CIA, CISA, Internal Audits

CISA/CIA EXAM PRACTICE QUESTION: PROJECT MANAGEMENT QUESTION 08/10/2017

As an Internal Auditor or an Information Systems Auditor, you will be constantly faced with project choices. In my career as an auditor, there are instances where I had to make critical choices on how to plan the team or to select the best route to take given the circumstances that I faced. Here is an example on critical path method (CPM) which may be tested in your CIA/CISA exam.

 

Ransom’s Question on 08/10/2017 – Project Management Question.

 

Company “ABC Machines” builds industrial machines and uses the critical path method (CPM) to monitor the construction of industrial machines. The company is currently 3 weeks behind schedule in the construction of a degerminator machine which is subject to a R250,000-per-week completion penalty. Path A-B-C-F-G-H-I has a normal completion time of 20 weeks, and critical path A-D-E-F-G-H-I has a normal completion time of 22 weeks. The following activities can be crashed:

 Activity Cost to Crash 1 week Cost to Crash 2 weeks
BC R150,000 R220,000
DE R250,000 R530,000
EF R100,000 R550,000

 

Company “ABC Machines” desires to reduce the normal completion time of the degerminator job and, at the same time, report the highest possible income for the year. ABC Machines should crash which activities?

Select an answer:

A – Activity BC 2 weeks.

B – Activity BC 1 week and activity EF 1 week.

C – Activity DE 1 week and activity EF 1 week.

D – Activity EF 2 weeks.

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