TRNG Handouts For Project PLNG & MGMT Wkshop 27 Nov 1dec 201 248

Objective Practice Exercises – Set 5
(Cost & Finance / EVM)
22 At the project review meeting your team member tells you the project’s EV is €800, PV
is €850 and the AC is €800.
What would best describe the health of your project?
a. Behind schedule and over budget
b. Behind schedule and on budget
c. Ahead of schedule and under budget
d. Behind schedule and under budget
23 At project completion, the project’s Earned Value will be same as the:

a. Budget at Completion
b. Percent complete
c. Actual Cost
d. Estimate to complete
24 If Estimate at completion is more than Budget at completion at some point in time, then
CPI at that time must be
a. Greater than 1
b. Equal to 1
c. Less than 1
d. Less than zero
25 A project is scheduled to be completed in 18 months. At project review it is found that

the CPI is 1.2. This shows the project will be completed in:
a. 15 months
b. 21 months
c. 18 months
d. Not possible to determine
26 Project ABC has a total budget of $9 Million and was planned to be completed in 8
months. While reviewing the progress at the end of 3 months, the following data was
presented: PV = $3 Million; EV = $2.5 Million and AC = $3 Million. What is the EAC if
the efficiency will change to 100% from now onwards?
a. $9 Million
b. $8.5 Million
c. $9.5 Million
d. $10.8 Million
27 During an EVM review, a project is found to have the following data:

PV = EV = AC
This means that the project’s:
a. Cost performance is as per plan
b. Schedule performance as per plan
c. Both cost and schedule performances are as per plan
d. There is insufficient data to draw any conclusion
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© Centre for Excellence in Project Management (P) Ltd
(Cost & Finance / EVM)
28 The following figures are presented during a project review meeting:

BAC = $24,000, EV = $12,000, AC = $10,000 and CPI = 1.2 .The team is confident
that the current level of cost performance will continue till the end of the project.
Accordingly you inform your sponsor that the amount of budget required to complete
the remaining work is:
a. $10,000
b. $12,000
c. $14,000
d. $20,000
29 You have a project where the total budget of $100,000 is evenly allocated throughout
the 5-month life of the project. You have just completed the second month of the
project and have finished only half of the Planned work. What is the Schedule
Performance Index and what conclusion can you draw about the project from this
data?
a. SPI = 0.5, Project is ahead of Schedule

b. SPI = 2, Project is ahead of Schedule
c. SPI = 0.5, Project is behind schedule
d. SPI = 2, Project is ahead of Schedule
30 The initial budget of your project was $200,000. During the Earned Value Management
review, you calculate that the Estimate at Completion is $150,000. You also find that
your project duration which was originally estimated to take 24 months is now going to
be 36 months. At the time of the review if the Actual Cost is $75,000, then the Earned
Value was:
a. 100,000
b. 120,000
c. 175,000
d. 150,000
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(Quality)
1 Name a Quality tool that lists out defects in the order of the frequency of occurrence is:
a. Crawford slip
b. Pareto chart
c. Histogram
d. Cause-and-effect analysis
2 Quality Control refers to process of:

a. Demonstrating that work is being done according to quality plan
b. Monitoring of project results to ensure specified quality is being achieved
c. Preparing, checking and recording actions required to achieve required
quality
d. None of above
3 Prevention over Inspection means:

a. Prevention costs exceeds inspection costs
b. Cost of appraisal, failure and prevention
c. Use correct processes so as to prevent occurrence of defects
d. Prevention is performed after the quality inspection
4 A control chart is used to:

a. Check if process readings are within a specified range
b. Detect the reasons for deviations
c. Prevent a problem from occurring
d. A and C
5 Pareto analysis is related to the?

a. 80/20 rule
b. 20/80 rule
c. 50/50 rule
d. 85/15 rule
6 Quality planning involves:

a. Identifying the most relevant quality standards that should be followed
b. Determining actions required to comply with relevant quality standards
c. Monitoring of project results to ensure deliverable meets required quality
d. a and b
7 The Quality Assurance process:

a. Monitors specific results to ensure that they comply with relevant
standards
b. Provides confidence that the work is being performed as per the plan
c. Records actions required to achieve the necessary standard
d. Record all the quality metrics using a checklist
8 A Pareto diagram:
a. Is an S curve based on the cumulative frequency of occurrence
b. Is a histogram depicting the magnitude of frequencies
c. Is a histogram based on the order of frequency of occurrence
d. Shows that 80 percent of the causes produce 20 percent of the problems
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(Quality)
9 An indication of excellent quality is:

a. Zero conformance cost incurred
b. Zero quality training cost incurred
c. Lot of field engineers recruited for warranty support
d. Zero non-conformance cost incurred
10 Which of the following is not a part of quality assurance?

a. Conducting of quality audits
b. Identifying improvements in the process
c. Checking results to remove defective products
d. Checking that the process is being correctly followed
11 In a control chart the upper and lower control limits are generally set:
a Two standard deviations from the mean
b. Three standard deviations from the mean
c. At same level as the specification limits
d. It is changed every time
12 Cause and effect diagrams are generally used to identify:

a Potential causes giving rise to defects
b. Potential causes for risks
c. Activity durations
d. A and B
13 What best describes the Rule of seven?

a Seven consecutive data points are outside the control limits
b. Seven consecutive date points are outside the specification limits
c. Seven consecutive data points on same side of mean should be investigated
d. Seven consecutive data points within control limits but on same side of the
mean should be investigated
14 Which of the following is not a cost of internal failure?

a Scrap
b. Rework
c. Warranties
d. Repairs
15 The cost of quality is made up of:

a. Cost of failure and prevention
b. Cost of appraisal, failure and prevention
c. Cost of assessment, appraisal, failure and prevention
d. Cost of prevention
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(Risk)
1 A Secondary risk is:

a. An unimportant risk
b. A new risk created when responding to a risk
c. A risk with two chances of occurrence
d. A risk with a second line of response strategy
2 When brainstorming for risk identification, it is important to:

a. List out the right and wrong options
b. List out all the unlikely options
c. List out the most likely options
d. List out all possible options
3 Risk probability can be described as:

a. The likelihood and effect of a risk occurring in the project
b. The chances that a similar risk will occur more than once
c. The likelihood of a risk occurring
d. Likelihood that the project will be completed on time, within budget
4 If the probability that an event A will occur is 60% and that the event B will occur is
50% then what is the probability of both A and B occurring when they are independent
events?
a. 55%
b. 40%
c. 30%
d. 36%
5 When a risk is transferred to another party it reduces:

a. Its likelihood of occurrence
b. Its impact as well as likelihood of occurrence
c. Its impact on the transferor of the risk
d. It has no impact on either party
6 Monte Carlo simulation is used for:

a. Critical path analysis
b. Risk analysis
c. Responding to a risk
d. Risk identification
7 Risk assessment should be done:

a. For all high value projects
b. For all projects throughout the project cycle
c. For all projects at project initiation and close out
d. For projects having contracts
8 Who should be made responsible for implementing agreed risk responses?

