Q: A project consists of three tasks: Task A ($1,000), Task B ($1,000), Task C ($500). At the end of week 1, Task A is 45% complete, Task B is 100% complete, Task C is 10% complete. What is the BCWP?

$3,000 \times 0.45 + 1,000 \times 1.00 + 500 \times 0.10 = 1,350 + 1,000 + 50 = 2,400$

Question 1

Which of the following best describes the purpose of a project closeout audit in construction accounting?

Accepted Answer

To validate data, identify areas of exceptional and poor performance, and learn from both successes and mistakes.

Question 2

A project manager is reviewing the Schedule Performance Index (SPI) for a project. If the SPI is calculated as $\frac{BCWP}{BCWS}$ and equals 0.96, what does this indicate?

Accepted Answer

The project is behind schedule.

Question 3

Which formula is used to calculate the Cost Performance Index (CPI) in earned value analysis?

Accepted Answer

$\frac{BCWP}{ACWP}$

Question 4

In Example 7-3, the BCWP is $2,400 and the ACWP is $2,350. What is the CPI and what does it indicate?

Accepted Answer

CPI = $\frac{2,400}{2,350} = 1.02$, indicating the project is under budget.

Question 5

Which of the following is NOT included in the calculation of earned value (EV) for a construction project?

Accepted Answer

Submittals that do not have a cost.

Question 6

A project consists of three tasks: Task A ($1,000), Task B ($1,000), Task C ($500). At the end of week 1, Task A is 45% complete, Task B is 100% complete, Task C is 10% complete. What is the BCWP?

Accepted Answer

$3,000 	imes 0.45 + 1,000 	imes 1.00 + 500 	imes 0.10 = 1,350 + 1,000 + 50 = 2,400$

Question 7

If the Labor Cost Performance Index (LCPI) is calculated as $\frac{BCLP}{ACLP}$ and equals 1.05, what does this indicate?

Accepted Answer

Labor costs are under budget.

Question 8

Which step in the monitoring and controlling process is most critical for identifying and correcting cost overruns early?

Accepted Answer

Establishing a baseline and checking costs against it early in the process.

Question 9

A cost-loaded schedule assigns costs to tasks and determines weekly or monthly costs. What is the primary benefit of this approach?

Accepted Answer

It allows for accurate tracking of project progress and cost performance.

Question 10

In Example 7-5, the total estimated cost at completion is calculated as $\frac{4,500}{1.02}$. What is the result and what does it represent?

Accepted Answer

$4,412$, representing the total estimated cost at completion assuming CPI remains constant.

Question 11

Which of the following is a common challenge in controlling labor costs on a construction project?

Accepted Answer

Labor costs are hard to control and must be tracked by timecards, which must be processed quickly.

Question 12

What is the correct formula for calculating the Schedule Performance Index (SPI)?

Accepted Answer

$\frac{BCWP}{BCWS}$

Question 13

If a project’s CPI is less than 1, what does this indicate?

Accepted Answer

The project is over budget.

Question 14

Which of the following is a key insight from managing costs in construction accounting?

Accepted Answer

The earlier costs are checked and approved against a budget, the easier it is to control costs.

Question 15

A project manager wants to measure the efficiency of in-house labor costs. Which index should they use?

Accepted Answer

Labor Cost Performance Index (LCPI)

Question 16

In a cost-loaded schedule, if a task spans multiple weeks, how should the costs be allocated?

Accepted Answer

Costs should be divided equally among the weeks.

Question 17

Which of the following is a plausible reason for a negative overrun in a job cost report?

Accepted Answer

Actual costs are less than budgeted costs for a task.

Question 18

What is the primary purpose of using earned value analysis in construction projects?

Accepted Answer

To measure performance with regards to schedule and cost efficiency.

Question 19

In a design-build project, what is the recommended approach to managing design costs?

Accepted Answer

Monitor and control design costs using the same methods as construction costs.

Question 20

If the total estimated cost at completion is $4,412 and the ACWP is $2,350, what is the estimated cost to complete the project?

Accepted Answer

$4,412 - 2,350 = 2,062$

Managing Costs and Earned Value Analysis in Construction Accounting

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