Chapter 7 Project 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 tangible costs
they can be easily measured
T/F: project managers must conduct cash flow analysis to determine net present value
True
a cost management plan can include organizational procedures links, control thresholds and process descriptions T/F
True
a rough order of magnitude 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
bottom up
a cost estimation tool which is used to allocate money into an organizations budget is known as a ______ estimate
budgetary
the cost performance index (CPI)
can be used to estimate the projected cost of completing the project
______ is a method for determining the estimated annual costs and benefits for a project
cash flow analysis
one of the main outputs of the _______ process is a cost baseline
cost budgeting
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
involves allocating the overall cost estimate to individual work items to establish a baseline for measuring performance
determining the budget
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
profits may be defined as
revenues - expenditures
analogous estimates are also know as _____ estimates
top down
estimates should become more accurate as time progresses t/f
true
which of the following is an output of the process of controlling costs
cost forecasts
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 varience is
the earned value minus the actual cost
schedule variance is
the earned value minus the planned value
the formulas for variances and indexes start with EV, the earned value t/f
true
which of the following types of estimate use the actual cost of a previous, similar project as the basis for estimating the cost of a current project
analogous estimates
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 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 and estimate of what a project will cost
______ helps develop an accurate projection of a projects financial expenses and benefits
life cycle costing
which of the following reserves allows for future situations that are unpredictable
management reserves
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
______ 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 tech costs estimates
people lack estimating experience
the budget is one of the three values of earned value management and is also know as ____
planned value
if an important supplier goes out of business management reserves can be set aside to cover the resulting costs T/F
True
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
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 analogous estimates
they are most reliable when previous projects are similar in face with current projects
which of the following is true of bottom up estimates
they are time intensive and expensive to develop
the first step in project management is
to plan how costs will be managed
T/F: It project managers must be able to present and discuss project info both in financial and technical terms
true
a schedule performance index of one means that the project is on schedule t/f
true
definitive estimates are made one year or less prior to project completion T/F
true
determining the budget involves allocating the project cost estimate to individual work items over time
true
in a bottom up estimate, the size of the individual work items is one of the factors that drives the accuracy of the estimates t/f
true
it is important for project managers to understand that every cost estimate is unique t/f
true
one of the reasons why project cost estimates are inaccurate is because human beings are biased towards underestimation t/f
true
parametric models are reliable when the models are flexible in terms of the projects size t/f
true
spreadsheets are a common tool for cost estimating, cost budgeting, and cost control t/f
true
the project management plan and project funding requirements are inputs of the process of controlling costs t/f
true
which of the following is an input of the process of controlling costs
work performance data