a. Whoever is best placed to manage the risk effectively
b. The person who identified the risk
c. The project manager
d. The sponsor
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(Risk)
9 Assumption analysis:
a. Undertakes a stability analysis
b. Is done to identify risks
c. Undertakes a sensitivity analysis
d. All of the above
10 Risk mitigation is carried out after:

a. Risk identification process
b. Quantitative risk analysis
c. Risk response planning
d. Qualitative risk assessment
11 A Risk Score can be defined as:
a. The sum total of the probability times the impact of all the identified risks
b. The total number of identified risks in the project
c. Probability of successful completion of the project
d. The product of the probability of a risk event times its impact
12 Sensitivity analysis is used for:

a. Motivating team members
b. Qualitative risk assessment
c. Calculating the critical path
d. Prioritizing the most significant risks
13 A negative risk has a 70% probability of occurrence with a financial impact of $50K and
a positive risk has a 50% probability of occurrence with a financial impact of $100K.
Your project budget should be:
a. Increased by $15K
b. Decreased by $15K
c. Increased by $ 50K
d. Decreased by $ 50K
14 After prioritizing the most important risks through Qualitative Risk Analysis, you have
updated the Risk Register with the top 20 risks. What should you do with the risks
which are at the bottom of the list?
a. Discard them as they are having a low risk score
b. Carryout a quantitative risk analysis
c. Ask the Sponsor and follow their instructions
d. Monitor these risks in future review meetings to check if the risk score has
changed
15. You have implemented a risk response measure due to which the probability of
occurrence of a significant risk has reduced from 80 % to 20 % although it’s impact has
not reduced. This action of yours may be termed as:
a. Avoidance
b. Transfer
c. Mitigation
d. Acceptance
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(HR)
1 Line management is best suited for:

a. Managing changes in the company
b. Routine operation such as manufacturing
c. Managing managers
d. Introducing a new product
2 Self Actualization is:

a. A Herzberg’s Motivation Factor
b. A Management philosophy
c. Maslow’s second level need
d. Maslow’s highest level need
3 Which of the following is not true of a projectized organization?

a. Is mainly involved in project work obtained from outside clients
b. The functional manager is jointly responsible for the project
c. The project manager has full control of the project
d. Team members report to the project manager
4 Some advantages of managing projects in a Matrix organization are:

a. The project manager and functional manager can share
responsibility for assigning priorities
b. It allows most economical and efficient use of resources
c. Allows team members to be more dedicated as their career
prospects are maintained
d. All of the above
5 Some disadvantages of a Matrix organization are:

a. Team members have to keep both functional and project managers happy
b. Can have disagreement between Line & Project manager regarding project
priorities
c. Top management has to be more involved to lay down guidelines etc
d. All of the above
6 Project staffs have to report to more than one boss in a:

a. Functional Organization
b. Balanced Matrix structure
c. International projects
d. Government projects
7 All of the following are true about the Responsibility Matrix except:
a. Shows when the tasks will be performed
b. Is made using the WBS and the OBS
c. Rows generally indicate the activities
d. Shows the responsibilities or functions
8 The project Sponsor’s role involves all of the following except:

a. Resolve disputes in project changes
b. Justify the benefits for taking up the project
c. Manage the contractors
d. Monitor progress of the project
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(HR)
9 The project manager believes in keeping tight control over the team working and
dictating what should be done by the team members. This style of management is
……………. and more suitable for ……………. projects:
a. Bureaucratic, government
b. Directive, low level
c. Autocratic, low risk
d. Laissez Faire, R&D
10 Which of the following conflict resolution method results in a long lasting solution?
a. Forcing
b. Confrontation
c. Withdrawal
d. Smoothing
11 In case of a conflict, who will decide the importance between the project’s cost,
schedule and quality?
a. Project manager
b. Sponsor
c. Both the project manager and sponsor
d. None of above
12 When a conflict arises in the project team between two team members the project
manager’s preferred approach should be:
a. Let the persons involved be responsible to resolve their conflict
b. Try to resolve the conflict as soon as possible
c. Try to resolve it when he has some spare time
d. Avoid getting involved
13 If your boss supervises your work throughout the day to see what you are doing, then
your boss believes in:
a. Theory X management
b. Theory Y management
c. Kaizen
d. Quality circles
14 The lowest level need in Maslow’s Hierarchy of Needs is:

a. Security
b. Social needs
c. Physiological needs
d. Security needs
15 Herzberg’s Two Factor theory looks at the two aspects of ……… and …….:
a. Motivators, de-motivators
b. Motivators, hygiene factors
c. Salary, recognition
d. Hygiene factors, social needs
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Objective Practice Exercises - Set 9
(Communication / Change)
1 Communicating has many dimensions that includes all of the following Except:
a. Written and oral, listening and speaking
b. Internal and external
c. Definitive and clear
d. Formal and informal
2 You decide to go to the library and read about project Management best practices.
This is an example of:
a. Push communication
b. Pull communication
c. Interactive communication
d. Lateral communication
3 The performance of one of your subordinates is not up to the mark and you are in the
process of providing positive feedback to him. However, you find that he is not paying
full attention to your words. What kind of communication barrier is exhibited through his
behaviour?
a. Ignoring
b. Perception
c. Selective listening
d. Cultural differences
4 If the number of communication channels in your project is 45, then the number of
persons communicating in your project is:
a. 9
b. 10
c. 45
d. 90
5 As part of the communications process, the sender is responsible for:

a. Ensuring the receiver agrees with the message
b. Confirming that the information has been received properly
c. Presenting the information in the most favorable manner
d. Interpreting the message correctly
6 As part of making the communication management plan, you should consider all the
following points except:
a. Who needs what information
b. When they will need the information
c. What format will be used to send the information
d. How to suppress unpleasant facts
7 You had 10 people in your project team till last month including you. Two of your team
members have been transferred to another project. Percentage change in your
communication channels with respect to last month is:
a. 20%
b. 37.7%
c. 60.7%
d. Not possible to determine
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8 You believe that your boss does not like you and always finds faults with you. As a
result, you do not feel comfortable in discussing work related issues with your boss.
This in turn piles up the unresolved issues which make your work more difficult. Your
inability to communicate with your boss is due to what kind of communication barrier?
a. Message competition
b. Hidden agenda
c. Project Jargon
d. Perception
9 Communication about Liquidation Damages under a contract between buyer and Seller
should be:
a. Formal written communication
b. Formal verbal communication
c. Informal written communication
d. Informal verbal communication
10 If there is a scope change in the project during implementation the change should be
monitored against?
a. Project goals that were set out in the project charter
b. The project network schedule
c. The impact of the change on the resource usage
d. The communication plan
11 The project is progressing on schedule when the client asks for a change that is likely
to upset the schedule. As the project manager what should you do first?
a. Tell the client the change cannot be implemented as the time is too short
b. Analyze the impact of the change and follow the change management
process
c. Start implementing the change as the time is too short
d. Inform the sponsor of the change request
12 Which one of the following communication methods has more message impact on the
receiver?
a. Verbal
b. Written
c. Non-verbal
d. Diagram
13 In your Project Management training session, communication will be taking place

through:
a. Push communication
b. Pull communication
c. One way communication
d. Interactive communication
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14 You are the Project Manager having a team of 25 people distributed in 3 geographic
locations. Each location is headed by a Assistant PM. No. of communication channels
possible in your project is:
a. 406
b. 378
c. 392
d. 350
15 Configuration management is concerned with:

a. Keeping full traceability of the design changes
b. Scheduling when the changes will be required in the project
c. Ensuring the deliverables are according to latest requirements
d. A and C
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CIPM Class Exercise – Set 10
(Procurement)
1 At contract closeout, a product verification is done to:

a. Verify the product's design
b. To document the seller's work
c. Verify the work completed for making seller payments
d. Ensure that the seller's work is complete and satisfactorily meets all the
contract requirement
2 Poor scope definition can result in all except:

a. Low team morale
b. Rework
c. Increase in project costs
d. Decrease in project costs
3 You want to outsource some of the work packages, but are not very sure of the exact
nature of the work involved. The most suitable contract in this case is a:
a. Fixed plus incentive fee contract
b. Cost reimbursable contract
c. Time & Material contract
d. Any type is equally suitable
4 What item should be considered when selecting a supplier?

