Information Systems Project Mgmt - Chapter 7 Quiz
Microsoft Project
____________________ has many cost management features to help you enter budgeted costs, set a baseline, enter actuals, calculate variances, and run various cost reports.
False
T/F: Organizations have a history of spending too much money in the early phases of information technology projects.
False
T/F: Parametric models are least reliable when historical information was used to create the model.
False
T/F: Preparing cost estimates is a job for accountants.
True
T/F: Project managers must conduct cash flow analysis to determine net present value.
True
T/F: ROM estimates can be referred to as a ballpark estimate, a guesstimate, a swag, or a broad gauge.
False
T/F: The WBS is not a required input when developing a cost estimate.
True
T/F: The cost management plan is part of the overall project management plan.
True
T/F: The formulas for variances and indexes start with EV, the earned value.
Project cost management
____ includes the processes required to ensure that a project team completes a project within an approved budget.
Project managers
____, with assistance from financial experts in their organizations, should create estimates of the costs and benefits of the project for its entire life cycle.
Bottom-up estimates
____ involve estimating individual work items or activities and summing them to get a project total.
Determining the budget
____ involves allocating the overall cost estimate to individual work items to establish a baseline for measuring performance.
CV (cost variance)
____ is the earned value minus the actual cost.
direct costs
Project managers should focus on ____, since they can control them.
False
T/F: If cost variance is a positive number, it means that performing the work cost more than planned.
False
T/F: In an earned value chart, when the actual cost line is right on or above the earned value line, costs are less than or equal to planned.
False
T/F: Learning curve theory does not apply to the amount of time it takes to complete some tasks.
True
T/F: Many projects that are started never finish because of cost management problems.
True
T/F: Many projects, particularly information technology projects, do not have good planning information, so tracking performance against a plan might produce misleading information.
True
T/F: Most organizations have a well-established process for preparing budgets.
EAC (estimate at completion)
The cost performance index can be used to calculate the ______________________________.
cost management plan
A(n) ____________________ is a document that describes how the organization will manage cost variances on the project.
baseline
A(n) ____________________ is the original project plan plus approved changes.
cost baseline
A ____ is a time-phased budget that project managers use to measure and monitor cost performance.
rough order of magnitude estimate
A ____ is done very early in a project or even before a project is officially started.
definitive estimate
A ____ is used for making many purchasing decisions for which accurate estimates are required and for estimating final project costs.
budgetary estimate
A ____ is used to allocate money into an organization's budget.
rough order of magnitude estimate
A ____ provides an estimate of what a project will cost.
SPI (schedule performance index)
After you total the EV, AC, and PV data for all activities on a project, you can use the CPI and ___________________________________ to project how much it will cost and how long it will take to finish the project based on performance to date.
definitive estimate
If the cost estimate will be the basis for contract awards and performance reporting, it should be a ____ and as accurate as possible.
cost baseline
In addition to providing input for budgetary estimates, cost budgeting provides a(n) ____________________.
negative
In general, ____________________ numbers for cost and schedule variance indicate problems in those areas.
cost estimates
In practice, many people find that using a combination or hybrid approach involving analogous, bottom up, and/or parametric modeling provides the best ____________________.
financial
Information technology project managers need to be able to present and discuss project information in ____________________ terms as well as in technical terms.
WBS (work breakdown structure)
It is helpful to analyze the total dollar value as well as the percentage of the total amount for each major ______________________________ category.
document
It's important for the team to ____________________ assumptions they made when developing the cost baseline and have several experts review it.
downtime
Since organizations depend on reliable information technology, there are also huge costs associated with ____.
False
T/F: A definitive estimate should be the least accurate of the three types of estimates.
56
The Standish Group's CHAOS studies reported an average cost overrun for unsuccessful IT projects ranged from 180 percent in 1994 to ____ percent in 2004.
EV (earned value)
The ____ is an estimate of the value of the physical work actually completed.
EAC (estimate at completion)
The ____ is an estimate of what it will cost to complete the project based on performance to date.
PV (planned value)
The ____ is that portion of the approved total cost estimate planned to be spent on an activity during a given period.
RP (rate of performance)
The ____ is the ratio of actual work completed to the percentage of work planned to have been completed at any given time during the life of the project or activity.
CPI (cost performance index)
The ____ is the ratio of earned value to actual cost and can be used to estimate the projected cost of completing the project.
SPI (schedule performance index)
The ____ is the ratio of earned value to planned value and can be used to estimate the projected time to complete the project.
