Chapter 7

46. ____ allow for future situations that are unpredictable. A. Contingency reserves B. Management reserves C. Known unknowns D. Indirect reserves

B. Management reserves

36. ____ is the ratio of revenues to profits. A. Profit B. Profit margin C. Cost structure D. Cost margin

B. Profit margin

38. ____, 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 managers B. Project managers C. Budget managers D. System managers

B. Project managers

42. Project managers should focus on ____, since they can control them. A. sunk costs B. indirect costs C. direct costs D. intangible costs

C. direct costs

47. A ____ provides an estimate of what a project will cost. A. budgetary estimate B. definitive estimate C. rough order of magnitude estimate D. final estimate

C. rough order of magnitude estimate

48. A ____ is done very early in a project or even before a project is officially started. A. budgetary estimate B. definitive estimate C. rough order of magnitude estimate D. final estimate

C. rough order of magnitude estimate

51. ____ use the actual cost of a previous, similar project as the basis for estimating the cost of the current project. A. Actual estimates B. Parametric estimates C. Bottom-up estimates D. Analogous estimates

D. Analogous estimates

40. ____ is a method for determining the estimated annual costs and benefits for a project and the resulting annual cash flow. A. Life cycle costing B. Profit margin analysis C. Cost estimating D. Cash flow analysis

D. Cash flow analysis

34. ____ involves developing an approximation or estimate of the costs of the resources needed to complete a project. A. Determining the budget B. Consolidation of costs C. Controlling costs D. Estimating costs

D. Estimating costs

43. ____ 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 B. Tangible costs C. Direct costs D. Indirect costs

D. Indirect costs

60. The ____ is that portion of the approved total cost estimate planned to be spent on an activity during a given period. A. AC B. EV C. RP D. PV

D. PV (present value)

33. ____ includes the processes required to ensure that a project team completes a project within an approved budget. A. Cost budgeting B. Cost estimating C. Cost control D. Project cost management

D. Project cost management

68. 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 B. CV C. CPI D. SPI

D. SPI (scheduled performance index)

39. Since organizations depend on reliable information technology, there are also huge costs associated with ____. A. work time B. technical planning C. uptime D. downtime

D. downtime

70. 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 B. 5 C. 11 D. 15

A. 1

63. The ____ is the total direct and indirect costs incurred in accomplishing work on an activity during a given period. A. AC B. EV C. RP D. PV

A. AC (actual cost)

45. ____ allow for future situations that may be partially planned for. A. Contingency reserves B. Management reserves C. Unknown unknowns D. Direct reserves

A. Contingency reserves

35. ____ involves allocating the overall cost estimate to individual work items to establish a baseline for measuring performance. A. Determining the budget B. Consolidation of costs C. Controlling costs D. Estimating costs

A. Determining the budget

64. Variances are calculated by subtracting the actual cost or planned value from ____. A. EV B. AC C. PV D. RP

A. EV (earned value)

66. ____ is the earned value minus the planned value. A. SV B. CV C. CPI D. SPI

A. SV (scheduled variance)

44. ____ should be forgotten. A. Sunk costs B. Indirect costs C. Direct costs D. Intangible costs

A. Sunk costs

49. A ____ is used to allocate money into an organization's budget. A. budgetary estimate B. definitive estimate C. rough order of magnitude estimate D. final estimate

A. budgetary estimate

58. The project management plan, project funding requirements, work performance data, and organizational process assets are inputs for the process of ____. A. controlling costs B. budgeting costs C. consolidating costs D. estimating costs

A. controlling costs

56. The main goal of the ____ process is to produce a cost baseline for measuring project performance and project funding requirements. A. cost budgeting B. cost consolidation C. cost control D. cost estimating

A. cost budgeting

65. ____ is the earned value minus the actual cost. A. SV B. CV C. CPI D. SPI

B. CV (cost variance)

62. The ____ is an estimate of the value of the physical work actually completed. A. AC B. EV C. RP D. PV

B. EV (earned value)

59. ____ is a project performance measurement technique that integrates scope, time, and cost data. A. Cost baseline B. Earned value management C. Constructive cost modeling D. Parametric modeling

B. Earned value management

50. A ____ is used for making many purchasing decisions for which accurate estimates are required and for estimating final project costs. A. budgetary estimate B. definitive estimate C. rough order of magnitude estimate D. final estimate

B. definitive estimate

55. 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 B. definitive estimate C. rough order of magnitude estimate D. final estimate

B. definitive estimate

54. 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 B. four C. five D. six

B. four

53. 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 B. parametric model C. bottom-up estimate D. reserve analysis

B. parametric model

32. 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 B. 23-24 C. 33-34 D. 43-44

C. 33-34

31. 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 B. 43 C. 56 D. 73

C. 56

52. ____ involve estimating individual work items or activities and summing them to get a project total. A. Actual estimates B. Parametric estimates C. Bottom-up estimates D. Analogous estimates

C. Bottom-up estimates

67. 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 B. CV C. CPI D. SPI

C. CPI (cost performance index)

69. The ____ is an estimate of what it will cost to complete the project based on performance to date. A. CPI B. SV C. EAC D. SPI

C. EAC (estimate at completion)

37. ____ helps you develop an accurate projection of a project's financial costs and benefits. A. Profit cycle costing B. Financial costing C. Life cycle costing D. Profit margin costing

C. Life cycle costing

61. 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 B. EV C. RP D. PV

C. RP (rate of performance)

41. ____ are those costs that an organization can easily measure in dollars. A. Intangible costs B. Direct costs C. Tangible costs D. Indirect costs

C. Tangible costs

57. A ____ is a time-phased budget that project managers use to measure and monitor cost performance. A. budget baseline B. ledger C. cost baseline D. cost line

C. cost baseline