Change Management Final

What is a rough order of magnitude estimate also referred to as?

Ballpark

What type of estimate is a cost estimation tool that involves estimating individual work items or activities and summing them to get a project total?

Bottom-up

What type of estimate is a cost estimation tool used to allocate money into an organization's budget?

Budgetary

Which method is used for determining the estimated annual costs and benefits for a project?

Cash flow analysis

What is the first step in a Monte Carlo analysis?

Collect the most likely, optimistic, and pessimistic estimates for the variables in the model.

Work performance information and cost forecasts are main outputs of which process?

Cost Control

Which is an output of the process of controlling costs?

Cost Forecasts

Which diagramming technique is used to help select the best course of action in situations in which future outcomes are uncertain?

Decision tree

What type of estimate is used for making many purchasing decisions for which accurate estimates are required and for estimating final project costs?

Definitive

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 which type of costs?

Direct

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 would be an example of an indirect cost?

Electricity used to run its factories

A budgetary estimate is the most accurate of the three types of estimates.

False

A negative schedule variance means that it took less time than planned to perform the work.

False

Analogous estimates are called activity-based costing.

False

Analogous estimates are the most accurate technique to estimate costs

False

Brainstorming is a systematic, interactive forecasting procedure based on independent and anonymous input regarding future events.

False

Contingency reserves are also known as unknown unknowns.

False

If cost variance is a positive number, it means that performing the work costs more than planned.

False

If the cost performance index (CPI) is less than 100 percent, the project is under budget.

False

In an earned value chart, when the actual cost line is right on or above the earned value line, it indicates that costs are less than planned.

False

It is important for project managers to focus on indirect costs because they can be easily controlled.

False

Overrun is the additional percentage amount by which estimates exceed actual costs.

False

The last step in project risk management is deciding how to address the knowledge area for a particular project by performing risk management planning.

False

The primary output of the planning cost management process is a change request.

False

The psychology literature shows that individuals, working alone, produce fewer ideas than the same individuals produce through brainstorming in small, face-to-face groups.

False

Top Ten Risk Item Tracking is a quantitative risk analysis tool.

False

When deciding what projects to invest in or continue, one should include sunk costs.

False

Which process involves determining what risks are likely to affect a project and documenting the characteristics of each?

Identifying risks

Which costs are difficult to measure in monetary terms?

Intangible costs

Which is true of the schedule performance index (SPI)?

It can be used to estimate the projected time to complete the project.

Which is true of earned value?

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

Which statement is true of a order of magnitude estimate?

It provides an estimate of what a project will cost

Which reserves allow for future situations that are unpredictable?

Management reserves

Which process involves monitoring identified and residual risks, identifying new risks, carrying out risk response plans, and evaluating the effectiveness of risk strategies throughout the life of the project?

Monitoring risk

Which analysis technique simulates a model's outcome many times to provide a statistical distribution of the calculated results?

Monte Carlo

Which statement is true regarding indirect costs?

Not directly related to the products or services of a project

Which type of estimating uses project characteristics in a mathematical model to estimate project costs?

Parametric

Which is most likely to be a reason for inaccuracies in information technology cost estimates?

People lack estimating experience.

What is the first step in project cost management?

Plan how costs will be managed

What is another term used for budget?

Planned Value

What process involves deciding how to approach and plan the risk management activities for the project?

Planning risk management

What type of management includes the processes required to ensure that a project team completes a project within an approved budget?

Project cost management

Variances are calculated by subtracting the actual cost from which value?

Rate of performance

How are profits best defined?

Revenues minus expenditures

Which action applies to positive risks when the project team cannot or chooses not to take any actions toward a risk?

Risk Acceptance

Which action involves changing the size of the opportunity by identifying and maximizing key drivers of the positive risk?

Risk Enhancement

Which document contains results of various risk management processes; it is often displayed in a table or spreadsheet format?

Risk register

Risk utility rises at a decreasing rate for a _____ person.

Risk-averse

Those who are _____ have a higher tolerance for risk, and their satisfaction increases when more payoff is at stake.

Risk-seeking

Which risks are direct results of implementing risk responses?

Secondary

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 which costs?

Sunk

Which statement is true of contingency reserves?

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

Which statement is true of analogous estimates?

They are most reliable when previous projects are similar in fact with current projects.

Which statement is true of bottom-up estimates?

They are time-intensive and expensive to develop

Which statement is true of tangible costs?

They can be easily measured

Which statement is true of tangible costs?

They can be easily measured.

_____ is a qualitative risk analysis tool that maintains an awareness of risks throughout the life of a project in addition to identifying risks.

Top Ten Risk Item Tracking

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

True

A risk-seeking person prefers outcomes that are more uncertain and is often willing to pay a penalty to take risks.

True

A schedule performance index of one means that the project is on schedule

True

Budgetary estimates are made before a project is officially started.

True

Definitive estimates are made one year or less prior to project completion.

True

Determining the budget involves allocating the project cost estimate to individual work items over time.

True

Estimates should become more accurate as time progresses

True

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

True

Identified risks may not materialize, or their probabilities of occurrence or loss may diminish.

True

If an important supplier goes out of business, management reserves can be set aside to cover the resulting costs.

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.

True

It is important for project managers to understand that every cost estimate is unique.

True

One of the reasons why project cost estimates are inaccurate is because human beings are biased toward underestimation.

True

One possible response to managing negative risk it to accept the potential effects from the risk.

True

Parametric models are reliable when the models are flexible in terms of the project's size.

True

Project managers must conduct cash flow analysis to determine net present value

True

Risks can have both negative and positive effects on meeting project objectives.

True

Spreadsheets are a common tool for cost estimating, cost budgeting, and cost control.

True

Supporting details for an estimate include the ground rules and assumptions used in creating the estimate.

True

The Monte Carlo analysis can predict the probability of finishing by a certain date or the probability that the cost will be equal to or less than a certain value.

True

The formulas for variances and indexes start with EV, the earned value.

True

The main output of qualitative risk analysis is updating the risk register.

True

The project management plan and project funding requirements are inputs of the process of controlling costs.

True

The risk register can be created with a simple Microsoft Word or Excel file.

True

_____ are unplanned responses to risk events used when project teams do not have contingency plans in place.

Workarounds

Which type of estimate uses the actual cost of a previous, similar project as the basis for estimating the cost of the current project?

analogous estimates

The main goal of which process is to produce a cost baseline for measuring project performance and project funding requirements?

cost budgeting

Which process results in a cost baseline as a main output?

cost budgeting

Which process involves allocating the overall cost estimate to individual work items to establish a baseline for measuring performance?

determining the budget

Which statement best defines schedule variance?

earned value minus the planned value

What is the purpose of a cost performance index (CPI)?

estimate the projected cost of completing the project

Which process involves developing an approximation of the costs of resources needed to complete a project?

estimating costs

The main outputs of which process include a risk register, risk report, and project documents updates?

identifying risks

Which process helps develop an accurate projection of a project's financial expenses and benefits?

life cycle costing

What does the process of controlling costs primarily involve?

managing changes to the project budget

Which process involves prioritizing risks based on their probability of occurrence and impact?

performing qualitative risk analysis

Which process involves numerically estimating the effects of risks on project objectives?

performing quantitative risk analysis

Which action involves eliminating a specific threat, usually by eliminating its causes?

risk avoidance

What term is used for analogous estimates?

top-down

Which is an input of the process of controlling costs?

work performance data