Ch 7

definitive

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

bottom-up

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.

budgetary

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

top-down

Analogous estimates are also known as _____ estimates.

the earned value minus the actual cost.

Cost variance is:

sunk

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.

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.

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

Indirect costs are:

cost budgeting

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

revenues minus expenditures.

Profits may be defined as:

the earned value minus the planned value.

Schedule variance is:

cost budgeting

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

managing changes to the project budget.

The process of controlling costs primarily involves:

earned value

Variances are calculated by subtracting the actual cost from _____.

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

Which of the following is true of contingency reserves?

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

Which of the following is true of earned value?

They can be easily measured.

Which of the following is true of tangible costs?

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

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

Management reserves

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

Analogous estimates

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?

ballpark

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

direct

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.

Electricity used to run its factories

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?

planned value

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

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

The cost performance index (CPI):

to plan how costs will be managed.

The first step in project cost management is:

Estimating costs

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

Work performance data

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

Cost forecasts

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

People lack estimating experience.

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

It provides an estimate of what a project will cost.

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

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

Which of the following is true of analogous estimates?

They are time-intensive and expensive to develop.

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

cost control

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

Intangible costs

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

Life cycle costing

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

Project cost management

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

Determining the budget

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

Cash flow analysis

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

Parametric estimating

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