PMP Exam Question 133

Aligned with PMBOK 6th Edition®.

Project Cost Estimates :

You have just finished the cost estimates for your IT project. Rounding up or down your cost estimates is your next step. Which project document contains the level of precision?

A. Cost Baseline.
B. Project Charter.
C. Plan Cost Management.
D. Cost Management Plan.

5 responses on "PMP Exam Question 133"

  1. PMP® Solution 133.

    X A. The cost baseline is the approved version of the time-phased project budget, excluding any management reserves, which can only be changed through formal change control procedures. It is used as a basis for comparison to actual results. The cost baseline is developed as a summation of the approved budgets for the different schedule activities.

    X B. The project charter is the document issued by the project initiator or sponsor that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities. It documents the high-level information on the project and on the product, service, or result the project is intended to satisfy, such as: Project purpose, High-level requirements, Overall project risk, Preapproved financial resources, Key stakeholder list, Project approval requirements, Project exit criteria, Assigned project manager, responsibility, and authority level and Name and authority of the sponsor or other person(s) authorizing the project charter.

    X C. Plan Cost Management is the process of defining how the project costs will be estimated, budgeted, managed, monitored, and controlled. The key benefit of this process is that it provides guidance and direction on how the project costs will be managed throughout the project. However, it is not a project document, it is a process.

    The cost management plan is a component of the project management plan and describes how the project costs will be planned, structured, and controlled. The cost management processes and their associated tools and techniques are documented in the cost management plan. It can establish the following;
    -Units of measure.
    -Level of accuracy.
    -Control thresholds.
    -Organizational procedures links.
    -Rules of performance measurement.
    -Reporting formats.
    -Additional details.
    -Level of precision is the degree to which cost estimates will be rounded up or down (e.g., US$995.59 to US$1,000), based on the scope of the activities and magnitude of the project. Therefore, right answer is D. [PMBOK 6th edition, Page 238] [Project Cost Management]

    Cheers

  2. Good to have tough and interesting questions.

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