Omis 352 ch 7 quiz

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

B. The earned value minus the actual cost

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

False

Analogous estimates are the most accurate technique to estimate costs.

False

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

False

Estimates should become more accurate as time progresses.

True

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

True

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

True

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

True

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

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

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.

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

b. cost control

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

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

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

• a. revenues minus expenditures.

_ 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

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.

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

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 O d.rough order of magnitude

• b. budgetary

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

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