a. Dependability
b. Product quality
c. Location
d. All of above
5 A procurement strategy would not include:

a. Potential sources of supply
b. Final value of the contract
c. Terms and type of contract
d. Methods of supplier selection
6 In procurement, a RFP and a RFQ are typically prepared by:

a. The buyer or the Seller
b. The buyer
c. The buyer and the seller
d. The seller
7 Contract Closeout involves all of the following except:

a. Relocating the team members
b. Formal acceptance of the work by the buyer
c. Updating the contract file
d. Product verification
8 Contract closure should be done:

a. If there is enough time
b. If a contract is terminated before completion
c. At the end of the contract
d. b and c
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CIPM Class Exercise – Set 10
(Procurement)
9 The amount of monitoring of contractor's cost by the PM will vary based on:
a. The value of the contract
b. The type of contract being used
c. The reputation of the contractor
d. The nature of the work being done
10 The business risks in a Firm Fixed Price contract will be borne by:
a. Buyers
b. Sellers
c. Buyer or seller
d. Not possible to know this
11 What is not true of a Fixed Price contract:

a. Is the most commonly used contract
b. Buyer should monitor the costs incurred by seller
c. Should have clear work specifications
d. Contractor faces more risk than buyer
12 A Ceiling Price is applicable in which of the following types of contracts?

a. FPIF
b. CPIF
c. CPPC
d. CPFF
13 In your contract you are using a Maximum Fee and a Minimum Fee. This means you
are using a _________ contract.
a. FPIF
b. CPIF
c. CPPC
d. CPFF
14 In a CPFF contract, the estimated cost of the contract is Rs.1,00,000 and the contractor
fee is 10% of the estimated cost. However, the actual costs incurred by the to complete
the work was Rs.1,50,000. What is the final amount payable for the contract?
a. 1,00,000
b. 1,10,000
c. 1,50,000
d. 1,60,000
15 In a CPPC contract signed by your company, the estimated cost of the contract was
Rs. 2,00,000 and a 20% fee was to be paid to the contractor for doing the work. The
actual costs incurred by the contractor to complete the contract went up by 25%. What
is the final amount you need to pay to the contractor?
a. 2,00,000
b. 2,50,000
c. 3,00,000
d. 3,50,000
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(Integration and Closeout)
1 Managing issues in projects is important because:

a. It helps to pinpoint the unresolved issues
b. It helps to understand some of the root causes of poor project performance
c. It helps to build team cohesion
d. All of the above
2 Product integration involves:

a. Integrating the individual components and sub-components
b. Testing the performance of the components against their acceptance criteria
c. Checking that all the components work properly together
d. All of the above
3 A change log is:

a. A record of all authorized project changes
b. A record of all proposed changes, rejected or authorized
c. A record of the people who are creating issues in the project
d. A record of rejected changes with reason for rejection
4 The work packages should be checked against the approved specification to ensure
the deliverables ________________:
a. Have been completed as per schedule
b. Have met the planned cost
c. Have not used extra resources
d. Conform to the plan
5 What is true of project closeout?

a. It is the done in the implementation phase
b. Uses the Business case to ensure that all benefits got materialized
c. It does not involve the project manager
d. Check is done to see all work is completed
6 For proper integration within a project:

a. Relationships between sub-projects in the project should be clear
b. Team members must meet daily
c. The sponsor should be actively involved
d. All of above
7 The project manager is responsible to integrate the project. Integration of the project
work involves:
a. Efficient use of network schedules
b. Effective coordination and control
c. Making the responsibility matrix
d. Meetings of all the stakeholders regularly
8 What would best describe the overall aim of project management?

a. Ensure the project is completed on schedule irrespective of cost
b. Ensure the project cost is maintained irrespective of schedule
c. Achieve the success criteria described in the Business Case
d. Provide better quality than was specified
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(Integration and Closeout)
9 Lessons learned documentation is important as they:

a. Help to pinpoint fraudulent activities
b. Hel to conduct a project audit
c. Are most useful in future projects to be performed by the organization
d. All of the above
10 Projects often fail due to:

a. Lack of proper planning
b. Unforeseen environmental changes
c. Inadequate project monitoring and control
d. All of the above
11 A contract can be formally closed after:

a. The deliverables are handed over to the client
b. The contractor provides the required quality test reports
c. The deliverables are completed satisfactorily and accepted by the client
d. The team members have been released
12 Health and safety standards are initiated in the:

a. The Business case
b. Business strategy
c. Project Success Criteria
d. Project Management Plan
13 The project has been completed and the contract is in process of being closed. A
common dispute that arises at this time between the contractor and the owner could be
regarding all of the following except:
a. Is the work part of the original contract or not?
b. The additional time taken to complete project due to delays from owner side
c. The monetary compensation that should be awarded to the contractor for
contract changes
d. When owner is required to release the final payment to contractor
14 Configuration management should keep a record of?

a. When a change can occur in the project’s requirements
b. All changes in drawings and documents issued in the project
c. The changes requested
d. The members of the change control board
15 To ensure that the project’s scope has been fully met a scope verification process for
acceptance of deliverables before delivery will be conducted by the:
a. Client
b. Contractor
c. Contractor in presence of Client
d. Contractor in presence of Directors
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Mock Test
1 Match the following:

Money originally budgeted for project.. ……; How much money spent so far ………….; Physical
work accomplished so far …………; Revised estimate for the final cost of project ………….
A EAC
B BAC
C ACWP
D EV
2 A Pareto diagram will be used by the project manager to:
A Focus on the most critical issues to improve quality

B Focus on stimulating thinking
C Explore a desired future outcome
D Determine if a process is out of control
3 You are part of the team developing the project’s responsibility matrix. Which statement is not
true of a responsibility matrix?
A Shows the time taken to complete the tasks

B Combines the WBS and the OBS
C Columns are generally used to identify the positions/names
D Shows different levels of responsibility
4 A work package is all except:
A The lowest level of a work breakdown structure

B The level where work will be controlled
C Can have different owners for better control
D Used as input for developing the network
5 The scope baseline is the original:
A Project schedule and budget

B Description in the project charter
C Original scope plus or minus approved changes
D Performance measure
6 In the context of projects, temporary means that:
A Projects have a finite time duration with start and end dates
B Every project has a definite beginning
C The project results are temporary
D Projects have no significance to the permanent sustainability of a corporation
7 A work breakdown structure is considered a key tool in project management as it:
A Identifies different work elements

