does Planned Value represent in terms of cost?

    <p>The planned schedule in terms of cost</p> Signup and view all the answers

    Variance analysis is not a technique used to assess the magnitude of variation in the value of a variable from the baseline.

    <p>False</p> Signup and view all the answers

    The earned value technique (EVT) is commonly used to measure only the scope and schedule performance of a project.

    <p>False</p> Signup and view all the answers

    In earned value management (EVM), the budgeted cost of work scheduled is compared with the actual cost of work performed.

    <p>True</p> Signup and view all the answers

    The project cost and project schedule are unrelated to each other according to earned value management principles.

    <p>False</p> Signup and view all the answers

    Variance analysis is primarily focused on assessing deviations in project parameters such as quality and risk.

    <p>False</p> Signup and view all the answers

    Schedule Variance (SV) is calculated as EV minus PV in Earned Value Management.

    <p>True</p> Signup and view all the answers

    A negative Schedule Variance (SV) indicates that the project is ahead of schedule.

    <p>False</p> Signup and view all the answers

    Schedule Performance Index (SPI) is calculated by dividing EV by PV in Earned Value Management.

    <p>True</p> Signup and view all the answers

    An SPI value of 0.75 indicates that the project is progressing faster than planned.

    <p>False</p> Signup and view all the answers

    All performance variables in Earned Value Management, except BAC, are calculated at different points in time as the project progresses.

    <p>True</p> Signup and view all the answers

    Cost variance (CV) is calculated by subtracting the actual cost (AC) from the planned value (PV).

    <p>False</p> Signup and view all the answers

    The total planned value (PV) of a project is equal to the budget at completion (BAC).

    <p>True</p> Signup and view all the answers

    The reserves are included in the cost baseline for projects.

    <p>False</p> Signup and view all the answers

    Schedule variance (SV) and the schedule performance index (SPI) are calculated in terms of cost using actual cost (AC).

    <p>False</p> Signup and view all the answers

    Earned value analysis is primarily based on planned value (PV), earned value (EV), and actual cost (AC).

    <p>True</p> Signup and view all the answers

    The cost baseline is developed during the process of determining the budget for a project.

    <p>False</p> Signup and view all the answers

    In earned value management, the earned value of a project at a certain point indicates the budgeted cost of work performed.

    <p>True</p> Signup and view all the answers

    If the planned value of a project is higher than the earned value, it indicates a favorable cost variance.

    <p>False</p> Signup and view all the answers

    Cost variance is calculated by subtracting the earned value from the actual cost of work performed.

    <p>True</p> Signup and view all the answers

    In variance analysis, any deviation in project parameters from the baseline is considered irrelevant to project performance.

    <p>False</p> Signup and view all the answers

    The earned value is calculated using the formula EV = BAC × (work completed/total work required)

    <p>True</p> Signup and view all the answers

    Actual cost (AC) is the total cost actually incurred until a specific point on the timescale in performing the work for a project.

    <p>True</p> Signup and view all the answers

    Cost variance (CV) is calculated by subtracting the actual cost (AC) from the earned value (EV).

    <p>True</p> Signup and view all the answers

    The expected value of CV is always negative because we expect the earned value to be less than the actual cost.

    <p>False</p> Signup and view all the answers

    A positive cost variance indicates better cost performance than expected, while a negative cost variance indicates worse cost performance than expected.

    <p>True</p> Signup and view all the answers

    The Estimate to Complete (ETC) is calculated as the Budget at Completion (BAC) minus Earned Value (EV).

    <p>True</p> Signup and view all the answers

    Cost Performance Index (CPI) is calculated by dividing Earned Value (EV) by Actual Cost (AC).

    <p>True</p> Signup and view all the answers

    Schedule Variance (SV) is calculated as the difference between Earned Value (EV) and Planned Value (PV).

    <p>True</p> Signup and view all the answers

    Planned Value (PV) is calculated as Budget at Completion (BAC) times Time Passed divided by Total Schedule Time.

    <p>False</p> Signup and view all the answers

    The Cost Variance (CV) is calculated as the Actual Cost (AC) minus Earned Value (EV).

    <p>False</p> Signup and view all the answers

    The Budget at Completion (BAC) represents the total budget authorized for performing the project work.

    <p>True</p> Signup and view all the answers

    Earned Value (EV) indicates the value of the actually performed work in terms of the approved budget for a project or project activity.

    <p>True</p> Signup and view all the answers

    The Budget at Completion (BAC) is also known as the Actual Cost (AC).

    <p>False</p> Signup and view all the answers

    Variance analysis primarily focuses on assessing deviations in project parameters such as quality and risk.

    <p>False</p> Signup and view all the answers

    The Performance Measurement Baseline (PMB) includes variables such as BAC, EV, and AC.

    <p>False</p> Signup and view all the answers

    Planned Value (PV) represents the total cost of the project work originally estimated in the project management plan.

    <p>True</p> Signup and view all the answers

    Budget at Completion (BAC) is calculated differently depending on whether it is for the whole project or just a part of it.

    <p>False</p> Signup and view all the answers

    Earned Value (EV) is equivalent to the Budgeted Cost for Work Scheduled (BCWS).

    <p>False</p> Signup and view all the answers

    Cost Performance Analysis focuses on how effectively money is being spent on the project work compared to set expectations.

    <p>True</p> Signup and view all the answers

    The Schedule Performance Index (SPI) is calculated by dividing Earned Value (EV) by Actual Cost (AC).

    <p>False</p> Signup and view all the answers

    Study Notes

    • Schedule refers to performing work over a specific time period, while cost relates to the money spent for the work on a project during a certain timeframe.
    • The relationship between cost and schedule is evident in the understanding that money is required to carry out scheduled activities.
    • Planned value (PV), earned value (EV), and actual cost (AC) are fundamental parameters in Earned Value Management (EVM) that need close monitoring and development.
    • Scope, schedule, and cost are interlinked in the triple constraint of project management, where changing one aspect affects the others.
    • Schedule Variance (SV) is calculated as the difference between EV and PV, indicating if the project is ahead or behind schedule.
    • Schedule Performance Index (SPI) measures the efficiency of the project schedule by comparing EV to PV, showing how the project is progressing compared to the planned pace.
    • Contingency reserves are used to manage uncertainties in schedule duration and cost, and for addressing project objective overruns to meet stakeholder expectations.

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    Test your knowledge on strategies to prevent cost overruns, manage change requests, and communicate with stakeholders in project cost management. Find out how to keep expenditures within the approved budget limits and ensure timely handling of change requests.

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