Using reserves in case of over budget? is that right?

Submitted by miners on Sat, 12/22/2012 - 20:07

Your project is running slightly over budget. You mention this to another project manager, who suggests you shift some of your expenses to indirect costs that are not charged to your project budget. What do you do?

  1. Reestimate the project.

  2. Examine project expenses to see if any are indirect expenses that could be taken off your project.

  3. Fast track the project.

  4. Use your reserves.

The answer is D - use your reserves....anyone to help uncover my gap?

My problem:  Reserves are for  known risks and you cannot just use 'em anywhere you'd like to. If you're over budget first option should be a corrective action

Appreciate your time and help!

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PMP / CAPM exam Question bank
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miners

Sat, 12/22/2012 - 20:40

Question # 2

 

A major construction project has included in the project budget the cost of the construction loans taken out to finance the work, and this will be accounted for on a monthly basis. The project manager will factor in these cost estimates into the project during which process?

  1. Estimate Project Cost

  2. Estimate Activity Resources

  3. Estimate Activity Durations

  4. Estimate Activity Costs

sspawar

Mon, 12/24/2012 - 03:37

I would like to add an old  "Group Study Discussion via email" for Q2


SUB:EC and DB
Reply From- S S Pawar <pawarindo@gmail.com> Sat, Nov 17, 2012 at 12:34 PM
To: Kranti Kumar <krantikumarpmp@gmail.com>, Sendil Kumar <sendilkumar06@gmail.com>
Good morning KK And SK
Hope you are doing well
Estimate Cost - a process of developing estimated cost of each activities or WPkgs .
While Determine Budget - is a process of aggregation of all individual cost estimates of activities or / WPkgs to develop cost base lines.
Here contingency reserve for respecive activities/ WPkgs will be already there before of aggregation and
hence contingency reserves is part of EC .
Management reserve is not a part of DB or cost baseline or Project cost or project budget .
When MR added to DB it will called as Total budget I am in theater -watching movie -SON OF SARDAR
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I am writing this mail since Morning 8am and now completing.
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With this knowlwdge base I can say Option D would be answer. And it will be taken as a seperate activity, it will not be a part of contingency reserve, because CR is cost of uncertainities only. 


Read also -PMBOK P168 last para (3-4 lines).

sspawar

Thu, 01/17/2013 - 23:22

Answer of your subjected quote and 1st question , as already discussed somewhere recently:

I repeat here

Since contingency reserve is a part of approved budget / Authorized funding and PM is authorised to use it, and management reserve can be obtained on request from higher authorized management, if sanctioned.

After all it is type of risk (uncertainity) pmbok p117.

So it will be/can be used when there is cost overrun.

Number of problems we solved , when AC>EV, and CPI <1, OR CV , becomes negative, -- it is nothing but cost overrun. From where you will get it ? Ans : from authorized funding > Apped Budget.

in PMBOK KA CONTROL COST or CONTROL SCHEDULE describeit in detail. Table 10.15 also records this thing.

CR is a part of individual activity /wp/ca cost estimate

 

rjbuzzing

Mon, 01/21/2013 - 20:13

D - Estimate Costs, Sounds like the right answer for Question 2 ?

What is the correct answer ?