Ch. 7 Quiz: Project Cost Management

Analogous estimates are called activity-based costing.

False

Contingency reserves are also known as unknown unknowns.

False

When deciding what projects to invest in or continue, one should include sunk costs.

False

Which statement is true of an order of magnitude estimate?

It provides an estimate of what a project will cost

Which is most likely to be a reason for inaccuracies in information technology cost estimates?

People lack estimating experience

Which statement is true of tangible costs?

They can be easily measured

One of the reasons why project cost estimates are inaccurate is because human beings are biased toward underestimation.

True

Which process involves allocating the overall cost estimate to individual work items to establish a baseline for measuring performance?

determining the budget

What type of management includes the processes required to ensure that a project team completes a project within an approved budget?

project cost management

How are profits best defined?

revenues minus expenditures