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Your sponsor would like to know how long it takes to build the prototype on your project. He tells you that a similar project last year produced a prototype in 28 days. Your engineer tells you that the design of the prototype will take anywhere from 25 to 45 days and based on the design changes he thinks it will probably be close to about 32 days. What is the weighted average of the numbers that you have received?
A.
31 days
B.
32 days
C.
33 days
D.
34 days
Correct Answer C. 33 days
Explanation The formula for the weighted average is (Pessimistic + (4 * Most Likely) + Optimistic) / 6. The numbers to use are only those from your engineer. The sponsors 28 days are irrelevant. Therefore you calculate (45 + (4 * 32) + 25) / 6 = 33 days
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2.
The activity “Ship Container” in your network diagram has an early start of day 17, a late start of day 22 and a late finish of day 37. What is the activity duration?
A.
15 days
B.
16 days
C.
59 days
D.
14 days
Correct Answer B. 16 days
Explanation The formula to calculate activity duration is Late Finish - Late Start +1.
Therefore you calculate 37 - 22 + 1 = 16
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3.
Your project has a CV of -200. This means:
A.
Your project is under budget
B.
Your SPI is also negative
C.
Your project is above budget
D.
CV cannot be negative and there must be an error in the calculation
Correct Answer C. Your project is above budget
Explanation CV is calculated CV = EV - AC. Therefore, a negative Cost Variance means that you have spent more Actual Cost than you have Earned Value. Thus you are spending more than is coming in and you are over budget.
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4.
After the last project meeting your sponsor has asked you to give her a new estimate of the cost at the end of the project. This is because during the meeting it was found that so much has gone wrong until now, that the numbers are probably off. It is expected, that from now on things will progress normally. You gather all the necessary numbers from your PMIS. Which formula will you use to create the expected total cost of the project?
A.
EAC = BAC/CPI
B.
EAC = AC+ETC
C.
EAC = AC+BAC-EV
D.
ETC = EAC-AC
Correct Answer C. EAC = AC+BAC-EV
Explanation The sponsor has asked you to calculate the Estimate at Completion (EAC). Based on the information in the scenario we learn that the past variances are not typical because things should be normal going forward from here. Hence we will use the EAC formula which is used when past variances are thought to be atypical. We will calculate the actual cost to date plus remaining budget. (BAC - EV is the
remaining budget.)
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5.
Your project is budgeted at £500,000 with a schedule duration of 8 months. You are currently at the end of month 4 and you know that you are £20,000 ahead of schedule. Your estimated earned value is £350,000. How much of the project budget is complete?
A.
70%
B.
42%
C.
5%
D.
50%
Correct Answer A. 70%
Explanation The formula for calculating percent complete of a project budget is EV / BAC * 100. Therefore you calculate 350,000 / 500,000 * 100 = 70. (Note if the question had been how much of the project schedule is complete then 50% would have been correct, since you are at the end of month 4 of 8.)
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6.
You are the project manager of the Sterling project. The goal is to explore 2 possible new products for your company. Over €150,000 have been spent on this exploratory project. Market studies with focus groups show that there is a need for both products. However, your sponsor is worried that you are only 60% finished and that the current ETC tells you that another €175,000 is required to finish. What should you do?
A.
Stop the project because you are over budget
B.
Ignore the sunk cost in the decision making process
C.
The SPI is positive, therefore we can continue
D.
Defer the decision to the project control board
Correct Answer B. Ignore the sunk cost in the decision making process
Explanation All decision on whether or not to continue with a project should be based on forward looking criteria. The sunk cost (= money that has been spent) should not be a factor in the decision making process. Take your car as an analogy: If you learn that you need to have the flux capacitor replaced (at a cost of €750) then you should not be thinking “Gee… I just replaced the intake valve for €250 last month!”
Instead you should look at the value of your car and whether this investment / repair is worth the future usage of the vehicle. It is the same with projects. Make forward looking decisions and ignore sunk cost.
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7.
PV = 100, EV = 105, BAC = 400, AC = 102, CV = 3, EAC = 390. How much is the VAC?
A.
205
B.
10
C.
3
D.
