7. Defining the Project Budget and Risk Plans

Ref:📕CompTIA Project+ Study Guide: Exam PK0-005 (Sybex Study Guide)

Project+ (PK0-005) Chapter 07. Defining the Project Budget and Risk Plans

1 / 33

What does the cost baseline in a project represent?

A. The initial cost of setting up the project

B. The total amount of money spent on the project to date

C. The total approved expected cost for the project

D. The total amount of money budgeted for the project

2 / 33

What is the primary function of Earned Value Measurement (EVM) analysis techniques?

A. To verify the sign-off from the sponsor for the new cost baseline.

B. To determine and document the cause of the variance, impact of the variance, and whether a corrective action should be implemented.

C. To measure the actual costs that may include direct and indirect costs.

D. To verify that the earned value does not exceed the total project budget.

3 / 33

Which of the following are crucial areas where accuracy is paramount when presenting estimates in project management?

A. Communication and Execution Plans

B. Quality and Risk Management Plans

C. Cost Baseline and Schedule Baseline

D. Progress Reports and Meeting Minutes

4 / 33

What does a negative cost variance (CV) indicate in project management?

A. The project has spent less than budgeted

B. The project has spent more than budgeted

C. The project is ahead of the schedule

D. The project is behind the schedule

5 / 33

According to the text, what action should be taken for risks with a risk score of 5 or greater?

A. They should be ignored as they are not significant

B. They should be deleted from the risk register

C. They should be assigned a response plan

D. They should be assigned to the project sponsor

6 / 33

Earned Value Management (EVM) is a performance monitoring technique that compares what your project has produced to what you’ve spent. Which of the following metrics is NOT part of the EVM calculations?

A. Planned value

B. Actual cost

C. Earned value

D. Project buffer

7 / 33

What does expenditure tracking include in project management?

A. Measuring the project spending to date and determining the burn rate

B. Making budget updates during project update meetings

C. Showing estimated costs versus the actual costs in a budget report

D. Tracking project spending using project management software

8 / 33

Which of the following best describes the bottom-up cost-estimating technique mentioned?

A. It defines cost estimates based on the quantity of work multiplied by the rate

B. It is a mathematical model for computing costs dependent on data accuracy

C. It assigns a cost estimate to each work package, then totals these estimates

D. It calculates cost estimates based on the duration of a task multiplied by the rate

9 / 33

What are the three points in a three-point estimate and how do they form an estimate?

A. Most likely estimate, optimistic estimate, pessimistic estimate – and the estimate is calculated by addition of all three

B. Most likely estimate, optimistic estimate, pessimistic estimate – and the estimate is calculated by division of all three

C. Best guess, expected cost and unexpected cost – and the estimate is calculated by addition of all three

D. Most likely estimate, optimistic estimate, pessimistic estimate – and the estimate is calculated by averaging of all three

10 / 33

Which among the following formulas is correctly associated with its meaning?

A. CV: EV – AC, which represents the variance between actual cost and planned value

B. CPI: EV / AC, which reflects the cost efficiency for the work completed

C. SV: EV – PV, which indicates the schedule performance using actual costs

D. SPI: EV / PV, which illustrates the cost variance

11 / 33

What are the elements to consider when defining probability and impact and prioritizing the lists of risk as mentioned in the text?

A. Urgency, Proximity, Dormancy, Strategic Impact

B. Urgency, Propinquity, Detectability, Dormancy

C. Dormancy, Manageability, Controllability, Interconnectivity

D. All of the above

12 / 33

Which of the following is NOT a method used to calculate burn rate on a project?

A. Cost Performance Index (CPI) calculation

B. Estimate to Complete (ETC) formula

C. Cost estimation

D. Demand forecasting

13 / 33

What techniques can be used to identify potential risks during the risk identification and analysis process?

A. Brainstorming, interviews, and facilitated workshops

B. Applying a risk response plan

C. Conducting an IT audit

D. Enforcing management policies

14 / 33

Which of the following is NOT a question to ask when preparing the project budget?