B Displays the overall project schedule
C Provides the basis for cost estimates
D A and C
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Mock Test
8 A risk has a 35% chance of happening in any given month. If the project is expected to last for 8
months, the probability that this risk event will occur during the project’s sixth month is:
A 25%
B 35%
C 75%
D 100%
9 In the arrow diagramming method (ADM), __________ do not consume time or resources:
A Events
B Activities
C Float
D Arrows
10 In a three time estimate using PERT, if the optimistic estimate for a task is 6 days and
pessimistic estimate is 18 days, what is the most likely estimate if the mean is 10 days:
A 7 days
B 8 days
C 9 days
D 12 days
11 How will a negative float be shown in a network?
A The late start date is earlier than the early start date
B The critical path supports the imposed end date
C The early finish date is equal to the late finish date
D The late start date is later than early start date
12 Task B cannot begin until 10 days after task A begins is best described as a:
A Finish to start relationship

B Start to start relationship
C Start to start with a 10 days lag
D Start to start with a 5 day lead
13 Which of the following is most important to plan and control the project?
A Project charter
B Project schedule
C Work breakdown structure
D Work assignments
14 Your project manager has asked you to show the relationships between the different activities.
To do this you should use a:
A Bar chart
B Network diagram
C Histogram
D Work breakdown structure
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Mock Test
15 ROM cost estimates are meaningful during the _______ phase of the project:
A Conceptual
B Planning
C Control
D Execution
16 Your project work requires that you must wait for 3 days before you can begin the successor
activity. What is this relationship called?
A Lead
B External dependency
C Lag
D Discretionary dependency
17 If you are a project team member how could you make use of floats?
A Use the floats to crash the project

B Utilize the floats to optimize use of resources
C Fast track the activities that have floats
D All of the above
18 When can a non-critical activity become a critical activity?
A Not possible
B If the activity is not completed by it’s Late Finish date
C When the project progress shows the activity has a negative float
D B and C
19 A Project often needs to balance among the competing objectives of:
A Risk, cost and schedule

B Direct cost, indirect cost and resource availability
C Cost, quality and schedule
D Quality, procurement and time
20 A Bar chart is best used to:
A Show the activity dependencies

B Show the completion date of key events
C Review the project’s progress at a summary level
D Assign responsibility to team members
21 A start to start logical relationship is used to show:
A The predecessor activity can start once it’s successor has started
B The successor activity can start once it’s predecessor has started
C The successor activity can finish once it’s predecessor has started
D A lead in the successor activity
22 When developing the WBS at which level will you place the work package?
A The highest level of the WBS

B The middle level of the WBS
C The lowest level of the WBS
D Will depend on the industry
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Mock Test
23 You notice that your client has made a calculation mistake and made an excess payment to you.
What should you do?
A It is not your problem. Client should have used computers

B Bring it to the client’s attention
C Do not worry as any way you were loosing money on this contract, extra money will
help you to recover some losses
D Ignore it until matter comes into notice
24 Activity C is part of an on-going project. The activity has a total duration of 15 days, the early
start is day 25 and the late start is day 30. Two activities D and F both have a finish to start
dependency with activity C. Activity D is the critical activity. This implies that activity C:
A Is a critical activity as activities D and F are dependent on it

B Will delay the project end date if it does not begin on day 25 of the project
C Does not lie on the critical path
D Has a float of 15 days
25 Complex projects that require a multi disciplinary approach will be most suited to which of the
following structures:
A A inverted matrix organization

B A functional organization
C A strong matrix organization
D A weak matrix organization
26 You are required to examine the consequences of a scope change. To do this you should view
its impact on the project’s:
A Schedule
B Cost
C Quality
D All of the above
27 When you are contemplating how to recover a delay in the project schedule, the last thing you
should consider is to _______:
A Look at the critical path carefully

B Apply more resources
C Fast track the project
D Adjust the project end date to adjust the time delay
28 One should have an attitude of ____________ in order to be successful in negotiating across

global cultures:
A Forcing your position
B Distrust
C Mutual trust and cooperation
D Showing your company is the best
29 If the project manager does not allow the team members to provide extra items as an add-on to
please the customer during the execution phase, is she/he following the principles of good
scope management to complete the required work?
A May be yes or no
B No
C Yes
D It depends
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Mock Test
30 Configuration management is closely related to:
A Change control
B Project control
C Time control
D Scope control
31 You are involved in identifying risks using the Delphi technique. Which statement is not true
about this technique?
A Participants must be known to each other

B Participants can be in different locations
C Participants are anonymous
D Subject matter experts are used to provide expert opinion
32 Your sponsor has asked you to prepare a report showing the start and end dates of critical path
activities. To do this you would use:
A Bar charts
B PDM network
C Milestone charts
D Pert networks
33 The 80/20 rule often used in projects is depicted as a:
A Control chart
B Attribute variable
C Pareto chart
D Run chart
34 The project manager of a large multidisciplinary engineering project is evolving a RAM

(Responsibility Assignment Matrix) to assign the different roles and responsibilities for her team
members. She must use:
A The project’s WBS and the organizational chart

B The WBS
C The network schedule
D The staff productivity
35 In a project, quality control helps to:
A Provide early warning signs to prevent a problem from occurring

B Check the correctness of the deliverables
C Check for quality compliance by monitoring project results
D All of the above
36 During the execution of a project two team members disagree about how to proceed with a task
that they are working on. This disagreement is seriously affecting the work on the project. The
project manager holds a meeting with both of them to discuss the alternative options and decide
on the best approach. This method of settling differences can be described as:
A Compromising
B Forcing
C Smoothing
D Confronting/problem solving
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Mock Test
37 Which of the following is NOT the responsibility of the project manager?
A Monitoring project progress

B Project Integration
C Budgeting project costs
D Developing the Project charter
38 Normally, increased complexities in a project will _______ uncertainties:

A Have nothing to do with
B Reduce
C Increase
D Can not say any thing about
39 The detailed project plans are developed by the:
A CEO
B Functional managers
C Project manager with involvement of the project team
D Project team alone
40 When communicating, project managers spend most of their time _______:
A Reporting
B Exchanging information
C On the phone
D Solving problems
41 A very common pitfall in effective communication is:
A Not selecting the correct medium

B Not considering the position of the receiver
C Assuming that because a message is sent, it has been received
D Not selecting the correct audience to receive the message
42 The most important ingredient for building an effective team is:

A Effective communications skills
B Appropriate experience
C Trust
D Willingness to accept change
43 Each project is divided into several project phases. Project management follows this approach
in order to:
A Improve management control of the project
B Understand the specific deliverable to be produced at the end of a phase
C Have better control on resource deployment as resource requirements may vary from
phase to phase
D All of the above
44 In the beginning of a project, the probability of successfully completing the project is ______ ,
risk is _____ and uncertainty is _______:
A Lowest, lowest, lowest

B Highest, highest, highest
C Lowest, highest, highest
D Highest, lowest, lowest
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 217
Mock Test
45 Project stakeholders are defined as those who are _________:
A Involved in the project and /or have positive or negative influence on project
execution
B Are only involved in project execution
C Have influence only in investment decisions
D Are a member of the Board of the corporation
46 All of the following consider time value of money except:
A Payback period
B Discounted cash flow
C Net present value
D Internal rate of return
47 What is not true of standard deviation?
A A larger standard deviation means the spread of uncertainty is greater

B A larger standard deviation means the spread of uncertainty is smaller
C Standard deviation of an activity is calculated using the formula (Pessimistic -
Optimistic) / 6
D PERT is used for estimating costs and time duration
48 As a project is being closed out, a common source of conflict arises in:
A Determining the best use of the time of design personnel

