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COURSE:
SECTION:

Engineering Management Principles and Economics

RR

EXAMINATION: Midterm

DATE: February 26, 2013

NUMBER: ENGR 301

TIME: 16:15hrs 17:30hrs

INSTRUCTOR: Christopher J. Willis PhD, CAPM, P.Eng, MCSCE

MATERIALS ALLOWED: Non-programmable Calculator & Writing Instruments.
SPECIAL INSTRUCTIONS:
1. This is a closed-book exam with duration of 70 minutes.
2. Write your name and registration number at the top of each page.
3. Answer all questions by circling the correct answer and using the space provided
for calculations.
4. Each multiple-choice question has one correct answer.
5. The available points for each question is given in [ ] brackets. The total is 35 points.
6. Do not remove sheets from this booklet.
1. Project Management is:
[1]
a. The integration of the critical path method and the earned value management
system.
b. The application of knowledge, skills, tools and techniques to project activities to meet
project requirements.
c. The application of knowledge, skills, wisdom, science and art to organizational
activities to achieve operational excellence.
d. A subset of most engineering and other technical disciplines.
2. Project
a.
b.
c.
d.
3. Which
a.
b.
c.
d.

Managers have the highest authority in:

Functional organizations.
Matrix organizations.
Projectized organizations.
None of the above.

one of the following contract types has the lowest risk to the owner?
Unit price.
Cost plus.
Lump sum.
Construction management.

[1]

[1]

4. The first build activity cannot starts until after the first design activity is completed in:[1]
a. Traditional project delivery method.
b. Phased project delivery method.
c. Fast track project delivery method.
d. None of the above.

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5. A project is:
[1]
a. A set of sequential activities performed in a process or system.
b. A revenue generating activity that needs to be accomplished while achieving
customer satisfaction.
c. An ongoing endeavor undertaken to meet customer or market requirements.
d. A temporary endeavor undertaken to create a unique product or service.

6. Which
a.
b.
c.

of the following is NOT true about project stakeholders?

[1]
They are all individuals and organizations that are actively supportive of the project.
They are all individuals and organizations actively involved in the project.
They are all individuals and organizations whose interests may be affected as a result
of project execution.
d. They are all individuals and organizations that may exert influence over the project.

7. Which one of the following costs is usually disregarded in Engineering Economic Analysis?
[1]
a. Opportunity costs.
b. Variable costs.
c. Sunk costs.
d. Marginal costs.
8. In cost control earned value refers to:

[1]

a. How much money of the budget should have been spent in view of the planned cost
of work.
b. How much money of the budget should have been spent in view of the amount of
work performed.
c. How much money was actually spent for work already performed.
d. None of the above.
9. Which one of the following flow charts best illustrates an Owner-Builder project delivery
system?
[1]

a.

c.

b.
d.

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10. Indicate whether the following statement is True or False.

[1]
In terms of estimating accuracy, as the percentage of engineering / design complete increases,
the accuracy of estimates begin to decrease.
TRUE

FALSE

11. Indicate whether the following statement is True or False.

[1]

As a sole trader your personal assets cannot be seized to pay off your business debts.
TRUE

FALSE

12. Indicate whether the following statement is True or False.

A contract must be in writing in order for it to be enforceable by law.
TRUE
FALSE

[1]

13. Indicate whether the following statement is True or False.

[1]

As the level of detail in an estimate increases, the cost of making the estimate also increases.
TRUE
FALSE
14. Which
a.
b.
c.
d.

statement is NOT associated with sunk costs?

Money already spent.
Past decision.
Cost of the least feasible alternative.
Should be disregarded in engineering economic analysis.

[1]

15. How much would $3000 deposited in a bank account be worth after 5 years at 2.75%
compound interest?
[1]
a.
b.
c.
d.
16. Which
a.
b.
c.
d.

$2,224,731
$3435
$3,412
$44,250
one of the following statements is TRUE about the WBS?
The WBS is deliverable-oriented.
The WBS is an unstructured list of activities in chart form.
The WBS is the same as an Organizational Breakdown Structure.
The WBS refers to the Bill of Material (BOM).

17. Which
a.
b.
c.
d.

one of the following is NOT a cost estimating technique?

The learning curve.
Standard costs.
Earned value.
None of the above.

18. In engineering economic analysis the variable A represents:

a. An end-of-period cash receipt or disbursement in a uniform series.
b. A single future sum of money.
c. The initial disbursement or receipt associated with a cash flow series.
d. None of the above.

