PMT 3600V Exam 2|Questions and
Answers|Latest Update with complete
solution
1. What is the primary purpose of Earned Value Management (EVM)?
a) To replace standard accounting practices
b) To track project hours only
c) To integrate scope, schedule, and cost to measure project performance
d) To manage project quality control
Answer: c) To integrate scope, schedule, and cost to measure project performance
Rationale: EVM is a management methodology that uses objective performance
data to identify current variances and forecast future project outcomes, integrating
the work scope with the schedule and cost elements.
2. What does BCWP (Budgeted Cost for Work Performed) represent in EVM?
a) Actual Cost of Work Performed (ACWP)
b) Planned value of the work scheduled
c) The earned value or the value of the work actually accomplished
d) The total budget at completion
Answer: c) The earned value or the value of the work actually accomplished
Rationale: BCWP is the "Earned Value." It is the budgeted amount for the work that
has physically been completed at a given point in time.
3. What is the formula for Schedule Variance (SV)?
a) SV = ACWP - BCWP
b) SV = BCWS - ACWP
c) SV = BCWP - BCWS
,d) SV = BAC - EAC
Answer: c) SV = BCWP - BCWS
Rationale: Schedule Variance is the difference between the work performed
(Earned Value) and the work scheduled (Planned Value). A negative result indicates
a behind-schedule condition.
4. What is the formula for Cost Performance Index (CPI)?
a) CPI = BCWP / ACWP
b) CPI = BCWS / BCWP
c) CPI = ACWP / BCWP
d) CPI = BAC / BCWP
Answer: a) CPI = BCWP / ACWP
Rationale: CPI measures cost efficiency. It's the ratio of earned value to actual
cost. A CPI < 1.0 indicates a cost overrun (spending more than planned for the work
done).
5. A project has a CPI of 0.85. What does this indicate?
a) The project is ahead of schedule
b) The project is under budget
c) For every dollar spent, only $0.85 of physical work has been accomplished
d) The project will finish 15% under budget
**Answer:** c) For every dollar spent, only $0.85 of work has been accomplished
Rationale: A CPI < 1.0 signifies a cost overrun. It means the project is earning less
value than it is spending.
6. The "point of management reserve" in the context of the Over Target
Baseline (OTB) is to:
a) Increase profit margins
b) Account for the cost of work that is required to complete the program but is not
funded in the performance measurement baseline
c) Fund future contract modifications
d) Pay for contractor liability insurance
,Answer: b) Account for the cost of work not funded in the performance
measurement baseline
Rationale: An OTB is implemented when the estimated cost exceeds the contract
budget base. Management Reserve covers the delta between the baseline and the
known (but unfunded) remaining work.
7. What is the difference between the Management Reserve (MR) and the
Undistributed Budget (UB)?
a) MR is for known risks, UB is for profit
b) MR is held by the project manager for unforeseen risks, UB is budget that has not
yet been assigned to a work package or planning package
c) There is no difference
d) MR is government-owned, UB is contractor-owned
Answer: b) MR is for unforeseen risks; UB is unassigned budget
Rationale: UB is typically transitional budget awaiting distribution to specific
control accounts. MR is a contingency amount set aside by the PM to mitigate
unknown-unknowns that arise within the existing scope of the contract.
8. What does a positive To Complete Performance Index (TCPI) of 1.15
indicate?
a) The project can relax its spending to finish
b) The project must improve its cost efficiency by 15% over the current plan to hit
the target budget
c) The project is 15% ahead of schedule
d) The project has 15% more funding than needed
Answer: b) The project must improve efficiency by 15% to hit the target budget
Rationale: TCPI = (Work Remaining) / (Funds Remaining). A TCPI > 1.0 indicates
that the remaining work must be done at a cost efficiency better than originally
planned to meet the EAC or BAC goal, which is often unrealistic.
9. During an Integrated Baseline Review (IBR), what is the primary focus of the
review team?
, a) Auditing the contractor’s tax returns
b) Ensuring the Performance Measurement Baseline (PMB) is realistic, adequately
planned, and captures the entire technical scope of work
c) Testing the software code
d) Negotiating the contract fee
Answer: b) Ensuring the PMB is realistic and captures the technical scope
Rationale: The IBR is a joint assessment by the government and contractor to verify
the technical scope and schedule realism, ensuring the PMB is a valid foundation
for EVM execution.
10. A program is 50% complete and has a CPI of 1.1 and an SPI of 0.9. What is
the most accurate assessment?
a) On schedule and under budget
b) Ahead of schedule and on budget
c) Under budget but behind schedule
d) Over budget and behind schedule
Answer: c) Under budget but behind schedule
Rationale: CPI > 1.0 (1.1) indicates the project is spending less than planned
(under budget). SPI < 1.0 (0.9) indicates the project is progressing slower than
planned (behind schedule).
11. What is the definition of Actual Cost of Work Performed (ACWP)?
a) The budget for the scheduled work
b) The negotiated contract cost
c) The total cost incurred and recorded for the specific work accomplished
d) The management reserve budget
Answer: c) The total cost incurred and recorded for the work accomplished
Rationale: ACWP represents the real dollars spent (or labor hours consumed) for
the work that has been completed. It is what the earned value (BCWP) is compared
against to find cost variance.