-10
Correct Answer B. 10
Explanation The formula for calculating the Variance at Completion (VAC) is VAC = BAC – EAC. Therefore you calculate 400 - 390 = 10.
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8.
PV = 100, EV = 105, BAC = 400, AC = 102, CV = 3, ETC = 300. How much is the EAC if the variances from the BAC are expected to continue at the same rate?
A.
388
B.
402
C.
397
D.
400
Correct Answer A. 388
Explanation The formula for calculating the Estimate at Completion (EAC) if we expect the variances to continue at the current rate is EAC=BAC/CPI. However, the question does not give you the CPI.
So you first have to calculate the CPI: CPI = EV / AC = 105 / 102 = 1.0294
Now you can calculate the EAC: EAC = BAC / CPI = 400 / 1.0294 = 388.57
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9.
You are planning a speed networking event. The idea is to bring 50 top executives from local companies who don’t know each other together into one room and give them 3 minutes to talk with each other and then move on to the next person in the room. At the end of the event each attendee will have spoken to each of the other attendees. Speed networking begins at 5pm. When will it end?
A.
About 20 hours later
B.
At 7:27pm
C.
At 7:30pm
D.
About 40 hours later
Correct Answer B. At 7:27pm
Explanation This is an interesting variation of the “Communications Channels” formula designed to test your logical thinking. In fact, the goal of the question is not to use the communication channels formula at all. If you use the formula you will get the wrong answer. Why? Because the question isn’t asking you to calculate the communication channels. Instead the question asks the following:
We have 50 executives. Each of them will speak to the 49 others for 3 minutes. How long will it take?
The mistake you could make is to calculate the communication channels (50 * 49 / 2 = 1225) multiply that by 3 minutes and then the end-time would be about 20 hours later. No executive would stay this long. Yes, you have correctly calculated the communications channels, but you have to remember that during the event you always have 25 simultaneous conversations going on in the room. I speak to you
and the other 48 executives speak to each other as well.
The actual calculation you have to do is much simpler: If I am one of the 50 executives, then I have to speak to 49 others. If you are one of these executives then you also have to speak to 49 others. In fact, each of the attending 50 executives has to speak to 49 others. Therefore, you calculate 49 * 3 minutes = 147 minutes = 2 hours 27 minutes. This gives you an end time of 7:27pm
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10.
PV = 100, EV = 105, BAC = 400, AC = 102, CV = 3, ETC = 300, EAC = 407. The ETC is given as 300. However, how much would the Estimate to Complete be if we assume that current variances are thought to be atypical?
A.
298
B.
300
C.
305
D.
295
Correct Answer D. 295
Explanation The formula for calculating the ETC when variances are atypical is ETC = BAC-EV. Therefore you calculate 400 - 105 - 295
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11.
PV = 100, EV = 105, BAC = 400, AC = 102, CV = 3, ETC = 300, EAC = 407. How much is the Actual Cost?
A.
100
B.
102
C.
7
D.
2
Correct Answer B. 102
Explanation The answer to this question can be found right in the question. It states that “AC = 102”, therefore Actual Cost has to be 102. This question is trying to throw you off by giving you way too much information.
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12.
Inspection shows that roughly 72% of your products are produced defect free. What sigma level is this?
A.
1 Sigma
B.
2 Sigma
C.
3 Sigma
D.
4 Sigma
Correct Answer A. 1 Sigma
Explanation 1 Sigma = 68.26%. 2 Sigma = 95.46%, 3 Sigma =99.73% and 6 Sigma = 99.99%. Even though 72% is not a “true” sigma value, it is closest to answer A and therefore A is the best available answer.
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13.
You are the project manager of the Gutenberg project. One major activity in this project is the purchase of a printing press at a cost of CHF 2,500,000. The printing press has an expected life of 25 years but it will only be used for the project for 5 of these. Using straight line depreciation, what is the value of the printing press at the end of its usage for the project?
A.
CHF 500,000
B.
CHF 1,500,000
C.
CHF 2,000,000
D.