A. Are all project expenses submitted to the project manager for approval?

B. Does the project manager approve timesheets for project team members?

C. What portions of the budget are capital expenses and which are operational expenses?

D. How many team members have previous project experience?

15 / 33

Which of the following is NOT a part of Earned Value Measurement (EVM) technique?

A. Planned value (PV)

B. Earned value (EV)

C. Cost variance(CV)

D. Risk acceptance (RA)

16 / 33

What is a budget burndown chart?

A. A chart that shows the expected burn rate for the budget over the scheduled timeline

B. A chart that shows the remaining time and work effort for the iteration

C. A visual representation of a project’s budget drawn down to zero

D. A graphic plot of each team member’s utilization of the budget

17 / 33

What are the main techniques discussed for determining cost estimates in the project?

A. Analogous, parametric, bottom-up, and three-point estimates

B. Analogous, parametric, top-down, and four-point estimates

C. Analogous, parametric, bottom-up, and two-point estimates

D. Top-down, parametric, bottom-up, and four-point estimates

18 / 33

Which of the following is vital while performing cost estimates in project management?

A. Ignoring any possible hidden costs

B. Neglecting the need for special training of team members

C. Documenting any cost-related assumptions

D. Failing to provide stakeholders with a timeline for a definitive estimate.

19 / 33

What is one benefit of using quantitative analysis when examining risk within a project?

A. It assigns numerical values to risks and their impacts, helping in risk assessment.

B. It determines the final cost of the project.

C. It is used exclusively for scheduling.

D. It eliminates the need to consider risk impacts on project objectives.

20 / 33

What is the importance emphasized in expenditure reporting as per the text?

A. Spending overruns are often within the project manager’s control.

B. The sponsor will appreciate negative budget news.

C. Expenditure reporting can only take the form of simple spreadsheets

D. Reporting the budget spending and alerting the sponsor at early signs of budget trouble are crucial.

21 / 33

What best describes Analogous Estimating in project budgeting?

A. It is the costliest but most accurate estimating technique.

B. It involves using the cost of a past similar project to approximate the cost of the current project.

C. It is typically used to estimate individual work packages.

D. It does not rely on expert judgment.

22 / 33

What is SWOT analysis in the context of project management and what elements of a project does it analyze?

A. A technique for risk identification focusing on strengths, weaknesses, opportunities, and threats of the project including resources and organizational processes.

B. A technique for project budgeting that focuses on strengths, weaknesses, opportunities, and threats.

C. A process for monitoring project performance involving strengths, weaknesses, opportunities, and threats.

D. A communication strategy that concentrates on the project’s strengths, weaknesses, opportunities, and threats.

23 / 33

What does situational/scenario analysis helps to identify in a project?

A. The duration of the project

B. The risks from specific situations or scenarios

C. The financial budget of the project

D. The human resources needed for the project

24 / 33

What does a higher risk score in the probability and impact matrix generally indicate?

A. The risk is unlikely to occur and has a negligible impact on the project

B. The risk is likely to occur and has a significant impact on the project

C. The risk is unlikely to occur but will have a significant impact on the project if it does

D. Risk score doesn’t have a correlation with probability and impact

25 / 33

What are the three major components of risk planning?

A. Identifying potential risks, considering risk impacts, and identifying relevant stakeholders

B. Defining risk threshold, identifying potential risks, and analysing risk impacts

C. Identifying potential risks, analyzing risk impacts, and developing appropriate responses

D. Developing risk responses, controlling project risks, and preparing risk contingency plans

26 / 33

What is the primary purpose of risk analysis during project management?

A. To identify those risks that have the lowest possibility and least impact on the project.

B. To identify those risks with the greatest possibility of occurring and the greatest impact to the project.

C. To assign individual preferences of stakeholders to the risk events.

D. To provide a standard risk tolerance level for different industries.

27 / 33

What information should you include when defining an acceptable use policy?

