Chpter7

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?

Analogous estimates

_____ is a method for determining the estimated annual costs and benefits for a project.

Cash flow analysis

Which of the following is an output of the process of controlling costs?

Cost forecasts

_____ involves allocating the overall cost estimate to individual work items to establish a baseline for measuring performance.

Determining the budget

Soles is a footwear company which has recently set up its store in Ambrosia. To manufacture its products, Soles incurs a range of different costs. Which of the following would be an example of an indirect cost?

Electricity used to run its factories

Which of the following involves developing an approximation of the costs of resources needed to complete a project?

Estimating costs

_____ are those costs that are difficult to measure in monetary terms.

Intangible costs

Which of the following is true of the schedule performance index (SPI)?

It can be used to estimate the projected time to complete the project.

Which of the following is true of earned value?

It is an estimate of the value of the physical work actually completed.

Which of the following is true of a rough order of magnitude estimate?

It provides an estimate of what a project will cost.

_____ helps develop an accurate projection of a project's financial expenses and benefits.

Life cycle costing

Which of the following reserves allows for future situations that are unpredictable?

Management reserves

_____ uses project characteristics in a mathematical model to estimate project costs.

Parametric estimating

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

People lack estimating experience.

_____ includes the processes required to ensure that a project team completes a project within an approved budget.

Project cost management

Which of the following is true of contingency reserves?

They allow for future situations that can be partially planned for.

Which of the following is true of analogous estimates?

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

Which of the following is true of bottom-up estimates?

They are time-intensive and expensive to develop.

Which of the following is true of tangible costs?

They can be easily measured.

Which of the following is an input of the process of controlling costs?

Work performance data

A rough order of magnitude estimate can be referred to as a _____ estimate.

ballpark

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.

bottom-up

A cost estimation tool which is used to allocate money into an organization's budget is known as a _____ estimate.

budgetary

The cost performance index (CPI):

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

One of the main outputs of the _____ process is a cost baseline.

cost budgeting

The main goal of the _____ process is to produce a cost baseline for measuring project performance and project funding requirements.

cost budgeting

Work performance information and cost forecasts are main outputs of the _____ process.

cost control

A _____ estimate is used for making many purchasing decisions for which accurate estimates are required and for estimating final project costs.

definitive

If the cost estimate for a project is a basis for contract awards and performance reporting, it should be a(n) _____ estimate and as accurate as possible.

definitive

Newtech Inc. hires John for the position of a software programmer to work on their new project. Salary paid to John by Newtech Inc. would be an example of _____ costs.

direct

Variances are calculated by subtracting the actual cost from _____.

earned value

The process of controlling costs primarily involves:

managing changes to the project budget.

Indirect costs are:

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

The budget is one of the three values of earned value management and is also known as _____.

planned value

Profits may be defined as:

revenues minus expenditures.

Good Earth, a company manufacturing packaged food products, sets up its stores in Baltonia. However, a year later, the company closes the store down due to high operating costs. In such a scenario, the money spent in paying for the rent of the store in Baltonia would be an example of _____ costs.

sunk

Cost variance is:

the earned value minus the actual cost.

Schedule variance is:

the earned value minus the planned value.

The first step in project cost management is:

to plan how costs will be managed.

Analogous estimates are also known as _____ estimates.

top-down