CHF 2,500,000
Correct Answer C. CHF 2,000,000
Explanation In the straight line depreciation method, the same value is depreciated from the investment every year. The cost of the press is 2.5 million with a lifespan of 25 years. This means that we depreciate 2,500,000 / 25 = 100,000 every year. After 5 years of depreciation the remaining value is 2,500,000 - (5 * 100,000) = 2,000,000.
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14.
You have received the following values from your statistical sampling:
80, 83, 85, 90, 82, 88, 90, 91, 94, 79. What is the mean of this number set?
A.
10
B.
86.5
C.
90
D.
86.2
Correct Answer D. 86.2
Explanation “Mean” is another term for “Average”. To calculate the mean (or average) you take the sum of all the members of the list divided by the number of items in the list: (80+83+85+90+82+88+90+91+94+79) / 10 =86.2
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15.
Your company is holding their annual employee get together. This year 123 employees have attended. Let’s assume that each employee had a brief conversation with each of the other employees. How many conversations took place?
A.
15,006
B.
123
C.
7,503
D.
15,129
Correct Answer C. 7,503
Explanation The formula to calculate communication channels (or in this case “conversations”) is n * (n-1) / 2. Therefore you calculate 123 * (123 - 1) / 2 = 7,506
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16.
Your project has an SPI of 1.1 and a CPI of 0.9. What does this mean?
A.
We are over budget and ahead of schedule
B.
We are ahead of schedule but under budget
C.
We are over budget and behind schedule
D.
We are behind schedule and under budget
Correct Answer A. We are over budget and ahead of schedule
Explanation A Schedule Performance Index (SPI) of > 1 means that we are ahead of schedule because the work is progressing at a rate of greater than what was planned. A Cost Performance Index (CPI) of < 1 means that we are over budget because we are getting less value for the money spent than what we had planned.
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17.
Your friend Joe is planning to retire 20 years from today. He is investing $200,000 in a long-term investment at 3.5%. How much will this money be worth in 20 years?
A.
$399,757
B.
$401,627
C.
$379,597
D.
$397,957
Correct Answer D. $397,957
Explanation You are asked to calculate the Future Value of a 200,000 investment at 3.5% for 20 years. The formula for Future Value is FV = PV * (1+r)^n. Therefore you calculate 200,000 * (1 + 0.035)^20 = 397,957.
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18.
Your customer is asking you for a preliminary estimate. Your numbers show that the project will most likely cost DKK 100,000. What number will you give to your customer?
A.
DKK 100,000
B.
DKK 75,000 - 150,000
C.
DKK 85,000 - 150,000
D.
DKK 95,000 - 110,000
Correct Answer C. DKK 85,000 - 150,000
Explanation The percentages for the various estimates that you need to know for the exam are as follows: Order of Magnitude estimate = -50% to +50% (PMBOK® Guide); Preliminary estimate = -15% to + 50%; Budget estimate = -10% to +25%; Definitive estimate = -5% to +10%; Final estimate = 0%. You have been asked to provide a preliminary estimate. Therefore your range has to be -15% to + 50% from
the 100,000 starting point.
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19.
Your company owns an asset with an original value of $1,000. This asset will be depreciated using the double declining balance method over the period of 5 years. What is the dollar value of the annual depreciation in year 2?
A.
$400
B.
$144
C.
$240
D.
$86.40
Correct Answer C. $240
Explanation To calculate the annual depreciation % for the double-declining-balance method you have to first calculate the straight-line depreciation rate. Since the asset has a 5 year life, the straight-line depreciation rate is 100% / 5 years = 20% per year. With double-declining-balance method, as the name suggests, the double of that rate (40%) is used.
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20.
The activity “Pack Container” in your network diagram has an early start of day 12, a late start of day 15, a duration of 3 and a late finish of day 17. What is the total float of this activity?
A.
1 day
B.
2 days
C.
3 days
D.
4 days
Correct Answer C. 3 days
Explanation The total float of an activity determines how many days you can delay an activity without delaying the project. There are two formulas both will give the same result:
Total Float = LS - ES
Total Float = LF - EF.
In our question we have the following values:
ES = 12
LS = 15
LF = 17
Therefore we calculate Total Float = LS - ES = 15 - 12 = 3 days.
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21.
Using the Benefit Cost Ratio, which of the following projects do you select?