A. The people and systems impacted

B. The roles and responsibilities of users

C. The rules and procedures for accessing systems and data

D. All of the above

28 / 33

What does a positive Cost Variance (CV) number signify?

A. The costs are higher than budgeted

B. The costs are lower than budgeted

C. The project is behind schedule

D. The project is ahead of schedule

29 / 33

What does Earned Value Measurement (EVM) in project management refer to?

A. The technique used to measure the profits from a project

B. The value of work completed to date compared to the budget

C. The approved budget assigned to the work to be completed during a given time period

D. Money that’s actually been expended during a given time period for completed work

30 / 33

What is the difference between a contingency reserve and a management reserve?

A. A contingency reserve is used to cover future situations that can’t be predicted, whereas a management reserve is used to cover costs resulting from possible adverse events or unexpected issues on the project.

B. A contingency reserve and a management reserve are the same thing, used interchangeably in project budgeting.

C. The project manager controls how the contingency funds are used. The management fund is usually controlled by upper management, and the project manager can’t spend money out of this fund without approval from upper management.

D. A contingency reserve is included as part of the project budget or cost baseline, whereas management reserves are not.

31 / 33

What is one of the strategies to deal with negative risks in a project?

A. Exploit

B. Share

C. Transfer

D. Enhance

32 / 33

Which one of the following is NOT an example of a security policy category according to this text?

A. Physical Security

B. Operational Security

C. Digital Security

D. Time Management Security

33 / 33

Which of the following best describe the method for calculating the total cost of a task using the bottom-up estimating technique?

A. It is calculated by multiplying the activity duration by the resource’s rate

B. It is calculated by multiplying the work effort for each resource by the rate for that resource

C. It is done by dividing the total cost of the project by the number of tasks

D. It is estimated by adding up the cost of all the materials used in the task

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CompTIA Project+ (PK0-005) Chapter 07: Defining the Project Budget and Risk Plans Master IT Project Budgeting and Risk Management for Project+ Certification Success

Introduction to Budget and Risk Management

Effective budget planning and risk mitigation are cornerstones of successful IT projects. This chapter equips you with essential skills for the CompTIA Project+ certification and your future career in IT project management.

Key Learning Objectives

1. Developing comprehensive IT project budgets
2. Implementing cost control measures for technology projects
3. Identifying and analyzing IT-specific project risks
4. Creating effective risk mitigation and contingency plans

Free Study Resources for Project+ Certification

1. Practice Exam: Test your budget and risk management knowledge with our comprehensive, free practice exam [Take the exam now]
2. Anki Flashcards: Reinforce key budgeting and risk analysis concepts with our specially designed deck [Download Anki deck]

Your Project+ Certification Journey

← Previous: Chapter 06: Resource Planning and Management
→ Current: Defining the Project Budget and Risk Plans
→ Next: Chapter 08: Communicating the Plan

Real-World Application

– Case Study: How proactive risk management saved a tech company $1.5 million in potential losses
– Statistic: 80% of successful IT projects attribute their financial performance to robust budget management (PMI, 2023)

Career Impact

– Salary Insight: IT Project Managers proficient in budget and risk management earn 25% more on average (Glassdoor, 2024)
– Job Market Trend: Demand for certified Project+ professionals with strong financial and risk management skills up 40% YoY

Start Mastering IT Project Budgeting and Risk Management Now!

Ready to enhance your project management skills and advance your Project+ certification journey? Take our free practice exam and begin mastering IT project budgeting and risk management today.
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For official CompTIA Project+ certification details, visit the [CompTIA Official Site].

7. Defining the Project Budget and Risk Plans

Boost Your Skills with Free Anki Flashcards

CompTIA Project+ (PK0-005) Chapter 07: Defining the Project Budget and Risk Plans Master IT Project Budgeting and Risk Management for Project+ Certification Success

Introduction to Budget and Risk Management

Key Learning Objectives

Free Study Resources for Project+ Certification

Your Project+ Certification Journey

Real-World Application

Career Impact

Start Mastering IT Project Budgeting and Risk Management Now!

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