Ch 7 Final

definitive estimate provides

A ____________________ an accurate estimate of project costs. It provides details for purchases and estimates actual costs.

_____________helps develop an accurate projection of a project's financial expenses and benefits.

Life cycle costing

project management plan

The ____________________________, project funding requirements, work performance data, and organizational process assets are inputs for controlling costs.

The four processes for project cost management are as follows:

1) Planning Cost Mgmt.. 2)Estimating Costs 3)Determining the Budget 4)Controlling Costs

Which of the following types of estimate use the actual cost of a previous, similar project as the basis for estimating the cost of the current project?

Analogous estimates

A rough order of magnitude estimate can be referred to as a _____ estimate.

Ballpark

Which of the following is an output of the process of controlling costs?

Cost forecasts

allocating the project cost estimate

Determining the budget involves _________________________ to individual material resources or work items over time. These material resources or work items are based on the activities in the work breakdown structure for the project.

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

directly related to creating the products and services

Direct costs can be __________________________________________________________________ of the project. Project managers should focus on direct costs because they can be controlled.

various

Estimates are usually done at _____________ stages of a project and should become more accurate as time progresses.

developing an approximation or estimate

Estimating costs involves ______________________________ of the costs of the resources needed to complete a project. The main outputs of the cost estimating process are activity cost estimates, basis of estimates, and project documents updates.

provide supporting details supporting details

In addition to creating cost estimates for the entire project and activity cost estimates, it is also important to _____________________________ for the estimates and updates to project documents. The __________________ include the ground rules and assumptions used in creating the estimate, a description of the project used as a basis for the estimate, and details on the cost estimation tools and techniques used to create the estimate.

a cost management plan

In general, ____________________ includes level of accuracy, organizational procedures links, process descriptions, control thresholds, and rules of performance measurement, among others.

Which of the following is true of earned value

It is an estimate of the value of the physical work actually completed.

unknown unknowns

Management reserves allow for future situations that are unpredictable. They are sometimes called ____________ __________

organizations use software to assist in various activities

Most ______________________________ related to project cost management. Spreadsheets are a common tool for cost estimating, cost budgeting, and cost control.

financial terms and technical terms

Most members of a company's executive board have a better understanding of financial terms than IT terms, and are more interested in finance. Therefore, IT project managers need to be able to present and discuss project information both in ____________________________.

project cost estimates

One of the reasons why ____________________ are very inaccurate is because human beings are biased toward underestimation. It is thus important for project managers and top management to review estimates and ask important questions to make sure the estimates are not biased.

revenues expenses

Profits are revenues minus expenditures. To increase profits, a company can increase _____________, decrease ______________, or try to do both.

completes a project

Project cost management includes the processes required to ensure that a project team __________________ within an approved budget. Project managers must make sure their projects are well defined, have accurate time and cost estimates, and have a realistic budget that they were involved in approving.

planned value (PV)

The ___________________ , also called the budget, is the portion of the approved total cost estimate planned to be spent on an activity during a given period.

project cost management

The first step in ________________________ is planning how the costs will be managed throughout the life of the project. The project manager and other stakeholders use expert judgment, analytical techniques, and meetings to produce the cost management plan.

Which of the following is true of contingency reserves?

They allow for future situations that can be partially planned for.

A cost management plan can include organizational procedures links, control thresholds, and process descriptions. T or F

True

IT project managers must be able to present and discuss project information both in financial and technical terms. True or False

True

Management reserves

___________ ________________ allow for future situations that are unpredictable. For example, if a project manager gets sick for two weeks or an important supplier goes out of business, management reserves could be set aside to cover the resulting costs.

Bottom-up estimates

_____________ involve estimating the costs of individual work items or activities and summing them to get a project total. This approach is sometimes referred to as activity-based costing.

(4)Controlling costs

______________ involves controlling changes to the project budget. The main outputs of the cost control process are work performance information, cost forecasts, change requests, project management plan updates, project documents updates, and organizational process assets updates. The main output of the planning cost management process is a cost management plan. Planning cost management involves determining the policies, procedures, and documentation that will be used for planning, executing, and controlling project cost.

(2)Estimating costs

_______________ involves developing an approximation or estimate of the costs of the resources needed to complete a project. The main outputs of the cost estimating process are activity cost estimates, basis of estimates, and project document updates.

Cash flow analysis

_______________ is a method for determining the estimated annual costs and benefits for a project and the resulting annual cash flow. Project managers must conduct cash flow analysis to determine net present value.

Contingency reserves

________________ allow for future situations that may be partially planned for. They are sometimes called known unknowns.

The earned value (EV)

__________________ is an estimate of the value of the physical work actually completed. EV is based on the original planned costs for the project or activity and the rate at which the team is completing work on the project or activity to date.

Cost variance (CV)

__________________ is the earned value minus the actual cost. If cost variance is a negative number, it means that performing the work costs more than planned. If cost variance is a positive number, performing the work costs less than planned.

(1)Planning cost management

_____________________ involves determining the policies, procedures, and documentation that will be used for planning, executing, and controlling project cost. The main output of this process is a cost management plan.

(3)Determining the budget

______________________ involves allocating the overall cost estimate to individual work items to establish a baseline for measuring performance. The main outputs of the cost budgeting process are a cost baseline, project funding requirements, and project document updates.

Controlling costs

______________________ involves controlling changes to the project budget. The main outputs of the cost control process are work performance information, cost forecasts, change requests, project management plan updates, project documents updates, and organizational process assets updates.

Schedule variance (SV)

_______________________ is the earned value minus the planned value. A negative schedule variance means that it took longer than planned to perform the work, and a positive schedule variance means that the work took less time than planned to perform.

Determining the budget

_________________________ involves allocating the overall cost estimate to individual work items to establish a baseline for measuring performance. The main outputs of the cost budgeting process are a cost baseline, project funding requirements, and project documents updates.

Tangible and intangible costs and benefits

_______________________________ are categories for determining how well an organization can define the estimated costs and benefits for a project. Tangible costs or benefits can easily be measured in dollars.

Sunk cost

is money that has been spent in the past. When deciding what projects to invest in or continue, one should not include sunk costs.

Indirect costs are

not directly related to the products or services of a project.