A.
Project Gold with a BCR of 0.9
B.
Project Silver with a CBR of 0.9 and cost of $100,000
C.
Project Diamond with a cost of $100,000 and benefits of $110,000
D.
Project Platinum with a BCR of 1.2
Correct Answer D. Project Platinum with a BCR of 1.2
Explanation The higher the BCR the better. Project Platinum has the highest BCR of 1.2 and should be selected if you rely only on the BCR. Here is why: Project Gold has a BCR of 0.9, so it is clearly less than Project Platinum’s 1.2.
Project Silver has a CBR of 0.9 and a Cost of 100,000. We cannot compare a CBR to a BCR. We have to first calculate its BCR. This is a two step process: First you have to calculate the benefits by dividing the cost by the ratio: 100,000 / 0.9 = 111,111. Now you calculate the BCR by dividing the benefits by the cost: 111,111 / 100,000 = 1.11. Now we see that project Silver has a BCR of 1.11 which is less
than Project Platinum’s 1.2.
Project Diamond doesn’t give us the BCR. So we have to calculate it by dividing the benefits by the cost: 110,000 / 100,000 = 1.1. Now we see that project Diamond has a BCR of 1.1 which is less than Project Platinum’s 1.2.
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22.
Your company owns an asset with an original value of $1,000. This asset will be depreciated using the double declining balance method over the period of 5 years. What is the percentage of the annual depreciation in year 2?
A.
20%
B.
$240
C.
40%
D.
$140
Correct Answer C. 40%
Explanation For the detailed explanation please refer to question #22 above. Also, please note that the question asks “What is the percentage” and not “What is the Dollar value”.
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23.
Your 8-person team is getting support from 2 external consultants. How many communication channels are added by hiring these consultants?
A.
2
B.
8
C.
16
D.
17
Correct Answer D. 17
Explanation To find the answer you have to subtract the communication channels of an 8- person team from those of a 10-person team.
8-person team = n * (n-1) / 2 = 8 * (8-1) / 2 = 8 * 7 / 2 = 28 channels
10-person team = n * (n-1) / 2 = 10 * (10-1) / 2 = 10 * 9 / 2 = 45 channels
And the difference is 45 - 28 = 17.
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24.
Your company owns an asset with an original value of $5,000. This asset will be depreciated using the Sum-of-Years' Digits Method over the period of 5 years. What is the depreciation rate in year 2?
A.
20%
B.
40%
C.
2/15th
D.
4/15th
Correct Answer D. 4/15th
Explanation First, determine the years' digits. Since the asset has useful life of 5 years, the Years' digits are: 5, 4, 3, 2, and 1.
Now, calculate the sum of the digits: 5+4+3+2+1=15.
Therefore, the depreciation rates are as follows: 5/15 for the 1st year, 4/15 for the 2nd year, 3/15 for the 3rd year, 2/15 for the 4th year, and 1/15 for the 5th year
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25.
Your designer has given his resignation. This means that you will be losing him and your team size (including yourself) will go from 12 to 11 people. How many fewer communication channels do you personally have on your project?
A.
1
B.
10
C.
11
D.
12
Correct Answer A. 1
Explanation This question doesn’t require you to use the communication channel formula.
Let’s first look at the question: It does not ask “How many fewer communication channels are there on the project”. Instead, the question asks: “How many fewer communication channels do you personally have on your project?” So to find the correct answer, we have to concentrate on your own channels and not on those of the team. Let’s do that.
We know that the team has 12 team members, including you. This means that there are 11 other team members on the project and you communicate with them. Since there are 11 other team members, that means that you personally have 11 communication channels - one with each of the other team members. One of these 11 team members has resigned and will leave the team. This means that there are now only 10 other team members on the team, leaving you with only 10 communication channels. So the difference for you is 11 - 10 = 1.
In other words: Team of 12 = You personally communicate with 11 others = 11 channels
Team of 11 = You personally communicate with 10 others = 10 channels
The difference is 1.
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26.
Your customer is asking for an order of magnitude estimate. What numbers do you give him, assuming that your bottom up estimate gave you a project cost of approximately CHF 200,000?
A.
