Question 110 - Qid 6113796, Cost Management, 2. Process, 7.4 Control Costs
You are managing a renovation project of a house which is to be completed at a budget of $100,000. Earned value analysis shows that so far
you have completed 40% of the work and spent $60,000.
How much more will it cost to complete the project if the cost performance remains unchanged?
$160,000
$149,254
$120,000
$89,254
Hint Unmarked
Question 111 - Qid 6125212, Procurement Management, 2. Process, 12.3 Control Procurements
A major dispute arises with a vendor on a project. The project manager claims that the vendor has failed to perform its contractual
obligations, while the vendor complains that the project is behind on payments.
What is the best course of action for the project manager in this situation?
Refer this issue to a third party for mediation or arbitration
File a contract claim and then work directly with the vendor to resolve the issue
Terminate the contract, document lessons learned, and find another vendor
Conduct a procurement audit
Hint Unmarked
This question involves two Project Management Knowledge Areas: Project Risk Management and Project Procurement
Management. Based on the scenario described, the project team is carrying out the Identify Risks process. Procurement
documentation is an output from the Plan Procurement Management process and an input to the Identify Risks process.
Procurement documentation may include bid documents, the procurement statement of work, payment information, contractor
work performance information, plans, drawings, correspondence. Since procuring goods and services from outside the
organization may increase or decrease overall project risk and may introduce additional individual project risks, reviewing
procurement documentation is the best course of action for the project team.
Your answer is incorrect
Explanation:
The total budget, or budget at completion (BAC), is $100,000. The cost so far, or actual cost (AC), is $60,000. You have completed
40% of the work which is the earned value (EV), i.e., EV = 40% x $100,000 = $40,000.
Understanding what exactly the question asks is the key to answering the question correctly. The last sentence of the question
starts with "How much more will it cost to complete the project...", implying we are requested to find the estimate to complete
(ETC). The ETC can be calculated as follows:
ETC = EAC - AC, where the EAC is the estimate to complete.
Selecting the correct formual for the EAC is another key to answering this question correctly. The last sentence ofthe question
ends with "...if the cost performance remains unchanged?", implying that the formula for the EAC should consider the cost
performance index (CPI), i.e.:
EAC = BAC / CPI
The CPI, in turn, can be claculated using the following formula:
CPI = EV / AC = 40,000 / 60,000 = 0.67
The rest of the calculations are shown below:
EAC = 100,000 / 0.67 = 149,254
ETC = 149,254 - 60,000 = 89,254
Therefore, the cost to complete the renovation if the cost performance remains unchanged is $89,254
Your answer is incorrect
Explanation: