Chapter 5: Estimating Project Times and Costs

We can push the estimating process down to the work package level for ___ ___ estimates that establish low-cost, efficient methods.

Bottom Up

Establishing cost and time estimates will allow a project manager to do which of the following?

Control the project

The 5- to 10- rule of thumb applies to ___ and ___ goals of a project

Cost Performance

___ costs represent real cash outflows and must be paid as a project progresses.

Direct

G&A overhead costs represent organization costs that are not ___ ___ to a specific project.

Directly Linked

What is a primary reason for using several people to generate a time or cost estimate for a project rather than have a single estimator do all the estimating?

Eliminates extreme estimates.

Which statements are correct about the influence that a planning horizon has upon project estimates?

Estimating is more accurate after the individual work packages have been defined. Near term event estimating is more accurate than long range planning.

Why is top down estimating generally not effective at developing a low cost project estimate?

Estimators may be influenced by the proposed budget.

One of the major advantages of a dedicated project team is the speed gained from concentrated focus and localized project decisions, what is the additional cost of that speed gained?

Personnel are 100% allocated to that project

Why is bottom up estimating generally considered more accurate than top down?

Using the WBS detail allows for more accuracy.

Cost of labor, materials, and equipment are examples of ___ costs.

direct

For projects with a standard time unit of days (most typical), what is the rule of thumb for duration of an individual work package within a work breakdown structure?

1-5 days

True or false: Poorly written scope statements for new technology lead to errors in estimating times and costs.

True

Why is the accuracy of estimates for current events greater than that for more distant events?

Uncertainty increases over time.

Why is past experience the best starting point for creating quality time and cost estimates?

While projects are unique, many elements are similar to past work.

Direct costs are real cash outflows expended as a project progresses and may be influenced by which of the following?

Work Package Leader Project Manager Project Team Member

Why is bottom up estimating generally considered more accurate than top down?

Work packages are individually considered/estimated.

Which of the following factors will influence the quality of a project's time or cost estimate?

Project management structure. Project duration. Organization culture.

The time estimate should represent the ___ level of resources.

normal

Which are project factors that would tend to require a greater level of detail in a work breakdown structure (WBS) used for estimating?

A high degree of project complexity A need for tight budget or time control.

Factors outside of the organization, project team, or project itself may influence which aspect of a time/cost estimate?

Accuracy of the estimate

Which approach to estimating is usually coordinated by a project manager/office and is a "roll up" of individual estimates from work breakdown structure elements?

Bottom up

Estimators should treat each task as ___ of other tasks that might be integrated by the WBS.

Independent

What "people factors" influence the quality of the project estimates?

Individual skills. Familiarity with the task.

Why is keeping task estimates independent of each other needed for sound project planning?

It prevents developing optimistic task time estimates. It considers the uncertainties of individual activities.

What factors inherent to dedicated project team structures will improve the quality of time and cost estimates?

Localized project decisions. Concentrated focus

Work package estimates should assume ___ or ___ conditions, even though every work package will not materialize as planned

Normal Average

Why should project task time, cost, and resource estimates be based on "normal conditions"?

Normal conditions provide a common frame of reference for interpreting the estimate. Normal conditions prevent overly optimistic estimates.

A simple breakdown by ___, most ___, and ___ for task time could provide valuable information regarding time and cost.

Optimistic Likely Pessimistic

What estimating influence is described by the general statement that some organizations encourage padding of estimates while others discourage the practice and want the most realistic and/or accurate estimate?

Organization Culture

Good time and cost estimates are needed within project execution to allow a project manager to do which of the following?

Support decision making Monitor project progress Schedule work

First-line managers' interests may be limited to one ___ or ___ ___

Task Work Package

Which of the following is considered a direct overhead cost?

Temporary rental space for the project team. Salary of the project manager.

All task time estimates need ___ time units.

consistent

Work package estimates should not include allowances for ___

contingencies

Using several people to make an estimate is sometimes called "___"

crowdsourcing

Organizational ___ shapes every dimension of project management.

culture

Top management interests usually center on the total project and major ___ events that mark major accomplishments

milestone

Direct ___ rates more closely pinpoint which resources of the organization are being used in the project.

overhead

Direct project ___ costs can be tied to project deliverables or work packages.

overhead

In some cases people are inclined to ___ estimates.

pad

The ___ factor can influence the quality of time and cost estimates.

people

At the work package level, estimates should be made by the ___ most familiar with the task.

person(s)

Time to implement new ___ has a habit of expanding in an increasing, nonlinear fashion.

technology

Why should time estimates use common units (hours, days, weeks, etc) across all project tasks?

Facilities network analysis

True or false: Direct project overhead is an immediate out-of-pocket expense.

False

Identify the true statements about general and administrative (G&A) overhead costs.

These represent organization costs that are not directly linked to a specific project. These costs include organization costs across all products and projects such as advertising.

A new technology usually carries more ___ and cost ___ than a proven process

Time Risks

Identify the main reasons why the project cost estimate is broken down into direct costs, direct project overhead costs, and general and administrative overhead costs.

To sharpen the control process To improve decision making

___-___ estimates usually are derived from someone who sues experience and/or information to determine the project duration and total cost.

Top Down

Which approach to estimating project time and cost is usually completed by upper management?

Top Down

Which of the following are potential impacts caused by padding time or cost estimates?

chances for realistic estimates are reduced. The project duration and cost are seriously overstated.

Direct costs are clearly ___ to a specific work package

chargeable

Drawing on the expertise of team members who will be responsible helps to build ___ channels early.

communication

Project estimating is a ___ process

complex