Chapter 7 Project Management

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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


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