AC (actual cost)
The ____ is the total direct and indirect costs incurred in accomplishing work on an activity during a given period.
project cost management
Using good _________________________ can change the false perception that costs grow and failures are to be expected.
Sunk costs
____ should be forgotten.
Life cycle costing
____ helps you develop an accurate projection of a project's financial costs and benefits.
Contingency reserves
____ allow for future situations that may be partially planned for.
parametric model
A(n) ____ might provide an estimate of $50 per line of code for a software development project based on the programming language the project is using, the level of expertise of the programmers, the size and complexity of the data involved, and so on.
True
T/F: A large percentage of total project costs are often labor costs.
False
T/F: Although information technology projects have a poor track record in meeting project goals, they have a good track record in meeting budget goals.
True
T/F: Any new technology or business process is untested and has inherent risks.
True
T/F: Cost budgeting provides information for project funding requirements.
False
T/F: Databases are a common tool for cost estimating, cost budgeting, and cost control.
False
T/F: Direct costs cannot be directly attributed to a certain project.
True
T/F: Estimates are usually done at various stages of a project and should become more accurate as time progresses.
True
T/F: Every cost estimate is unique.
True
T/F: If a project manager gets sick for two weeks or an important supplier goes out of business, management reserve could be set aside to cover the resulting costs.
False
T/F: If the cost performance index is less than one or less than 100 percent, the project is under budget.
False
T/F: The people who develop software cost estimates often have a great deal of experience with cost estimation.
False
T/F: There does not need to be a change control system to define procedures for changing the cost baseline.
False
T/F: When deciding what projects to invest in or continue, you should include sunk costs.
False
T/F: When developing an estimate for a large software project, estimates cannot be made before clear system requirements have been produced.
False
T/F: When justifying investments in new information systems and technology, the focus should only be on revenues or expenses.
cost budgeting
The main goal of the ____ process is to produce a cost baseline for measuring project performance and project funding requirements
cost budgeting
The main outputs of the ____________________ process are a cost performance baseline, project funding requirements, and project document updates.
cost control
The main outputs of the ____________________ process are work performance measurements, budget forecasts, organizational process asset updates, change requests, project management plan updates, and project document updates.
controlling costs
The project management plan, project funding requirements, work performance data, and organizational process assets are inputs for the process of ____.
33-34
Three separate surveys of software project cost overruns found that the average cost overrun for all of the projects in their survey samples (not just unsuccessful projects) were ____ percent.
four
Tom DeMarco, a well-known author on software development, suggests ____ reasons for the inaccuracies of many information technology project cost estimates and some ways to overcome them.
1
Using simplified percentage complete amounts for a one-year project with weekly reporting and an average task or work packet size of one week, you can expect about a(n) ____ percent error rate.
EV (earned value)
Variances are calculated by subtracting the actual cost or planned value from ____.
Management reserves
____ allow for future situations that are unpredictable.
portfolio
Many organizations now collect and control an entire suite of projects or investments as one set of interrelated activities in one place, called a(n) ____________________.
cost estimating
The main outputs of the ____________________ process are activity cost estimates, basis of estimates, and project document updates.
Indirect costs
____ are costs that are not directly related to the products or services of the project, but are indirectly related to performing the project.
Tangible costs
____ are those costs that an organization can easily measure in dollars.
Estimating costs
____ involves developing an approximation or estimate of the costs of the resources needed to complete a project.
Cash flow analysis
____ is a method for determining the estimated annual costs and benefits for a project and the resulting annual cash flow.
Earned value management
____ is a project performance measurement technique that integrates scope, time, and cost data.
SV (schedule variance)
____ is the earned value minus the planned value.
Profit margin
____ is the ratio of revenues to profits.
Analogous estimates
____ use the actual cost of a previous, similar project as the basis for estimating the cost of the current project.
Life cycle costing
____________________ allows you to see a big-picture view of the cost of a project throughout its life cycle.
Profits
____________________ are revenues minus expenditures.
Life cycle costing
____________________ considers the total cost of ownership, or development plus support costs, for a project.
Sunk
____________________ cost is money that has been spent in the past.
Labor
____________________ costs are often much higher for contractors.
Intangible
____________________ costs or benefits are costs or benefits that are difficult to measure in monetary terms.
Learning curve theory
____________________ states that when many items are produced repetitively, the unit cost of those items decreases in a regular pattern as more units are produced.
Parametric modeling
____________________ uses project characteristics in a mathematical model to estimate project costs.
CPI (cost performance index)
_________________________ and SPI less than one or less than 100 percent indicate problems.