B Different interpretations between buyer and contractor as to whether the terms and
conditions have been met
C Determining whether the cost-plus-actual fee (CPAF) or cost-plus-incentive fee
(CPIF) contract structure is most appropriate
D Identifying the primary causes of monthly variances on the project
49 Lessons learned is an important part of project management. These are documented by the
project team in order to:
A Assess each team members competence

B Know who to blame for errors
C Use them to improve future projects
D Review the project’s cost and schedule
50 Project A has a probability of scope change of .70, and a .20 probability that the project will be
terminated. What is the probability the project will have scope changes and will not be
terminated?
A 0.24
B 0.56
C 0.14
D 0.06
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Mock Test
51 Your project is an important one for the company and it was a feather in your cap to be selected
as the project manager. Unfortunately, the project is not progressing as well as planned and it
will be reviewed in the next board meeting. Which of the following is not a common format for
performance reporting and should not be used by you for management reporting?
A Bar charts
B S-curves
C Histograms
D Precedence diagrams
52 Written change orders are recommended:
A For all size of projects

B For large projects only
C For multi location projects only
D For those projects where CEO is personally interested
53 Project Management is most suitable for:
A Optimizing repetitive operations

B Introduction of new control procedures
C Introducing change
D B and C
54 Project phasing is done to:
A Overlap project work

B For better access of project by team members
C Break down the project into more manageable blocks
D Break down the project finances
55 Project management should be applied:
A Throughout the project life cycle

B During Concept definition
C During Execution and Operations
D During Execution, Operations and Maintenance
56 The Business Case is owned by the:
A Project manager
B Finance manager
C Sponsor
D Customer
57 A WBS is used to:
A Define the project's schedule

B To identify the project's stakeholders
C To organize and define the total scope of the project
D To define key parts of the project
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Mock Test
58 Decomposition of project deliverables involves:
A Identifying the elements of the deliverable

B Identifying major elements of the project
C Verifying the decomposition is correct
D All of above
59 The project manager is given no real authority in a ........... organization:
A Balanced matrix
B Functional
C Projectised
D Strong matrix
60 Environmental constraints should be considered:
A For manufacturing projects

B For construction projects
C For all projects
D Only for social and political projects
61 The critical path is the:
A Shortest path in the network

B Longest path in the network
C Path in which some activities contain floats
D Path which has the maximum float
62 A Make-or-buy analysis should consider:
A Resource availability
B Indirect costs
C Technical competence
D All of above
63 Project integration involves:
A Efficient use of network schedules

B Effective coordination and control
C Making the responsibility matrix
D Meetings of all the stakeholders
64 The Project Management Plan is owned by the:
A Sponsor
B Customer
C Project manager
D A and C
65 A project is a:
A Repetitive process
B Unique and temporary endeavour
C Has a definite beginning and end
D B and C
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Mock Test
66 A sequence of phases through which the project evolves is known as:
A The Project Life Cycle

B Project Gates
C Milestone charts
D Project Management Plan
67 The Project Management Plan shows the:
A Why, what, how, and when of the project

B What, how, how much and when of the project
C Why, what, how, how much and when of the project
D Why, what, how and how much of the project
68 A good project manger does not have to be an excellent:
A Technocrat
B Communicator
C Integrator
D Risk manager
69 Which of the following is necessary for a project manager?
A The responsibility, authority and accountability for the project

B The responsibility and accountability for the project
C The responsibility through line management for the project
D The responsibility through the client-sponsor for the project
70 A project phase is:
A An endeavor of considerable scope encompassing a number of projects

B A sub project
C A sub part of a programme
D Marked by completion of key deliverables
Type 2 Questions
71 The Business case should include:
A Criteria to judge whether the project is a success or failure

B Why the project is required
C The major project risks
D The success criteria
E All of the above
72 _____________defines why the project is required and what the project will do:
A Project Management Plan

B Need assessment
C Marketing & Sales
D Business Case
E Scope plan
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 221
Mock Test
73 Project life cycle phases are used to:
A Avoid the need for a project manager

B Lessen the conflict in project teams
C Ensure a systematic way of control
D Better define the Business case
E C and D
74 Which of the following is not true about analogous estimating technique?
A Estimate is based on past projects.

B It is not very accurate.
C It uses bottom-up approach
D It is a form of an expert judgment
E Is frequently used in the early phase of the project
75 An “S” curve:
A Shows cumulative values

B Describes allocation of resources
C An output of cost estimating
D Shows interrelationships between projects
E Shows interrelationships between direct and indirect costs
76 A Work Breakdown Structure:
A Is a key tool used in project management

B Forms the basis for planning the project
C Forms the basis for making the networks and bar chart
D Each level has a parent-child relationship
E All of the above
77 The project is likely to be delayed if:
A There are too many changes

B If proper planning is carried out in the beginning
C There is a no shortage of cash
D Quality assurance is neglected
E A and D
78 “I cannot test the software until I code the software”. This expression describes which of the
following dependencies?
A Discretionary
B Soft
C Mandatory or hard
D Regulated
E External
79 On large projects, detailed documentation:

A Should be avoided to the extent possible since it adds to bureaucracy and project
costs
B Has costs that typically lie in the 10%-15% range
C Is needed to keep track of what is happening
D Is the responsibility of the Sponsor
E B and C
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 222
Mock Test
80 The Project Management Plan should be accepted by the:
A Project Manager
B Project Manager and sponsor
C Project Manager and customer
D Sponsor and customer
E Project manager, sponsor and the project team
81 You are evaluating five projects. Project A has an NPV of 10,000, Project B has an NPV of Zero,
Project C has an NPV of 11,000, Project D has a NPV of 9,000 and Project E has a NPV of
-11,000. You should select:
A Project A
B Project B
C Project C
D Project D
E Project E
82 The IRR of a project shows:
A Helps to measure the project’s breakeven point

B The project’s expected profit
C The Payback period in NPV terms
D The project’s adjusted total investment
E B and C
83 During the project’s implementation phase an unidentified risk arises. What should you do first?
A Alert the client

B Inform the Sponsor
C Analyze the risk
D Revise the network schedule
E Mitigate the risk
84 What would you not include in the Project Charter?
A Project’s justification
B Customer requirements and expectations
C Network schedule
D Milestone schedule
E Summary budget
85 As the Project Manager you are attempting to solve a complex problem. Which communication
method will be most suitable?
A Informal verbal
B Formal verbal
C Informal written
D Formal written
E It will vary with the project manager
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 223
Mock Test
86 Which statement is not true:
A Payback period shows the time taken to recover original investment

B Payback period is good for long term projects
C Discounted cash flow relates future cash flows to a common base value
D IRR shows the discount rate at which project’s NPV will be zero
E Higher the discount rate the lower the NPV
Type 3 Questions
87 The activities of a small project are given below with the activity duration and activity
interrelationships.
Select the critical path and the activity/ies that have free float.
Activity Duration in weeks Predecessor Type of
Activities Dependency
A 1 - FS
B 3 A FS
C 6 B FS
D 5 A FS
E 2 D FS
F 1 C&E FS
G 6 E FS
H 4 F&G FS
A Critical path: A-B-C-F-H. Activities with free float: E

B Critical path: A-D-E-G-H. Activities with free float: F
C Critical path: A-D-E-G-H. Activities with free float: F and E
D Critical path: A-D-E-F-H. Activities with free float: D and C
88 The following table shows the initial investment, cash flows and Discount Factor associated with a
particular project option.
Calculate the Payback period and the Net Present Value for this project .
Year Cash Flow (Rs.) Discount Factor (8%)

