Project Cost Management: Master Cost Estimation and Control for Projects

Question 1

Which of the following is NOT a commonly used cost estimation technique in project management?

Accepted Answer

Linear extrapolation

Answer

Analogous estimating

Answer

Parametric modeling

Answer

Bottom-up estimating

Question 2

What is the primary goal of cost control in project management?

Accepted Answer

To ensure that project expenses stay within the approved budget

Answer

To allocate project funds efficiently

Answer

To identify and address potential cost overruns

Question 3

Which type of variance analysis directly compares the actual project cost incurred to the planned or budgeted cost?

Accepted Answer

Cost variance

Answer

Quality variance

Answer

Schedule variance

Answer

Performance variance

Question 4

What is the term used to describe a cost that has been incurred but not yet paid for?

Accepted Answer

Accrued cost

Answer

Direct cost

Answer

Overhead cost

Answer

Sunk cost

Question 5

What is a key benefit of using earned value management (EVM) in project management?

Accepted Answer

Provides a clear and transparent view of project progress and cost performance

Answer

Increases project flexibility and adaptability

Answer

Reduces project risks significantly

Answer

Eliminates project uncertainty entirely

Question 6

What is the fundamental difference between an estimated cost and a budgeted cost in a project?

Accepted Answer

An estimated cost is a preliminary approximation, while a budgeted cost is a more precise financial commitment

Answer

An estimated cost is for planning purposes, while a budgeted cost is for control purposes

Answer

An estimated cost is for direct costs, while a budgeted cost is for indirect costs

Question 7

Which of the following statements is a core principle of effective cost management in projects?

Accepted Answer

Cost considerations should be integrated throughout the entire project lifecycle, from planning to execution and closure

Answer

Cost can be disregarded if a project is on schedule

Answer

Cost is primarily important during the planning phase of a project

Question 8

What is the primary purpose of conducting a cost-benefit analysis in project management?

Accepted Answer

To evaluate and compare the potential financial costs of a project against its anticipated benefits

Answer

To identify and assess project risks

Answer

To determine the feasibility of a project based on available resources

Answer

To develop a detailed project schedule

Question 9

Which of the following is a common pitfall in project cost management that often leads to budget overruns?

Accepted Answer

Underestimating the true cost of project activities and resources

Answer

Failing to track project costs consistently

Answer

Ignoring project costs altogether

Answer

Overestimating project costs, leading to unnecessary reserves

Question 10

Why is risk management a crucial element of effective project cost management?

Accepted Answer

Risk management helps identify and address potential cost overruns by mitigating risk factors

Answer

Risk management enhances project communication and collaboration

Answer

Risk management improves project quality and deliverables

Answer

Risk management reduces the likelihood of project failure overall