CPE CPE Project Management & Engineering Economics

Question 1

What does the term 'net present value' (NPV) mean in engineering economics?

Accepted Answer

The current worth of all future cash flows discounted at a required rate of return

Answer

The total undiscounted profits from a project over its lifetime

Answer

The ratio of benefits to costs at current prices

Answer

The book value of assets after depreciation

Question 2

In a capital project, what is a 'Work Breakdown Structure' (WBS)?

Accepted Answer

A hierarchical decomposition of the project scope into manageable deliverables and work packages

Answer

A schedule of daily labor assignments for the project team

Answer

A list of all materials and equipment required for the project

Answer

A flowchart of approval authority for project decisions

Question 3

What is the 'critical path' in project scheduling?

Accepted Answer

The longest sequence of dependent tasks that determines the minimum project duration

Answer

The most expensive set of activities in the project

Answer

The list of tasks with the highest risk of delay

Answer

The sequence of milestones approved by senior management

Question 4

Which contract type places the greatest financial risk on the contractor?

Accepted Answer

Lump-sum (fixed-price) contract

Answer

Cost-plus-fixed-fee contract

Answer

Time-and-materials contract

Answer

Cost-plus-percentage-of-cost contract

Question 5

What is 'straight-line depreciation' for a capital asset?

Accepted Answer

Distributing the asset's cost evenly over its useful life in equal annual amounts

Answer

Writing off the full asset cost in the year of purchase

Answer

Accelerating deductions in early years based on usage

Answer

Calculating depreciation based on production output

Question 6

A Gantt chart is primarily used in project management to:

Accepted Answer

Visualize the project schedule by showing task durations and timelines in bar format

Answer

Track actual project costs versus the approved budget

Answer

Assign responsibility for each work package to team members

Answer

Document scope changes approved during the project