SPM Chapter 7
Any new technology or business process is untested and has inherent risks.
True
Cost budgeting provides information for project funding requirements.
True
Estimates are usually done at various stages of a project and should become more accurate as time progresses.
True
If a project manager gets sick for two weeks or an important supplier goes out of business, management reserve could be set aside to cover the resulting costs.
True
Many projects that are started never finish because of cost management problems.
True
Many projects, particularly information technology projects, do not have good planning information, so tracking performance against a plan might produce misleading information.
True
Most organizations have a well-established process for preparing budgets.
True
Project managers must conduct cash flow analysis to determine net present value.
True
ROM estimates can be referred to as a ballpark estimate, a guesstimate, a swag, or a broad gauge.
True
____________________ and SPI less than one or less than 100 percent indicate problems.
CPI - Cost performance index - Cost performance index (CPI)
____ is a method for determining the estimated annual costs and benefits for a project and the resulting annual cash flow. a. Life cycle costing c. Cost estimating b. Profit margin analysis d. Cash flow analysis
Cash flow analysis
The WBS is not a required input to the cost budgeting process.
False
The people who develop software cost estimates often have a great deal of experience with cost estimation.
False
There does not need to be a change control system to define procedures for changing the cost baseline.
False
When deciding what projects to invest in or continue, you should include sunk costs.
False
When developing an estimate for a large software project, estimates cannot be made before clear system requirements have been produced.
False
The cost management plan is part of the overall project management plan.
True
The formulas for variances and indexes start with EV, the earned value.
True
When justifying investments in new information systems and technology, the focus should only be on revenues or expenses.
False
The main outputs of the ____________________ process are a cost performance baseline, project funding requirements, and project document updates.
cost budgeting
The main outputs of the ____________________ process are work performance measurements, budget forecasts, organizational process asset updates, change requests, project management plan updates, and project document updates.
cost control
In practice, many people find that using a combination or hybrid approach involving analogous, bottom up, and/or parametric modeling provides the best ____________________.
cost estimates
A(n) ____________________ is a document that describes how the organization will manage cost variances on the project.
cost management plan
A(n) ____ might provide an estimate of $50 per line of code for a software development project based on the programming language the project is using, the level of expertise of the programmers, the size and complexity of the data involved, and so on. a. analogous cost estimate c. bottom-up estimate b. parametric model d. reserve analysis
parametric model
In general, ____________________ numbers for cost and schedule variance indicate problems in those areas.
negative
____ involve estimating individual work items or activities and summing them to get a project total. a. Actual estimates c. Bottom-up estimates b. Parametric estimates d. Analogous estimates
Bottom-up estimates
____ is the earned value minus the actual cost. a. SV c. CPI b. CV d. SPI
CV
____ is a project performance measurement technique that integrates scope, time, and cost data. a. Cost baseline c. Constructive cost modeling b. Earned value management d. Parametric modeling
Earned value management
____________________ considers the total cost of ownership, or development plus support costs, for a project.
Life cycle costing
____ is the earned value minus the planned value. a. SV c. CPI b. CV d. SPI
SV
____ should be forgotten. a. Sunk costs c. Direct costs b. Indirect costs d. Intangible costs
Sunk costs
Every cost estimate is unique.
True
A(n) ____________________ is the original project plan plus approved changes.
baseline
The main outputs of the ____________________ process are activity cost estimates, basis of estimates, and project document updates.
cost estimating
A ____ is done very early in a project or even before a project is officially started. a. budgetary estimate c. rough order of magnitude estimate b. definitive estimate d. final estimate
rough order of magnitude estimate
A ____ provides an estimate of what a project will cost. a. budgetary estimate c. rough order of magnitude estimate b. definitive estimate d. final estimate
rough order of magnitude estimate
A large percentage of total project costs are often labor costs.
True
Preparing cost estimates is a job for accountants.
False
Using simplified percentage complete amounts for a one-year project with weekly reporting and an average task or work packet size of one week, you can expect about a(n) ____ percent error rate. a. 1 c. 11 b. 5 d. 15
1 COMPLETION
Three separate surveys of software project cost overruns found that the average cost overrun for all of the projects in their survey samples (not just unsuccessful projects) were ____ percent. a. 13-14 c. 33-34 b. 23-24 d. 43-44
33-34
The Standish Group's CHAOS studies reported an average cost overrun for unsuccessful IT projects ranged from 180 percent in 1994 to ____ percent in 2004. a. 28 c. 56 b. 43 d. 73
56
____ involves allocating the overall cost estimate to individual work items to establish a baseline for measuring performance. a. Determining the budget c. Controlling costs b. Consolidation of costs d. Estimating costs
A
The ____ is the total direct and indirect costs incurred in accomplishing work on an activity during a given period. a. AC c. RP b. EV d. PV
AC
The ____ is the ratio of earned value to planned value and can be used to estimate the projected time to complete the project. a. SV c. CPI b. CV d. SPI
CPI
____ use the actual cost of a previous, similar project as the basis for estimating the cost of the current project. a. Actual estimates c. Bottom-up estimates b. Parametric estimates d. Analogous estimates
Analogous estimates
The ____ is the ratio of earned value to actual cost and can be used to estimate the projected cost of completing the project. a. SV c. CPI b. CV d. SPI
C
____ allow for future situations that may be partially planned for. a. Contingency reserves c. Unknown unknowns b. Management reserves d. Direct reserves
Contingency reserves
The ____ is an estimate of what it will cost to complete the project based on performance to date. a. CPI c. EAC b. SV d. SPI
EAC
The cost performance index can be used to calculate the ____________________.