0 1,40,000 1.000
1 40,000 .926
2 60,000 .857
3 80,000 .794
4 1,00,000 .735
5 1,00,000 .681
A 3.0 years and Rs.2,93,580

B 2.2 years and Rs.2,93,580
C 2.5 years and Rs.1,53,580
D 2.5 years and Rs. 2,40,000
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 224
Mock Test
89 A project has a budget of Rs.1,50,000 and a planned duration of 24 months. The following table
shows progress information for the first four months. Figures are cumulative:
What is the cost variance and schedule variance at the end of the third month and the
Estimate at completion based on the latest progress information?
Month 1 2 3 4
Planned (Rs)
10,000 20,000 30,000 45,000
Actual Spend (Rs)
6000 14,000 25,000 38,000
Earned Value (Rs) 32,000
5000 12,000 21,000
A -9000; -4000; 112,000

B 4000; 9000; 188,000
C -4000; -9000; 178,147
D -6000; -13,000; 211,267
90 The probability and impact grid shown below depicts the relative positions of different
risks to the project following a risk assessment. The risk identification numbers are
entered in the grid.
Select the top 5 risks in the order of their priority.
Very High (.9) 7 3 4 6
High (.75) 12
Probability
Medium (.5) 8 9
Low (.35) 2 1
Very low (.2) 11 5 10
Very low Low Med High Very High

.10 .25 .4 .6 .9
Impact
A 4, 6, 12, 9, 1
B 6, 12, 4, 9, 3
C 11, 5, 2, 7, 3
D 6, 12, 9, 10, 4
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 225
EXERCISES
q Numerical Exercises
n Investment Appraisal
n Networks & Resource Histograms
n PERT & Standard Deviation
n Crashing
n EVMS
n Contracts
q Objective Exercises
n Set 1 - Set 11
q Mock Test
Numerical Practice Exercises - Answers
(NPV/IRR)
NPV - 1
------------------------------------------------------------------------------------------------------------------------------------
Year Discount Cash Flow A PV A Cash Flow B PV B
Factor (Rev.-Exp.) (Cash Flow x DCF) (Rev.-Exp.) (Cash Flow x DCF)
(RS) (Rs) (Rs) (Rs)
------------------------------------------------------------------------------------------------------------------------------------
1 .90 3000 2700 3000 2700
2 .80 5000 4000 10000 8000
3 .70 10000 7000 15000 10500
4 .60 10000 6000 20000 12000
5 .50 10000 5000 10000 5000

-------- ---------- --------- ---------
24,700 38,200
---------- ----------
Less Initial investment 20,000 40,000
NPV for option A = 24,700 - 20,000 = Rs. 4,700
NPV for option B = 38,200 - 40,000 = Rs. -1,800
Option A is the better option.

The NPV of option B is negative so one should go for option A.
Note: (A higher NPV is better. If NPV negative then one should not go ahead with project.)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 227
(NPV/IRR)
NPV – 2
Ans. 2.1
-------------------------------------------------------------------------------------------------
Year Discount Cash Flow in £ PV £
Factor (Anticipated annual return) (Cash Flow x Discount Factor)
or cash flow
-------------------------------------------------------------------------------------------------
1 .925 1500 1387.5
2 .857 1500 1285.5
3 .793 1500 1189.5
4 .735 1500 1102.5
--------- -------
4965
Less Initial investment 5000
--------
- 35
NPV = - 35
Ans. 2.2 Project is not viable as the NPV is negative.
IRR
Discount Factor
Year Cash Flow Present Value
@ 8%
0 (149,500) 1.0 (149,500)
1 39,995 .926 37,035
2 40,000 .857 34,280
3 40,000 .794 31,760
4 40,000 .735 29,400
5 25,000 .681 17,025
Net Present Value 0
IRR for the project is 8%.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 228
Network 1
N1.1
4 2d 6 6 3d 9 9 5d 14
B E F
5 1 7 7 1 10 10 1 15
0 4d 4
A
0 0 4 4 3d 7 7 8d 15
C D
4 0 7 7 0 15 15 1d 16
H
15 0 16
7 5d 12
G
10 3 15
N1.2 The Critical Path is: A-C-D-H

N1.3 The project duration is: 16 days
N1.4 The Total Float: B = 1 day, E = 1 day, F = 1 day, G = 3 days
N1.5 Free Float: F = 1 day, G = 3 days
Legend:
ES - Early Start EF - Early Finish
ES DUR EF
(d, w, m) DUR - Duration of an activity (d = days, w = weeks, m = months)
Activity A - Name of an activity
LS - Late start LF - Late Finish
LS F LF F - Total Float
Note: .Figures in a box are in the same time units as the unit of the duration i.e. in days (d), week (w) or month (m).
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 229
NETWORK 1
N1.6 Bar Chart, Resource Histogram & ‘S’ Curve
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 230
Network 2
4 6w 10 12 9w 21 21 12w 33
B E F
6 2 12 12 0 21 21 0 33
0 4w 4 4 8w 12 12 14w 26 26 3w 29 33 7w 40
A D G H J
0 0 4 4 0 12 16 4 30 30 4 33 33 0 40
4 4w 8
C
12 8 16
N2.1 The Critical Path is: A-D-E-F-J

N2.2 Total float is: B = 2 Weeks, C= 8 Weeks, G = 4 Weeks, H = 4 Weeks
N2.3 Free Float is: B = 2 Weeks, C = 4 Weeks, H = 4 Weeks
Legend:
ES - Early Start EF - Early Finish
ES DUR EF
(d, w, m) DUR - Duration of an activity (d = days, w = weeks, m = months)
Activity A - Name of an activity
LS - Late start LF - Late Finish
LS F LF F - Total Float
Note: .Figures in a box are in the same time units as the unit of the duration i.e. in days (d), week (w) or month (m).
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 231
Numerical Practice Exercies - Answers
NETWORK -2
N2.4 Resourse Histogram
Activity
A 3 3 3 3

B 2 2 2 2 2 2
16
1 1 1 1
C
14
D 5 5 5 5 5 5 5 5
12
E 4 4 4 4 4 4 4 4 4
10
F 9 9 9 9 9 9 9 9 9 9 9 9
8
Men Res. Eng.
G 3 3 3 3 3 3 3 3 3 3 3 3 3 3
6
H 5 5 5
3 3 3 3 3 3 3 4
J 2
0
Wkly Res. Eng. 3 3 3 3 8 8 8 8 7 7 5 5 7 7 7 7 7 7 7 7 7 12 12 12 12 12 14 14 14 9 9 9 9 3 3 3 3 3 3 3
Weeks 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------
232
Network 3
16 3 19
G
0 2 2 17 1 20 20 1 21
A (Subt. 5 from H
ES of D)
2 2 4 20 0 21
4 8 12 7 9 16 17 3 20
C D F
4 0 12 8 1 17 17 0 20
0 4 4 (Add 5 to 8 for C)
B
12 5 17
0 0 4
E
12 0 17
N3.1 The Critical Path is: B- C- E- F- H