CHF 170,000 to CHF 300,000
B.
CHF 110,000 to CHF 300,000
C.
CHF 190,000 to CHF 220,000
D.
CHF 180,000 to CHF 250,000
Correct Answer B. CHF 110,000 to CHF 300,000
Explanation An Order of Magnitude estimate is from -50% to +50%. Answer B is best because it comes closest to this range. (Answer A would be a Preliminary Estimate, C would be a Definite Estimate and D would be a Budget Estimate).
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27.
Assuming a 3% interest rate, which of the following projects would you select?
A.
Project Gold with a total of 213,000 profit at the end of year 4
B.
Project Silver with a total of 97,000 profit at the end of year 1
C.
Project Bronze with a total of 128,000 profit at the end of year 2
D.
Project Leather with a total of 168,000 profit at the end of year 3
Correct Answer A. Project Gold with a total of 213,000 profit at the end of year 4
Explanation The “profit at the end of year x” represents a Future Value (FV). To determine which of these projects to select you must calculate the Present Value (PV) for each of the 4 projects. This is calculated by using the formula PV = FV / (1 + r)^n
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28.
Calculate the Point of Total Assumption on the following contract: Target Cost: 1,000,000; Target Profit: 100,000; Target Price: 1,200,000; Ceiling Price: 1,450,000; Share Ratio: 80% buyer–20% seller for overruns, 60%–40% for underruns.
A.
1,452,500
B.
2,250,000
C.
1,312,500
D.
1,550,000
Correct Answer C. 1,312,500
Explanation The Point of Total Assumption (PTA) is calculated as follows:
PTA = ((Ceiling Price - Target Price)/buyer's Share Ratio) + Target Cost
PTA = ((1,450,000 - 1,200,000)/ 0.80) + 1,000,000 = 1,312,500
The percentages for underruns are irrelevant for this question and can be ignored
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29.
You have just been assigned to a new project that is very similar to the previous one. One particular task on the previous project took 146 days to finish. You are doing a top down estimate of the new project and you estimate that the same task on the new project will take at least 138 and at maximum 157 days. What is the variance of this estimate?
A.
3.16 days
B.
146.5 days
C.
64.8 days
D.
10.2 days
Correct Answer D. 10.2 days
Explanation The formula to calculate the variance of a task is as follows: Variance =
((Pessimistic - Optimistic) / 6)^2. Therefore you would calculate:
((157 - 138) / 6)^2 = (19 / 6)^2 = 3.1666^2 = 10.02 days
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30.
You have received the following estimates from vendors: Vendor 1: €75,000, Vendor 2: €65,000, Vendor 3: €93,500, Vendor 4: €82,000, Vendor 5: €94,000. What is the median estimate that you have received?
A.
£81,900
B.
5
C.
£94,000
D.
£82,000
Correct Answer D. £82,000
Explanation The Median is the middle value that separates the higher half from the lower
half. In our example, you have to first order the numbers ascending:
£65,000 - £75,000 - £82,000 - £93,500 - £94,000
Now it is easy to see, that the Median value is £82,000. It is exactly in the middle
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31.
Your company has a small staff and due to resource constraints not all projects that are proposed can be undertaken. There are two new projects that have been proposed. Project Gold will take 1.5 years and will bring a profit of around €290,000 at the end of year 2. Project Silver will take 1 year and reduce internal cost by €270,000 by the end of year 4. Assuming a 3% interest rate, which of the following is true?
A.
These projects are exactly equal in benefits.
B.
Project Gold has a PV that is about €33,000 higher than Project Silver
C.
Project Silver is more attractive than Project Gold and should be undertaken
D.
Project Silver has a PV that is about €25,000 higher than Project Gold
Correct Answer B. Project Gold has a PV that is about €33,000 higher than Project Silver
Explanation Project Gold has a PV of €273,352 and Project Silver has a PV of €239,891. This is a difference of €33,461, making answer B the best one.
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32.
AC = 105, EV = 100, PV = 97, CV = -5. How much is the Schedule Variance?
A.
1.03
B.
-3
C.
3
D.
8
Correct Answer C. 3
Explanation The formula for calculating the SV is as follows: SV = EV - PV = 100 - 97 = 3.