Answers|Latest Update with complete
solution
1. What is the primary purpose of Earned Value Management (EVM)?
a) To replace standard accounting practices
b) To track project hours only
c) To integrate scope, schedule, and cost to measure project performance
d) To manage project quality control
Answer: c) To integrate scope, schedule, and cost to measure project performance
Rationale: EVM is a management methodology that uses objective performance
data to identify current variances and forecast future project outcomes, integrating
the work scope with the schedule and cost elements.
2. What does BCWP (Budgeted Cost for Work Performed) represent in EVM?
a) Actual Cost of Work Performed (ACWP)
b) Planned value of the work scheduled
c) The earned value or the value of the work actually accomplished
d) The total budget at completion
Answer: c) The earned value or the value of the work actually accomplished
Rationale: BCWP is the "Earned Value." It is the budgeted amount for the work that
has physically been completed at a given point in time.
3. What is the formula for Schedule Variance (SV)?
a) SV = ACWP - BCWP
b) SV = BCWS - ACWP
c) SV = BCWP - BCWS
,d) SV = BAC - EAC
Answer: c) SV = BCWP - BCWS
Rationale: Schedule Variance is the difference between the work performed
(Earned Value) and the work scheduled (Planned Value). A negative result indicates
a behind-schedule condition.
4. What is the formula for Cost Performance Index (CPI)?
a) CPI = BCWP / ACWP
b) CPI = BCWS / BCWP
c) CPI = ACWP / BCWP
d) CPI = BAC / BCWP
Answer: a) CPI = BCWP / ACWP
Rationale: CPI measures cost efficiency. It's the ratio of earned value to actual
cost. A CPI < 1.0 indicates a cost overrun (spending more than planned for the work
done).
5. A project has a CPI of 0.85. What does this indicate?
a) The project is ahead of schedule
b) The project is under budget
c) For every dollar spent, only $0.85 of physical work has been accomplished
d) The project will finish 15% under budget
**Answer:** c) For every dollar spent, only $0.85 of work has been accomplished
Rationale: A CPI < 1.0 signifies a cost overrun. It means the project is earning less
value than it is spending.
6. The "point of management reserve" in the context of the Over Target
Baseline (OTB) is to:
a) Increase profit margins
b) Account for the cost of work that is required to complete the program but is not
funded in the performance measurement baseline
c) Fund future contract modifications
d) Pay for contractor liability insurance
,Answer: b) Account for the cost of work not funded in the performance
measurement baseline
Rationale: An OTB is implemented when the estimated cost exceeds the contract
budget base. Management Reserve covers the delta between the baseline and the
known (but unfunded) remaining work.
7. What is the difference between the Management Reserve (MR) and the
Undistributed Budget (UB)?
a) MR is for known risks, UB is for profit
b) MR is held by the project manager for unforeseen risks, UB is budget that has not
yet been assigned to a work package or planning package
c) There is no difference
d) MR is government-owned, UB is contractor-owned
Answer: b) MR is for unforeseen risks; UB is unassigned budget
Rationale: UB is typically transitional budget awaiting distribution to specific
control accounts. MR is a contingency amount set aside by the PM to mitigate
unknown-unknowns that arise within the existing scope of the contract.
8. What does a positive To Complete Performance Index (TCPI) of 1.15
indicate?
a) The project can relax its spending to finish
b) The project must improve its cost efficiency by 15% over the current plan to hit
the target budget
c) The project is 15% ahead of schedule
d) The project has 15% more funding than needed
Answer: b) The project must improve efficiency by 15% to hit the target budget
Rationale: TCPI = (Work Remaining) / (Funds Remaining). A TCPI > 1.0 indicates
that the remaining work must be done at a cost efficiency better than originally
planned to meet the EAC or BAC goal, which is often unrealistic.
9. During an Integrated Baseline Review (IBR), what is the primary focus of the
review team?
, a) Auditing the contractor’s tax returns
b) Ensuring the Performance Measurement Baseline (PMB) is realistic, adequately
planned, and captures the entire technical scope of work
c) Testing the software code
d) Negotiating the contract fee
Answer: b) Ensuring the PMB is realistic and captures the technical scope
Rationale: The IBR is a joint assessment by the government and contractor to verify
the technical scope and schedule realism, ensuring the PMB is a valid foundation
for EVM execution.
10. A program is 50% complete and has a CPI of 1.1 and an SPI of 0.9. What is
the most accurate assessment?
a) On schedule and under budget
b) Ahead of schedule and on budget
c) Under budget but behind schedule
d) Over budget and behind schedule
Answer: c) Under budget but behind schedule
Rationale: CPI > 1.0 (1.1) indicates the project is spending less than planned
(under budget). SPI < 1.0 (0.9) indicates the project is progressing slower than
planned (behind schedule).
11. What is the definition of Actual Cost of Work Performed (ACWP)?
a) The budget for the scheduled work
b) The negotiated contract cost
c) The total cost incurred and recorded for the specific work accomplished
d) The management reserve budget
Answer: c) The total cost incurred and recorded for the work accomplished
Rationale: ACWP represents the real dollars spent (or labor hours consumed) for
the work that has been completed. It is what the earned value (BCWP) is compared
against to find cost variance.