N3.2 Total Floats: A= 2 days; D= 1 Day; G=1 day
N3.3 Free Floats: A=2 days; G=1 day
NOTE:
Activity D has a lead of 5 days and it has a S-F relationship with activity C.
• In the Forward Pass the lead amount of 5 days is subtracted from the EF of activity C to get the
ES of activity D.
• In the Backward Pass the lead of 5 days is re-adjusted by adding the lead amount (5 days) to the
LS of activity D when deciding what duration we should take for LF for activity C – it’s
predecessor i.e. 5 is added to 8, the LS of D making it 13 when deciding the LF for C. Since
activity E has a LS of 12 we then take 12 as the LF of C.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 233
Network 4
26 3 29
G
0 2 2 26 0 29 29 1 30
A (Add 5 to H
ES of D)
2 2 4 29 0 30
4 8 12 17 9 26 26 3 29
C D F
4 0 12 17 0 26 26 0 29
0 4 4 (Subt. 5 from
17 for C)
B
12 5 17
0 4
E
21 9 26
N 4.1 The Critical Path are: B- C- D- F- H and B-C-D-G-H

N 4.2 Total Float: A = 2 days; E = 9 days
N 4.3 Free Floats: A = 2 days; E = 9 days
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 234
(Standard Deviation/Crashing)
Standard Deviation
Standard Deviation for activities A, B and C
Activity
Activity Duration range
PERT Duration Variance
S.D. at 68%
Activity O ML P (Mean)
confidence
O+(4xML) + P {(P-O)/6}2
(P-O)/6 level
6
20.83
30 6.250 20.83 +/- 2.50
A 15 20 2.50
15+80+30 2.50 x 2.50) 18.33 to 23.33
6
20.00+/- 3.33
B 10 20 30 20.0 3.33 11.088
16.67 to 23.33
20.16 +/- 2.83

C 12 20 29 20.16 2.83 8.008
17.33 to 22.99
Standard Deviation for the path ABC
5.034
25.346
(Sq. Rt of 60.99 +/-5.034
For the (Total
60.99 25.346
Path Activity
which is 55.965 to
A+B+C Variance for
Variances 66.024
A+B+C)
of A+B+C
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 235
(Crashing)
Crashing
Normal Crash
Crash Cost Y/N
time Normal
Activity Predecessor time in after Crash cost
required cost
weeks Crashing
in weeks
A - 5 3 8,000 12,000 Y 2,000/-
B A 5 4 24,000 34,000 Y 10,000/-
C A 3 2 8,000 9,500 N
D B 2 1 11,000 16,000 N
E B,C 6 4 34,000 48,000 Y 7,000/-
F D,E 8 4 30,000 36,000 Y 1,500/-
Q.C1.1 You can crash activities A, B E and F as they are in the critical path.
Q C1.2 Activity F is cheapest to crash at Rs. 1,500/- per week.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 236
(EVMS)
Q. EV1 A project has 4 activities – A, B, C and D. At review point, (originally planned

completion point), this was the position in man-hours.
Activity Budgeted % Complete Actual

Man-hours of activity Man-hours
A 160 90 150
B 200 50 140
C 100 60 50
D 300 75 225
------- -------
760 565
EV1.1 What is the earned value for each activity and the project at review point?
EV1.2 What is the overall % complete of the project?
EV1.3 What is the current CPI?
EV1.4 What are the man-hours the project is likely to take to be completed based on the
current cost efficiency.
1.1 EV for A = 144 (PV x % complete)
EV for B = 100
EV for C = 60
EV for D = 225
EV for the project = 529 Man-hours
1.2 Overall % complete of the project is: 69.6% (Total EV / Total PV) = (529/760) = 69.6%
1.3 Current cost efficiency of the project is: 93.6% (Total EV/Total AC) = 529/565 = 0.936
1.4 Expected man-hours (EAC) based on current performance = 812 Man-hours (BAC/CPI)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 237
(EVMS)
Earned Value – 2
Q The Project budget is Rs. 1,00,000 and is planned to be completed in 12 months.
Actual Cost
Month PV (BCWS) EV (BCWP)
(ACWP)
1 7000 2000 2500
2 14000 6000 9000
3 22000 10000 15000
4 30000 14000 21000
Q. What is the schedule variance at month 4?

Ans. Schedule variance = EV – PV (BCWP – BCWS)
= 14000 – 30000
= -16000
Cost variance = EV – AC (BCWP – ACWP)

= 14000 – 21000
= -7000
Q. Cost of completion at end of 4th month is?

Ans. EAC = BAC / CPI
= 100,000 (14000/21000)
= 100,000 / .666
= Rs.1,50,000
Q. Estimate likely time of completion of project if efficiency remains same.

Ans. = Planned time to complete / SPI
= 12 months / (BCWP/BCWS)
= 12 (14,000/30,000)
= 12 / .4666
= 25.71 months
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 238
(EVMS)
Earned Value - 3
Following are details of a project that is planned to be completed in 12 months at a total

cost of Rs.1000. The project is being reviewed at the end of month 4.
Month PV in Rs AC in Rs EV
1 100 100 50
2 200 250 150
3 300 400 201
4 400 550 300
1 Calculate the schedule variance at month 4.

Schedule Variance = EV - PV = 300 - 400 = -Rs. 100
2 Calculate the cost variance at month 4.

Cost Variance = EV - AC = 300 - 550 = -Rs. 250
3 What is the cost efficiency of the project?

Efficiency is 54.5% (CPI i.e. EV/AC)
4 What is the status of the project?

The project is over budget by Rs. 250 and behind schedule by 25%
5 Forecast the time when the project can be expected to be completed

based on the current performance.
Forecasted completion date = OD/SPI = 12 / .75 = 16 months
6 Forecast the expected cost of the project based on the current performance.
Expected cost of project as per current performance is Rs. 1833.
BAC / CPI = 1000/.545
7 Forecast the expected cost of the project if the efficiency becomes 50% from 5th month.
Expected cost of project if efficiency is 50% from month 5 is Rs. 1950
AC + BAC-EV = 550+ (700 /.5) = 1950
.5
8 Forecast the expected cost of project if efficiency becomes 100% from 5th month.
Expected cost of project if efficiency is 100% from month 5 is Rs. 1250
AC + BAC-EV = 550 + 700 = 1250
1
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 239
(Contracts)
Cost Plus Incentive Fee (CPIF)

Q. What is the contractor fee and total price for the following CPIF contract details:
Contract details are:
Target Cost 2,10,000
Target Fee 25,000
Target Price 2,35,000
Share Ratio 80/20 (Buyer/Seller)
Minimum Fee 20,000
Actual Cost 2,00,000
Option 1: Actual Cos 2,00,000
Option 2:
Option 1 : Actual cost = 2,00,000
Contractor’s Fee =
2,10,000 – 2,00,000 (Target Cost minus Actual cost)
10,000 x 20% = 2000 (20% of cost saving)

25,000 + 2000 = 27,000
Final Price of contract = Actual cost + Contractor’s fee

= 2,00,000 + 27,000 = 2,27,000/-
Option 2 : Actual Cost 2,50,000
Contractor’s Fee =
2,10,000 – 2,50,000 (Target cost minus Actual cost)
-40,000 x 20% = -8000 (20% of extra cost)
25,000 - 8000 = 17,000 (Target fee less share of cost overrun)
Contractor fee = 20,000/- (Minimum Fee assured is 20,000)
Final Price of contract = Actual cost + Contractor’s fee
= 2,50,000 + 20,000 = 2,70,000/-
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 240
(Contracts)
Fixed Price Incentive Fee (FPIF)