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33.
Your quality assurance team is doing a review of a process. They find that the process used the following cycle times: 45sec, 49sec, 48sec, 50sec, 52sec, 49sec, 48 sec, 50sec, 46sec. How do you calculate the mean?
Explanation In mathematics, an average refers to a measure of the "middle" of a data set. The most common method is the arithmetic mean. That is why the “Average” is sometimes also and simply called the “Mean”. As such the question asks you to calculate the average of the times given. This is calculated as follows: the sum of all the members of the list divided by the number of items in the list.
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34.
How much is the Estimate to Complete?
A.
ETC = 30,000, when EAC = 100,000 and AC = 70,000
B.
ETC = 120,000, when BAC = 100,000 and EV = 20,000
C.
ETC = 110,000, when BAC = 125,000 and EV = 25,000 and CPI = 1.1
D.
ETC = 70,000, when BAC = 100,000 and AC = 30,000
Correct Answer A. ETC = 30,000, when EAC = 100,000 and AC = 70,000
Explanation There are several ways to calculate the Estimate to Complete (ETC).
ETC = EAC-AC
ETC = BAC-EV
ETC = (BAC-EV) / CPI
Answers A, B and C all contain the numbers to calculate each of the formulas, but only answer A has the correct result of 30,000. The results shown for answer B (120,000) and C (110,000) are incorrect. The correct result for Answer B is 80,000
and the correct result for answer C is 90,909. Answer D is completely impossible,
because you cannot calculate the ETC by using BAC and AC in any combination.
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35.
You estimate that a task will take anywhere from 60 - 70 days to complete. Assuming that you estimated towards 3 sigma, how certain are you about this duration?
A.
68.26%
B.
95.46%
C.
99.73%
D.
99.99%
Correct Answer C. 99.73%
Explanation The values for sigma are as follows: 1 sigma = 68.26%; 2 sigma = 95.46%; 3 sigma = 99.73%; 6 sigma = 99.99%. Therefore, if you are “certain by 3 sigmas” then you are 99.73% certain.
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36.
Your earned value analysis shows the following values: EV = 90,000, ETC = 100,000, EAC = 190,000, PV = 110,000, AC = 90,000. Which of the following is true?
A.
The project is ahead of schedule and on budget
B.
The project is on schedule and below budget
C.
The EAC is incorrect
D.
The project is behind schedule and on budget
Correct Answer D. The project is behind schedule and on budget
Explanation The project is behind schedule because our Earned Value tells us that we have earned only 90,000 and the Planned Value shows that at this time in the project we should have earned 110,000. Therefore we are 20,000 behind schedule. We are on budget because both our Actual Cost and Earned Value are 90,000.
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37.
What is the EMV of the following event?
Probability (Impact in $)
0.5(-8,000)
0.2(-7,000)
0.2(-4,500)
0.1(2000)
A.
2,000
B.
-8,000
C.
-6,100
D.
-4,500
Correct Answer C. -6,100
Explanation The Expected Monetary Value is calculated by multiplying the probability with the impact and then adding up the total
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38.
Your Project has the following 4 tasks:
Task A starts at the beginning of the project and has a duration of 2 days
Task B starts after the completion of task A and has a duration of 3 days
Task C starts after the completion of task A and has a duration of 7 days
Task D starts after the completion of both tasks B and C and has a duration of 4 days
What is the critical path on your project?
A.
7 days
B.
10 days
C.
13 days
D.
16 days
Correct Answer C. 13 days
Explanation To properly calculate the critical path on your project you have to draw a network diagram and then do a backward pass / forward pass.
However, this drawing can take you up to 5 minutes, which is too long on the exam. The shortcut (during the exam) is to draw the boxes for each task approximately to scale of their duration and line them up.
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39.
You recently installed a new PMIS tool that also allows you to perform Earned Value Analysis. The tool gives you the following EV data: EV = 231,000, PV = 261,000, AC = 256,000. Which of the following do you expect to see in your PMIS tool?
A.
CV = -25,000 , SV = +30,000
B.
CV = -25,000 , SV = -30,000
C.
CV = +25,000 , SV = +30,000
D.