[1]

[1]

[1]

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The following questions refer to the AON diagram provided on page 5. Do a forward pass,
backward pass, and total float calculations (durations are in days); clearly showing the ES, EF, LS
and LF for each activity. Use an early start of 0 for the first activity, and a late finish of the last
activity equal to its early finish. Answer the following questions based on the outcome of the
forward and backward pass.
19. The projects duration is:
a. 22 days
b. 19 days
c. 38 days
d. 61 days

[1]

20. The LF
a.
b.
c.
d.

[1]

of activity C is:
Day 8
Day 11
Day 10
Non of the above

21. The early finish of activity L is:

a. 14 days
b. 20 days
c. 18 days
d. Non of the above

[1]

22. The total float of activity G is:

a. 3 days
b. 0 days
c. 5 days
d. 2 days

[1]

23. The critical path/paths of the project is/are:

a. A-C-J-M
b. A-D-J-K-M
c. A-B-F-J-M
d. A-B-F-J-M & A-D-H-L-M

[1]

24. If the duration of activity I is increased by 4 days, by how many days will the projects
overall duration increase?
[1]
a. 0 days
b. 4 days
c. 6 days
d. 2 days

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Questions 24 to 28 are based on the following situation:

The sum of $285,000 was budgeted for the excavation of 120,000m3 of earth on a construction
site. At this point in time 95,000m3 of excavation is complete and the recorded expenditure is
$237,237. The schedule at this point in time was to excavate 90,000m 3 with a cost of $213,750.

Space for Earned Values Calculations

EV = (95,000/120,000) * $285,000 = $225,625

CV = BCWP ACWP = $225,625 - $237,237 = $11,612
SV = BCWP BCWS = $225,625 - $213,750 = $11,875
EAC = ETC + AC = ($285,000 -$225,625) + $237,237 = $296,612

25. The earned value of the project at this point in time is:
a. $237,237
b. $225,625
c. $213,750
d. $230,750

[1]

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26. The cost variance of the project at this point in time is:
a. -$44,763
b. $0
c. $11,875
d. -$11,612

[1]

27. The schedule variance of the project at this point in time is:
a. -$44,763
b. $0
c. $11,875
d. -$11,612

[1]

28. Assuming that variances are atypical, i.e. ETC = BAC - EV, the EAC for this project is:
[1]
a. $296,612
b. $261,613
c. $308,487
d. $285,000
29. Which one of the following statements best describes the current performance of the
project?
[1]
a. The project is currently over budget and behind schedule
b. The project is currently below budget and ahead schedule
c. The project is currently below budget and behind schedule
d. The project is currently over budget and ahead of schedule

30. Which one of the following expressions establishes economic equivalence of the cash flows at
t=2?
[1]

a.
b.
c.
d.

M(F/P,i%,2)+$B(P/A,i%,5)+x(P/G,i%,5)
M(F/P,i%,1)+$B(P/A,i%,4)+x(P/G,i%,5)
M(F/P,i%,1)+$B(P/F,i%,3)+ $B+x(P/F,i%,4)+$B+2x(P/F,i%,5)+$B+3x(P/F,i%,6)
M(F/P,i%1)+[$B+x(A/G,i%,4)](P/A,i%,4)

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31. An engineer purchases a piece of equipment for $1000 and spends $90 per year on
maintenance. During the fourth year, a major overhaul cost of $300 is expected. Benefits
from use of the equipment follow an arithmetic gradient series with G = $50. At the end of
six years the engineer sells the equipment for $400. Which one of the following cash flow
diagrams represents the aforementioned transaction from the engineers viewpoint?
[1]
$1000

$700

$250
$200
$150
$50

$100

$90

$90

$90

a.

$90

$90

$390

$610

$160
0
1

$10

$60

$40
$190

b.

$1000
$790

$590
$340
$240
$190
$140
0
1

c.

$1000

$590
$340
$240
$190
$140
0
1

$790

d.

$1000

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32. From the cash flow diagram, find the value of A that will establish economic equivalence with
the given deposit and withdrawals at an interest rate of 12%.
[4]

Space for question 32 calculations

A (F/A,12%,5) + $1000(F/P,12%,6) = $4000(P/A,12%,4) +

$1000(P/G,12%,4) + $10,000(P/F,12%,6)
A(6.353) + $1000(1.974) = $4000(3.037) + $1000(4.127) + $10,000(0.5066)
6.353A + $1974 = $21,341
A = $3048