Project Management chapter 10

The approved project budget with contingency reserves serves as a (n) _________ for project control.

Baseline

Variations in project costs can be partially explained by the presence of certain events associated with a project. _______ are events discovered during planning that can be estimated directly.

Known knowns

A project cost management plan needs to be consistent with the methods of the __________.

Parent Organization

Where are resource Standard Rates assigned?

The Resource Sheet

Cost management plan

A continuous activity which requires re-forecasting and refinement of the cost estimates throughout the project

Value engineering

A formal, structured process to ensure project meet or exceed cost objectives without compromising quality, divides the total project scope into components, examine each individual component for alternatives that offer benefits

Bottom up estimating

A method of estimating what is needed to meet the requirements of each of the lower, more detail pieces of work, preferably the lowest level of WBS work elements, and these Estimates are than aggregated into a total quantity

Estimate

A quantified assessment of the likely amount; it should always include an indication of accuracy

Parametric estimating

An estimating technique that uses a statistical relationship between historical data and other variables. (i.e. Square footage in construction, lines of code in software development) how to calculate an estimate for: scope, cost, and duration

Analogous estimating

An estimating technique that uses the values of parameters on a scale, such as a scope, cost, budget, and duration or measures of scales such as size, weight, and flexibility from a previous and similar activity or project as the basis for estimating the same parameter or measure for a future activity or project respectively

What factors must be in place in order to develop an analogous estimate effectively?

An organization must know how much previous projects actually cost. An organization must have experience in performing similar projects. An organization must know how and to what extent the proposed project differs from the previous project.

________ is an estimating technique that uses the cost of a similar, previous project as a starting point for creating a cost estimate for a new project.

Analogous Estimating

Jason, a project manager, is working with his team to estimate the total cost of developing a web-based CRM system. After reviewing the planned scope of work with Jason, his sponsor suggests that Jason use the budget from a previous, similar project as the basis for his project budget. The estimating process that Jason's sponsor is using is called _____________.

Analogous estimating

What is the first thing the project manager must do before developing a budget in MS Project?

Assign costs to various resources in the project

The budget within the cost baseline that is allocated for identified risks, for which mitigating responses are developed, is called the ______.

Contingency reserve

_____ is the process of monitoring the project costs and managing changes to the cost baseline.

Control Cost

The ________ defines the cost baseline, modifies it whenever necessary, and uses it for monitoring and controlling costs.

Cost Management Plan

A(n) ______is used to compare actual project spending with planned expenditures over time to determine if corrective action is needed.

Cost baseline

_____________ is "the process of aggregating the estimated costs of individual activities or work packages to establish an authorized time-phased project budget or cost baseline".

Determine budget

Activity cost estimates, the basis of estimates and other supporting detail, are outputs of what process?

Estimate Costs

Reserve

Extra money in the project budget to be used if necessary; usually if a risk event occurs

(T/F) Analogous estimating is the most detailed, time consuming and accurate way to estimate.

F

(T/F) The project scope does not come into play when considering fixed and variable cost choices.

F

The task cost value is the sum of all assignment cost values, plus any task's _____ cost value.

Fixed

__________ costs are those that remain the same regardless of the size or volume of work.

Fixed

One of the principle benefits of creating a bottom-up estimate during planning is that the estimate:

Is very accurate.

The amount of project budget reserved for unforeseen project work that addresses the "unknown unknowns" that can affect a project is the _____.

Management reserve

What items describe an aspect of life cycle costing?

Many project selection decisions are made based upon life cycle cost. Project managers may need to consider disposal costs of the product after its useful life is complete to calculate total life cycle cost. Life cycle cost includes the cost of both creating the project and of using the result of the project during its useful life.

Contingency reserve

Money assigned to the project and allocated for identified risks for which contingent responses are developed

Management Reserve

Money assigned to the project for unknown possible cost and the money that senior management controls

As the project progresses from initiation through planning and executing, and additional detail is gathered, the range of values for the project cost estimate will:

Narrow

Ellen is estimating how much it will cost to re-carpet the executive conference room. After selecting the grade and pattern of carpet, Ellen multiplies the carpet price per square yard times the number of square yards in the conference room to derive the total price of the material. This estimating method is called ______.

Parametric estimating

The "process that establishes the policies, procedures, and documentation for planning, managing, expending, and controlling project costs" is referred to as:

Plan Cost Management

Estimate cost

Process of developing an approximation of monetary resources needed to complete project activities

Plan cost management

Process to determine how to plan, estimate, and control project costs

What does the Task Usage view show you in addition to the Gantt Chart view?

Resource Titles

In a time-phased project budget, where the cumulative cost is shown for the project at each point in time, the cumulative cost curve is ___ shaped.

S shaped

How is the task cost calculated?

Summing all the assignment costs for a task

(T/F) A contingency reserve is money assigned to the project and allocated for identified risks for which contingent responses are developed.

T

(T/F) A project manager needs to ensure that the cumulative amount of cash coming into the project either from internal budgeting or from customer payments meets or exceeds the demands for paying cash out.

T

(T/F) Cost estimating is linked very closely with scope, schedule and resource planning.

T

(T/F) Fixed costs remain the same regardless of the size or volume of work, while variable costs vary directly with volume of use.

T

(T/F) Plan Cost Management is the process to determine how to plan, estimate, and control project costs.

T

(T/F) Regardless of what method is used to estimate project costs, supporting detail should be provided.

T

(T/F) Value engineering is aimed at increasing the value or productivity of a work element while minimizing the cost.

T

(T/F) Vendor bid analysis is used to determine whether the price being asked by the vendors appears to be reasonable.

T

Cost baseline

That part of the project baseline that handles the amount of money the project is predicted to cost and on the other side when that money will be spent. It is an approved budget usually in a time distribution format used to estimate, monitor, and control the overall cost performance of the project

Determine budget

The process of aggregating the estimated cost of individual activities Oreburg packages to establish an authorized cost baseline

Control cost

The process of monitoring the project costs and managing changes to the cost baseline

How is the assignment cost calculated?

The resource standard rate multiplied by the work hours

There are many causes of variation in project costs. What accurately describes the nature of this variation?

Variation occurs in all work processes and the novelty associated with most projects creates many opportunities for variation.

The _________is the approved budget, usually in a time distribution format, that is used to estimate, monitor, and control the overall cost performance of the project.

cost baseline.

Projects often include indirect costs that are necessary to keep the organization running, but are not associated with one specific project. What items are most typically considered to be indirect costs?

executive salaries, utilities and insurance

What estimating technique uses a statistical relationship between historical data and other variables (e.g., square footage in construction, lines of code in software development) to calculate an estimate for scope, cost and duration?

parametric estimating

Costs that repeat as project work continues such as the cost of writing code or laying bricks are appropriately classified as:

recurring costs

What terms best describes extra money in the project budget to be used if necessary - usually if a risk event occurs?

reserve

Using _____________ level cost estimates, a projected duration and cost estimate of the entire project can be provided to project stakeholders when the complete detail of later project stages is not known.

summary

The documentation of a project cost estimate generally requires substantial supporting detail to include what?

the estimating methods and a range of possible outcomes. a description of scope. assumptions and constraints.