CV = +25,000 , SV = -30,000
Correct Answer B. CV = -25,000 , SV = -30,000
Explanation You have to apply the formulas for CV and SV as follows:
CV = EV - AC = 231,000 - 256,000 = -25,000
SV = EV - PV = 231,000 - 261,000 = -30,000
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40.
Your company has a very elaborate project selection method. You use multiple factors to determine if a project will be undertaken. Which of the following factors would not be part of this system?
A.
Internal Rate of Return
B.
Present value
C.
Pareto Analysis
D.
Benefit Cost Ratio
Correct Answer C. Pareto Analysis
Explanation The Pareto Analysis cannot be used in project selection. It is an excellent tool to show distribution but has nothing to do with the problem at hand.
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41.
Your company is constructing a new just in time manufacturing facility in Puerto Rico. This facility will be producing 3,000 bicycles every day. The raw materials are delivered to the facility on standard pallets, each taking up 1m2 (one square meter) of space. Every day approximately 500 pallets will be delivered to the facility. You have asked four local companies to submit their offers for constructing this new manufacturing facility. If you had to pick a vendor based on just the following information, which one would you choose?
A.
Company A: 8,000 m2 of production space and 500 m2 of pallet storage
B.
Company B: 8,000 m2 of production space and 250 m2 of pallet storage
C.
Company C: 8,000 m2 of production space and 150 m2 of pallet storage
D.
Company D: 8,000 m2 of production space and 0 m2 of pallet storage
Correct Answer D. Company D: 8,000 m2 of production space and 0 m2 of pallet storage
Explanation This is an example of a question with a large amount of unnecessary information. The answer to the question can be found in the first sentence: “Your company is constructing a new just in time manufacturing facility in Puerto Rico.” Per definition, the amount of inventory in a just in time environment is 0% or very close to 0%. This means that the new facility doesn’t require any special pallet storage space. (Of course, in the real world a thousand other factors would need to be considered to make a decision, but for this particular question, answer D is the best one.)
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42.
EV = 105 and SPI = 0.9375. How much is the Schedule Variance (SV)?
A.
Cannot be calculated based on these numbers
B.
-7
C.
-6
D.
7
Correct Answer B. -7
Explanation The formula to calculate the Schedule Variance is as follows: SV = EV - PV.
However, in this question the Planned Value isn’t given. Yet, the available two values (EV = 105 and SPI = 0.9375) enable us to calculate the PV. The complete process is as follows:
The formula for the SPI is: SPI = EV / PV.
We invert this formula in order to calculate the PV:
PV = EV / SPI = 105 / 0.9375 = 112
Now we apply the normal formula for SV
SV = EV - PV = 105 - 112 = -7
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43.
You work in the PMO of a mid-sized company. Your PPM tool shows
that there are currently 3 new projects waiting for selection. They are Project Stone with an NPV of ¥15,000,000, Project Paper with an NPV of ¥17,000,000 and Project Scissors with an NPV of ¥13,000,000. You present these 3 projects at the monthly
project selection board meeting. After initial discussion it was immediately decided that Project Scissors will not be pursued at all. At this point a lengthy discussion begins about the benefits of both Project Stone and Project Paper. After 45 minutes
the CEO asks you: “What is the opportunity cost of selecting Project Stone instead of Project Paper?” What is your answer?
A.
¥17,000,000
B.
¥15,000,000
C.
-¥2,000,000
D.
¥2,000,000
Correct Answer A. ¥17,000,000
Explanation This is an extremely simple question, presented to you as if it were a complex problem. The opportunity cost when selecting between two projects is simply the value of the project that is not selected. Or in numbers:
. Project Paper has a value of ¥17,000,000.
. If you don’t do this project, then your lost opportunity is ¥17,000,000.
. The value of the project that was actually selected is irrelevant.
. You do not have to do any calculation whatsoever
Here is another way of explaining this: Let us assume that you had enough resources in your company to tackle both projects. In this case you would make the profit of ¥15,000,000 from Project Stone plus the profit of ¥17,000,000 from Project Paper, giving you a total profit of ¥32,000,000. But because you only have capacity for Project Stone, you are unable to realize the profit from Project Paper. Therefore, your lost opportunity is the profit from the project that you did not do.
