SCMA 350 CH 9

Analogous estimating is the most detailed, time consuming and accurate way to estimate.

F

"Unknown unknowns" are unexpected events which can occur when the project is underway. All of the following accurately describe an implication associated with unknown unknowns EXCEPT:

They are usually discovered during risk identification

There are many causes of variation in project costs. Which of the following 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.

All of the following factors must be in place in order to develop an analogous estimate effectively EXCEPT: a. An organization must know details behind the time value of money. b. An organization must know how the proposed project differs from the previous project. c. An organization must have experience in performing similar projects. d. An organization must know how much previous projects actually cost.

a. An organization must know details behind the time value of money.

Which estimating technique uses historical data from a similar project as a starting point for creating a time or cost estimate?

analogous estimating

All of the following are among the benefits realized as a consequence of developing a cost management plan EXCEPT: a.It shows how to develop and share relevant, accurate and timely information that stakeholders can use to make intelligent and ethical decisions. b. It documents how the business case should be created c. It helps stakeholders to focus on schedule and performance as well as cost. d. It provides feedback that shows how the project's success is related to business objectives.

b. It documents how the business case should be created

Which estimating technique decomposes the work into detailed pieces for which estimates are prepared and then aggregated into a total quantity for the project?

bottom-up estimating

All of the following items describe an aspect of life cycle costing EXCEPT: a. Life cycle cost includes the cost of creating the project and using the result. b. Many project selection decisions are made based upon life cycle cost. c. Life cycle cost only includes the project cost from initiating through closing d. Project managers may need to consider product disposition costs to calculate total life cycle cost.

c. Life cycle cost only includes the project cost from initiating through closing

The approved time-phased project budget, excluding any management reserves, which can be changed only through formal change control procedures and is used as a basis of comparing actual results, is called a ____:

cost baseline

The process of developing an approximation of the cost of the monetary resources needed to complete project activities is known as:

estimate cost

Projects often include indirect costs that are not associated directly with one specific project. Which of the following items are most typically considered to be indirect costs?

executive salaries, utilities and insurance

What type of cost is incurred when a project must be conducted faster than normal, and overtime for workers and / or extra charges for rapid delivery from suppliers are necessary?

expedited costs

Costs that repeat as project work continues such as writing code are appropriately classified as:

recurring costs

Which of the following terms best describes a provision in the project management plan to mitigate cost and / or schedule risk?

reserve

Generally, parametric estimating requires less information and time than analogous estimating.

F

Decisions related to fixed and variable costs are very sensitive to changes in volume related factors and project scope.

T

Direct costs typically include the cost of direct labor as well as other direct costs for items such as material, travel, subcontracts and computer time.

T

Estimate cost is the process of developing an approximation of the monetary resources needed to complete project activities.

T

Fixed costs remain the same regardless of the size or volume of work, while variable costs vary directly with volume of use.

T

In addition to optimizing project life cycle costs, value engineering can also be used to improve quality or expand market share.

T

Most projects will employ bottom-up estimating at some point to serve as a basis for estimating cash flow needs and for controlling the project.

T

On small projects, the cost management plan may simply address the accuracy of estimating, the source of funding and cost reporting procedures.

T

Plan cost management is the process that establishes the policies, procedures and documentation for planning, managing, expending, and controlling project costs.

T

Project managers should not lie to themselves or others regarding project costs.

T

Regardless of what method is used to estimate project costs, supporting detail should be provided.

T

Special cause variation arises when something out of the ordinary occurs.

T

Vendor bid analysis is used to determine whether the price being asked by the vendors appears to be reasonable.

T

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

A contingency reserve is an amount of the project budget withheld for management control purposes, for unforeseen work that is within the scope.

F

Early in a project when very little detail is known about a project, it is impractical to render even a rough estimate of the final project cost.

F

Inflating the value of future revenue and cost streams to account for the time value of money enables better project decisions.

F

Recurring costs tend to occur during project planning and closing while nonrecurring costs tend to occur during project execution.

F

The component of the project management plan that describes how costs will be planned, structured and controlled is called the project financial plan.

F

Typically, expedited costs are preferred over regular costs.

F

Both normal and special cause variation add to project cost and need to be considered by project managers.

T

Cost estimating is linked very closely with scope, schedule and resource planning.

T

A milestone is a typical measuring point used when establishing cost control. Which of the following DOES NOT accurately describes the use of cost control milestones?

Milestones are developed during risk planning.

Complex projects such as research and development for new products often employ rolling wave planning to estimate costs. Which of the following best describes "rolling wave" planning?

Project managers render a definitive estimate for the first stage and an order of magnitude estimate for the remainder of the project.

Events discovered during Identify Risks that may or may not occur are often categorized as:

known unknowns

The documentation of a project cost estimate generally requires substantial supporting detail to include all of these EXCEPT:

management reserve needs

Activity based costing allocates indirect costs to fixed costs based on different types of cost drivers. Which of the following is one of the cost drivers that serve as a basis of cost allocation?

number of units produced

Which estimating technique uses an algorithm to calculate cost or duration based on historical data and other project parameters?

parametric estimating