CPE Cost Estimation & Budget Control 2 — Questions and Answers
Question 1: A project has a BAC of $500,000, an EV of $300,000, and an AC of $350,000. What is the Cost Performance Index (CPI)?
- 0.86 (Correct answer)
- 1.17
- 0.60
- 1.40
Correct answer: 0.86
CPI = EV / AC = $300,000 / $350,000 = 0.857, indicating cost overrun.
Question 2: Which cost estimating technique uses historical data from similar past projects as the primary basis?
- Parametric estimating
- Analogous estimating (Correct answer)
- Bottom-up estimating
- Three-point estimating
Correct answer: Analogous estimating
Analogous estimating uses historical data from similar projects to estimate current project costs.
Question 3: Estimate at Completion (EAC) using the formula EAC = BAC / CPI assumes:
- Future work will be performed at the planned rate
- Future cost performance will match current CPI (Correct answer)
- Remaining work has no cost variance
- The SPI will equal the CPI for remaining work
Correct answer: Future cost performance will match current CPI
EAC = BAC / CPI assumes the current cost efficiency will continue for all remaining work.
Question 4: What does a negative Cost Variance (CV) indicate?
- The project is ahead of schedule
- The project is under budget
- The project is over budget (Correct answer)
- The project has completed more work than planned
Correct answer: The project is over budget
CV = EV - AC; a negative CV means actual costs exceed earned value, indicating an over-budget condition.
Question 5: Which type of cost reserve is established for known unknowns in a project?
- Management reserve
- Contingency reserve (Correct answer)
- Overhead reserve
- Profit margin
Correct answer: Contingency reserve
Contingency reserve covers identified risks (known unknowns) and is part of the cost baseline.
Question 6: A parametric cost model for construction estimates $250 per square foot. If the building is 10,000 sq ft, what is the estimated cost?
- $2,500,000 (Correct answer)
- $250,000
- $25,000,000
- $2,000,000
Correct answer: $2,500,000
$250 × 10,000 sq ft = $2,500,000 using the parametric unit-rate method.
Question 7: The To-Complete Performance Index (TCPI) based on BAC is calculated as:
- (BAC - EV) / (BAC - AC) (Correct answer)
- (EV - AC) / BAC
- (BAC - AC) / EV
- (AC - EV) / (BAC - EV)
Correct answer: (BAC - EV) / (BAC - AC)
TCPI = (BAC - EV) / (BAC - AC), representing the required future cost efficiency to finish within BAC.
CPE Cost Estimation & Budget Control 2
A project has a BAC of $500,000, an EV of $300,000, and an AC of $350,000.
What is the Cost Performance Index (CPI)?