Note also, that Project Scissors was never part of this equation. The CEO only asked what the opportunity cost was when selecting between the other two projects
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44.
You are in the procurement process for a high-tech product that is needed for your current project. You have sent out an RFP to several vendors and you expect a target price of about £10,000. The first estimate has arrived this morning. You open the envelope and you see that the vendor is offering the product to you at a cost of £9,500 - £11,000. What type of estimate have you received from this vendor?
A.
Preliminary Estimate
B.
Definitive Estimate
C.
Order of Magnitude Estimate
D.
Final Estimate
Correct Answer B. Definitive Estimate
Explanation For the PMP exam you must know the following estimate types as well as percent ranges:
Order of Magnitude estimate -50% to +50% (PMBOK® Guide)
Preliminary estimate -15% to + 50%
Budget estimate -10% to +25%
Definitive estimate -5% to +10%
Final estimate 0%
Since your expected target price was around £10,000 you can easily see that the
definite estimate of -5% and +10% is what you received from the vendor.
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45.
You are 3 months into a 9 month project. The project is progressing as planned and you expect no major problems in the foreseeable future. Your PMIS is reporting the following values: BAC = 500,000, SPI = 1.1, CPI = 1.05, EV = 173,000,
AC = 164,761. How much is the EAC?
A.
491,761
B.
454,545
C.
189,761
D.
476,190
Correct Answer D. 476,190
Explanation There are many ways to calculate the EAC depending on how the project has been progressing. Therefore, questions about the EAC will always contain some information about the current “health” (or progression) of the project. There are certain keywords that you can look for. This information is important in order for you to pick the correct variation of the formula. Don’t ignore it! Sometimes the
question doesn’t use the exact keywords, but a variation. So your interpretation is needed.
For instance in our question here the information is: “The project is progressing as planned and you expect no major problems in the foreseeable future.” This indicates that there were no variances and that you expect it to continue at the same rate. Hence you need to use the first formula:
EAC = BAC / CPI = 500,000 / 1.05 = 476,190
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46.
What information does the EAC contain?
A.
The cost of the work to be performed to finish the project
B.
The value of the work that has already been performed
C.
The cost of the work that was completed
D.
The expected total cost of our project once it is finished
Correct Answer D. The expected total cost of our project once it is finished
Explanation The EAC is the Estimate at Completion. It represents the estimated cost of the total project upon completion
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47.
When a project is performed under contract, the contractual provisions will generally be considered as _____________ for the project.
A.
Constraints
B.
Exclusions
C.
Deliverables
D.
Provisions
Correct Answer A. Constraints
Explanation A - When a project is performed under contract, the contractual provisions are generally considered as constraints for the project.
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48.
You have been assigned a project where you are responsible for building a condo complex in a resort town. The project is expected to take 2 years to complete. During your work breakdown structure meeting you have decomposed many deliverables into work packages and schedule activities, however there are some work packages that will be occurring a year from now, so you have elected not to decompose those deliverables and work packages at this time. This is an example of what tool and/or technique?
A.
Project Scope Evolution
B.
Delayed Planning
C.
Rolling Wave Planning
D.
Time Delayed Decomposition
Correct Answer C. Rolling Wave Planning
Explanation C - The correct answer is rolling wave planning. Rolling wave planning is a form of progressive elaboration and is used when the project management team does not have enough information for a phase or deliverable that will occur quite a long way into the future.
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49.
A process that states how formal verification and acceptance of the completed project deliverables will be obtained is documented in the:
A.
Scope Management plan
B.
Procurement Management plan
C.
Project Body of Knowledge
D.
Communications Management Plan\\
Correct Answer A. Scope Management plan
Explanation A - The correct response is the Scope Management Plan. This plan provides guidance on how project scope will be defined, documented, verified, managed and controlled by the project management team.
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50.
Which of the following is not one of the Knowledge Area processes?
A.
Procurement management
B.
Integrations management
C.
Communications management
D.
Execution management
Correct Answer D. Execution management
Explanation D - Execution management is not a knowledge area. Note that execution is a process group.
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