EAC - estimate at completion - estimate at completion (EAC)
The ____ is an estimate of the value of the physical work actually completed. a. AC c. RP b. EV d. PV
EV
Variances are calculated by subtracting the actual cost or planned value from ____. a. EV c. PV b. AC d. RP
EV
____ involves developing an approximation or estimate of the costs of the resources needed to complete a project. a. Determining the budget c. Controlling costs b. Consolidation of costs d. Estimating costs
Estimating costs
Parametric models are least reliable when historical information was used to create the model.
False
A definitive estimate should be the least accurate of the three types of estimates.
False
Although information technology projects have a poor track record in meeting project goals, they have a good track record in meeting budget goals.
False
Databases are a common tool for cost estimating, cost budgeting, and cost control.
False
Direct costs cannot be directly attributed to a certain project.
False
If cost variance is a positive number, it means that performing the work cost more than planned.
False
If the cost performance index is less than one or less than 100 percent, the project is under budget.
False
In an earned value chart, when the actual cost line is right on or above the earned value line, costs are less than or equal to planned.
False
Learning curve theory does not apply to the amount of time it takes to complete some tasks.
False
Organizations have a history of spending too much money in the early phases of information technology projects.
False
____ are costs that are not directly related to the products or services of the project, but are indirectly related to performing the project. a. Intangible costs c. Direct costs b. Tangible costs d. Indirect costs
Indirect costs
____________________ costs or benefits are costs or benefits that are difficult to measure in monetary terms.
Intangible
____________________ costs are often much higher for contractors.
Labor
____________________ states that when many items are produced repetitively, the unit cost of those items decreases in a regular pattern as more units are produced.
Learning curve theory
____ helps you develop an accurate projection of a project's financial costs and benefits. a. Profit cycle costing c. Life cycle costing b. Financial costing d. Profit margin costing
Life cycle costing
____________________ allows you to see a big-picture view of the cost of a project throughout its life cycle.
Life cycle costing
____ allow for future situations that are unpredictable. a. Contingency reserves c. Known unknowns b. Management reserves d. Indirect reserves
Management reserves
The ____ is that portion of the approved total cost estimate planned to be spent on an activity during a given period. a. AC c. RP b. EV d. PV
PV
____________________ uses project characteristics in a mathematical model to estimate project costs.
Parametric modeling
____ is the ratio of revenues to profits. a. Profit c. Cost structure b. Profit margin d. Cost margin
Profit margin
____________________ are revenues minus expenditures.
Profits
____________________ has many cost management features to help you enter budgeted costs, set a baseline, enter actuals, calculate variances, and run various cost reports.
Project 2007 - Microsoft Project - Microsoft Project 2007
____ includes the processes required to ensure that a project team completes a project within an approved budget. a. Cost budgeting c. Cost control b. Cost estimating d. Project cost management
Project cost management
____, with assistance from financial experts in their organizations, should create estimates of the costs and benefits of the project for its entire life cycle. a. Financial mangers c. Budget managers b. Project managers d. System managers
Project managers
The ____ is the ratio of actual work completed to the percentage of work planned to have been completed at any given time during the life of the project or activity. a. AC c. RP b. EV d. PV
RP
After you total the EV, AC, and PV data for all activities on a project, you can use the CPI and ____________________ to project how much it will cost and how long it will take to finish the project based on performance to date.
SPI - schedule performance index - schedule performance index (SPI)
____________________ cost is money that has been spent in the past.
Sunk
____ are those costs that an organization can easily measure in dollars. a. Intangible costs c. Tangible costs b. Direct costs d. Indirect costs
Tangible costs
It is helpful to analyze the total dollar value as well as the percentage of the total amount for each major ____________________ category.
WBS - work breakdown structure - work breakdown structure (WBS)
A ____ is used to allocate money into an organization's budget. a. budgetary estimate c. rough order of magnitude estimate b. definitive estimate d. final estimate
budgetary estimate
The project management plan, project funding requirements, work performance data, and organizational process assets are inputs for the process of ____. a. controlling costs c. consolidating costs b. budgeting costs d. estimating costs
controlling costs
A ____ is a time-phased budget that project managers use to measure and monitor cost performance. a. budget baseline c. cost baseline b. ledger d. cost line
cost baseline
In addition to providing input for budgetary estimates, cost budgeting provides a(n) ____________________.
cost baseline
The main goal of the ____ process is to produce a cost baseline for measuring project performance and project funding requirements. a. cost budgeting c. cost control b. cost consolidation d. cost estimating
cost budgeting
A ____ is used for making many purchasing decisions for which accurate estimates are required and for estimating final project costs. a. budgetary estimate c. rough order of magnitude estimate b. definitive estimate d. final estimate
definitive estimate
If the cost estimate will be the basis for contract awards and performance reporting, it should be a ____ and as accurate as possible. a. budgetary estimate c. rough order of magnitude estimate b. definitive estimate d. final estimate
definitive estimate
Project managers should focus on ____, since they can control them. a. sunk costs c. direct costs b. indirect costs d. intangible costs
direct costs
It's important for the team to ____________________ assumptions they made when developing the cost baseline and have several experts review it.
document
Since organizations depend on reliable information technology, there are also huge costs associated with ____. a. work time c. uptime b. technical planning d. downtime
downtime
Information technology project managers need to be able to present and discuss project information in ____________________ terms as well as in technical terms.
financial
Tom DeMarco, a well-known author on software development, suggests ____ reasons for the inaccuracies of many information technology project cost estimates and some ways to overcome them. a. three c. five b. four d. six
four
Many organizations now collect and control an entire suite of projects or investments as one set of interrelated activities in one place, called a(n) ____________________.
portfolio
Using good ____________________ can change the false perception that costs grow and failures are to be expected.
project cost management