Q. What is the contractor fee and total price for the following FPIF contract details:
Target Fee 10,000
Share Ratio 75/25
Price Ceiling 1,20,000 (Max. payout)
Actual Cost 90,000
Contractor Fee
= 10,000 x .25 (share ratio of cost savings -Target cost less Actual cost)
= 2,500 + 10,000 (cost saving share + Target fee)
= 12,500
Final Price
= 90,000 + 12,500 (Actual cost + contractor Fee)
= 1,02,500
---------------------------------------------------------------------------
Q. What is the contractor fee and total contract price for the following FPIF contract:
Target Fee 10,000

Share Ratio 80/20
Ceiling Price 1,75,000
Actual Cost 1,70,000
Contractor’s Fee
[(150,000 – 170,000) (.20) = -4000 Fee reduction
= 10,000 - 4000 (10,000 less 4000) Target fee after adjusting for 20% excess cost
= 6000 less any excess cost above Ceiling price
Final Price
1,70,000 + 5000 (6000 less excess cost)
= 1,75,000 (Limited to ceiling)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 241
Objective Practice Exercises - Answers
Set 1 Set 2 Set 3 Set 4 Set 5 Set 6

Ques. Ans. Ques. Ans. Ques. Ans. Ques. Ans. Ques. Ans. Ques. Ans.
1 D 1 B 1 D 1 A 1 B 1 B
2 C 2 B 2 C 2 A 2 C 2 B
3 D 3 C 3 B 3 C 3 A 3 C
4 C 4 B 4 C 4 A 4 A 4 D
5 B 5 D 5 C 5 A 5 D 5 A
6 C 6 A 6 C 6 C 6 B 6 D
7 D 7 B 7 D 7 B 7 D 7 B
8 C 8 D 8 A 8 D 8 D 8 C
9 D 9 B 9 C 9 B 9 A 9 D
10 C 10 A 10 D 10 B 10 A 10 C
11 C 11 A 11 D 11 B 11 C 11 B
12 D 12 C 12 A 12 C 12 A 12 D
13 D 13 B 13 D 13 A 13 C 13 D
14 B 14 D 14 C 14 B 14 B 14 C
15 B,C,D,A 15 D 15 B 15 A 15 D 15 B
16 A 16 C 16 A
17 C 17 B 17 A
18 B 18 D 18 B
19 D 19 B 19 B
20 C 20 C 20 A
21 A 21 D 21 C
22 B 22 D 22 B
23 A 23 D 23 A
24 C 24 B 24 C
25 D 25 D 25 D
26 A 26 C 26 C
27 B 27 A 27 C
28 C 28 C 28 A
29 C 29 C 29 C
30 A 30 B 30 A
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 242
Objective Practice Exercises - Answers
Set 7 Set 8 Set 9 Set 10 Set 11

Ques. Ans. Ques. Ans. Ques. Ans. Ques. Ans. Ques. Ans.
1 B 1 B 1 C 1 D 1 D
2 D 2 D 2 B 2 D 2 D
3 C 3 B 3 C 3 B 3 B
4 C 4 D 4 B 4 D 4 D
5 C 5 D 5 B 5 B 5 D
6 B 6 B 6 D 6 B 6 A
7 B 7 A 7 B 7 A 7 B
8 A 8 C 8 D 8 D 8 C
9 D 9 C 9 A 9 B 9 C
10 C 10 B 10 A 10 B 10 D
11 D 11 B 11 B 11 B 11 C
12 D 12 B 12 C 12 A 12 A
13 B 13 A 13 D 13 B 13 D
14 D 14 C 14 A 14 D 14 B
15 C 15 B 15 D 15 C 15 C
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 243
DŽĐŬTest - Answers
Test
Ques. Ans. Ques. Ans. Ques. Ans.
1 B,C,D,A 31 A 61 B
2 A 32 A 62 D
3 A 33 C 63 B
4 C 34 A 64 C
5 C 35 D 65 D
6 A 36 D 66 A
7 D 37 D 67 C
8 B 38 C 68 A
9 A 39 C 69 A
10 C 40 B 70 D
11 A 41 C 71 E
12 C 42 C 72 D
13 C 43 D 73 C
14 B 44 C 74 C
15 A 45 A 75 A
16 C 46 A 76 E
17 B 47 B 77 E
18 D 48 B 78 C
19 C 49 C 79 C
20 C 50 B 80 E
21 B 51 D 81 C
22 C 52 A 82 A
23 B 53 D 83 C
24 C 54 C 84 C
25 C 55 A 85 D
26 D 56 C 86 B
27 D 57 C 87 B
28 C 58 D 88 C
29 C 59 B 89 C
30 A 60 C 90 BMoc
------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 244

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Objective Practice Exercises – Set 5

(Cost & Finance / EVM)

23 At project completion, the project’s Earned Value will be same as the:

25 A project is scheduled to be completed in 18 months. At project review it is found that

27 During an EVM review, a project is found to have the following data:

28 The following figures are presented during a project review meeting:

a. SPI = 0.5, Project is ahead of Schedule

2 Quality Control refers to process of:

3 Prevention over Inspection means:

4 A control chart is used to:

5 Pareto analysis is related to the?

6 Quality planning involves:

7 The Quality Assurance process:

9 An indication of excellent quality is:

10 Which of the following is not a part of quality assurance?

12 Cause and effect diagrams are generally used to identify:

13 What best describes the Rule of seven?

14 Which of the following is not a cost of internal failure?

15 The cost of quality is made up of:

1 A Secondary risk is:

2 When brainstorming for risk identification, it is important to:

3 Risk probability can be described as:

5 When a risk is transferred to another party it reduces:

6 Monte Carlo simulation is used for:

7 Risk assessment should be done:

8 Who should be made responsible for implementing agreed risk responses?

10 Risk mitigation is carried out after:

11 A Risk Score can be defined as:

12 Sensitivity analysis is used for:

1 Line management is best suited for:

2 Self Actualization is:

3 Which of the following is not true of a projectized organization?

4 Some advantages of managing projects in a Matrix organization are:

5 Some disadvantages of a Matrix organization are:

6 Project staffs have to report to more than one boss in a:

8 The project Sponsor’s role involves all of the following except:

14 The lowest level need in Maslow’s Hierarchy of Needs is:

5 As part of the communications process, the sender is responsible for:

13 In your Project Management training session, communication will be taking place

15 Configuration management is concerned with:

1 At contract closeout, a product verification is done to:

2 Poor scope definition can result in all except:

4 What item should be considered when selecting a supplier?

5 A procurement strategy would not include:

6 In procurement, a RFP and a RFQ are typically prepared by:

7 Contract Closeout involves all of the following except:

8 Contract closure should be done:

11 What is not true of a Fixed Price contract:

12 A Ceiling Price is applicable in which of the following types of contracts?

1 Managing issues in projects is important because:

2 Product integration involves:

3 A change log is:

5 What is true of project closeout?

6 For proper integration within a project:

8 What would best describe the overall aim of project management?

9 Lessons learned documentation is important as they:

10 Projects often fail due to:

11 A contract can be formally closed after:

12 Health and safety standards are initiated in the:

14 Configuration management should keep a record of?

1 Match the following:

2 A Pareto diagram will be used by the project manager to:

A Focus on the most critical issues to improve quality