CHapter 7 omis 352

The formulas for variances and indexes start with EV, the earned value. True False

True

The project management plan and project funding requirements are inputs of the process of controlling costs. True False

True

Which of the following is true of bottom-up estimates? a. They are most accurate when they involve large, extensive work items. b. They are based on the actual cost of a previous, similar project. C. They are time-intensive and expensive to develop d. They are also known as parametric estimating

C. They are time-intensive and expensive to develop

A budgetary estimate is the most accurate of the three types of estimates. True False

False

A negative schedule variance means that it took lesser than planned to perform the work. True False

False

Analogous estimates are called activity-based costing. True False

False

Analogous estimates are the most accurate technique to estimate costs.

False

Budgetary estimates are made even before a project is officially started. True False

False

Contingency reserves are also known as unknown unknowns. True False

False

If the cost performance index (CPI) is less than 100 percent, the project is under budget.

False

Intangible costs can be easily measured in monetary terms. True False

False

A schedule performance index of one means that the project is on schedule. True False

True

Definitive estimates are made one year or less prior to project completion.

True

Determining the budget involves allocating the project cost estimate to individual work items over time.

True

Estimates should become more accurate as time progresses.

True

Estimates should become more accurate as time progresses. True False

True

If an important supplier goes out of business, management reserves can be set aside to cover the resulting costs. True False

True

It is important for project managers to understand that every cost estimate is unique. True False

True

Parametric models are reliable when the models are flexible in terms of the project's size. True False

True

Project managers must conduct cash flow analysis to determine net present value. True False

True

Spreadsheets are a common tool for cost estimating, cost budgeting, and cost control. True False

True

Supporting details for an estimate include the ground rules and assumptions used in creating the estimate.

True

Supporting details for an estimate include the ground rules and assumptions used in creating the estimate. True False

True

Which of the following is an input of the process of controlling costs? a. Work performance data b. Scope baseline c. Change requests d. Cost forecasts

a. Work performance data

Indirect costs are: a. not directly related to the products or services of a project. b. those that cannot be allocated to projects. c. those that can be easily controlled by managers. d. directly related to performing the project.

a. not directly related to the products or services of a project.

Profits may be defined as: a. revenues minus expenditures. b. revenues plus expenses. c. costs plus revenues. d. expenses plus net income.

a. revenues minus expenditures.

The first step in project cost management is: a. to plan how costs will be managed. b. to develop several estimates of costs for different types of resources. c. to allocate project cost estimates to individual material resources. d. to control project costs and monitor cost performance.

a. to plan how costs will be managed.

_ involves allocating the overall cost estimate to individual work items to establish a baseline for measuring performance. a. Estimating costs b. Determining the budget c. Finalising policies for project costs d. Controlling costs

b. Determining the budget

_____ includes the processes required to ensure that a project team completes a project within an approved budget. a. Project scope management b. Project cost management c. Project time management d. Project quality management

b. Project cost management

Analogous estimates are also known as _____ estimates. a. bottom-up b. parametric c. budgetary d. top-down

d. top-down

A cost estimation tool which involves estimating individual work items or activities and summing them to get a project total is known as a(n) _____ estimate. a. analogous b. budgetary c. parametric d. bottom-up

b. budgetary

A cost estimation tool which is used to allocate money into an organization's budget is known as a _ estimate a. ballpark b. budgetary c. definitive d.rough order of magnitude

b. budgetary

The cost performance index (CPI): a. indicates that a project is under budget if CPI is less than one. b. can be used to estimate the projected cost of completing the project. c. is the ratio of earned value to planned value. d. indicates that the planned and actual costs are equal if CPI is more than one.

b. can be used to estimate the projected cost of completing the project.

Work performance information and cost forecasts are main outputs of the _ process a. cost estimating b. cost control c. cost budgeting d. cost pricing

b. cost control

The process of controlling costs primarily involves: a. finalising the procedures for project costs. b. managing changes to the project budget. c. determining a basis for estimates. d. determining the policies for project costs.

b. managing changes to the project budget.

Cost variance is: a. the rate of performance minus earned value. b. the earned value minus the actual cost. c. the planned value plus actual costs. d. the planned value minus the rate of performance.

b. the earned value minus the actual cost.

Which of the following is true of analogous estimates? a. They are the only technique which do not require expert judgement. b. They use project characteristics in a mathematical model to estimate project costs. c. They are most reliable when previous projects are similar in fact with current projects. d. Their main disadvantage is that they cost more than other techniques.

c. They are most reliable when previous projects are similar in fact with current projects.

A rough order of magnitude estimate can be referred to as a _____ estimate. a. definitive b. final c. ballpark d. budgetary

c. ballpark

Which of the following types of estimate use the actual cost of a previous, similar project as the basis for estimating the cost of the current project? a. Bottom-up estimates b. Definitive estimates c. Parametric estimates d. Analogous estimates

d. Analogous estimates

_____ are those costs that are difficult to measure in monetary terms. a. Tangible costs b. Fixed costs c. Direct costs d. Intangible costs

d. Intangible costs

_____ uses project characteristics in a mathematical model to estimate project costs. a. Bottom-up estimating b. Analogous estimating c. Rough order of magnitude estimating d. Parametric estimating

d. Parametric estimating

Which of the following is an input of the process of controlling costs? a. Change requests b. Scope baseline c. Cost forecasts d. Work performance data

d. Work performance data

A cost estimation tool which involves estimating individual work items or activities and summing them to get a project total is known as a(n) _____ estimate. a. budgetary b. analogous c. parametric d. bottom-up

d. bottom-up

Variances are calculated by subtracting the actual cost from _____. a. schedule variance b. rate of performance c. planned value d. earned value

d. earned value