chapter 7
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? --Ch. 7
Analogous estimates
_____ is a method for determining the estimated annual costs and benefits for a project. --Ch. 7
Cash flow analysis
Which of the following is an output of the process of controlling costs? --Ch. 7
Cost forecasts
individual work items to establish a baseline for measuring performance. --Ch. 7
Determining the budget
_____ is a project performance measurement technique that integrates scope, time, and cost data. --Ch. 7
Earned value management (EVM)
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? --Ch. 7
Electricity used to run its factories
Which of the following involves developing an approximation of the costs of resources needed to complete a project? --Ch. 7
Estimating costs
________ are a means of measuring software size based on what the software does for end users. --Ch. 7
Function points
_____ are those costs that are difficult to measure in monetary terms --Ch. 7
Intangible costs
Which of the following is true of the schedule performance index (SPI)? --Ch. 7
It can be used to estimate the projected time to complete the project.
Which of the following is true of earned value? --Ch. 7
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? --Ch. 7
It provides an estimate of what a project will cost.
_____ costing considers the total cost of ownership, or development plus support costs, for a project. --Ch. 7
Life cycle
_____ costing helps to see a big-picture view of the cost of a project throughout its life cycle. --Ch. 7
Life cycle
_____ helps develop an accurate projection of a project's financial expenses and benefits. --Ch. 7
Life cycle costing
Which of the following reserves allows for future situations that are unpredictable? --Ch. 7
Management reserves
_____ uses project characteristics in a mathematical model to estimate project costs. --Ch. 7
Parametric estimating
Which of the following is most likely to be a reason for inaccuracies in information technology cost estimates? --Ch. 7
People lack estimating experience.
_____ are revenues minus expenditures. --Ch. 7
Profits
_____ includes the processes required to ensure that a project team completes a project within an approved budget. --Ch. 7
Project cost management
Which of the following is true of contingency reserves? --Ch. 7
They allow for future situations that can be partially planned for.
Which of the following is true of analogous estimates? --Ch. 7
They are most reliable when previous projects are similar in fact with current projects.
Which of the following is true of bottom-up estimates? --Ch. 7
They are time-intensive and expensive to develop.
Which of the following is true of tangible costs? --Ch. 7
They can be easily measured.
Which of the following is an input of the process of controlling costs? --Ch. 7
Work performance data
The total direct and indirect costs incurred in accomplishing work on an activity during a given period is known as the _____. --Ch. 7
actual cost (AC)
A rough order of magnitude estimate can be referred to as a _____ estimate. --Ch. 7
ballpark
A(n)_____ is the original project plan plus approved changes. --Ch. 7
baseline
A cost estimation tool which involves estimating individual work items or activities and summing them to get a project total is known as a(n) _____ estimate. --Ch. 7
bottom-up
A cost estimation tool which is used to allocate money into an organization's budget is known as a _____ estimate. --Ch. 7
budgetary
The cost performance index (CPI): --Ch. 7
can be used to estimate the projected cost of completing the project.
Accountants define _____ as a resource sacrificed or foregone to to achieve a specific objective. --Ch. 7
cost
A(n) _____ is a time-phased budget that project managers use to measure and monitor cost performance. --Ch. 7
cost baseline
In addition to providing input for budgetary estimates, the process of _____ provides a cost baseline. --Ch. 7
cost budgeting
One of the main outputs of the _____ process is a cost baseline. --Ch. 7
cost budgeting
The main goal of the _____ process is to produce a cost baseline for measuring project performance and project funding requirements. --Ch. 7
cost budgeting
The main outputs of the _____ process are a cost performance baseline, project funding requirements, and project document updates. --Ch. 7
cost budgeting
Work performance information and cost forecasts are main outputs of the _____ process. --Ch. 7
cost control
In practice, many people find that using a combination or hybrid approach involving analogous, bottom up, and/or parametric modeling provides the best _____. --Ch. 7
cost estimates
The main outputs of the _____ process are activity cost estimates, basis of estimates, and project document updates. --Ch. 7
cost estimating
The main output of the planning cost management process is a(n) _____. --Ch. 7
cost management plan
A _____ estimate is used for making many purchasing decisions for which accurate estimates are required and for estimating final project costs. --Ch. 7
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. --Ch. 7
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 _____ costs. --Ch. 7
direct
The _____ 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. --Ch. 7
earned value
Variances are calculated by subtracting the actual cost from _____. --Ch. 7
earned value
The cost performance index can be used to calculate the _____ which gives an approximate cost of completing a project based on performance to date. --Ch. 7
estimate at completion (EAC)
The _____ 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. --Ch. 7
learning curve
The process of controlling costs primarily involves: --Ch. 7
managing changes to the project budget.
Project managers must conduct cash flow analysis to determine _____. --Ch. 7
net present value
Indirect costs are: --Ch. 7
not directly related to the products or services of a project.
The additional percentage or dollar amount by which actual costs exceed estimates is known as a(n) _____. --Ch. 7
overrun
The budget is one of the three values of earned value management and is also known as _____. --Ch. 7
planned value
The _____ is the portion of the approved total cost estimate planned to be spent on an activity during a given period. --Ch. 7
planned value (PV)
Project costs, like project schedules, grow out of the basic documents that initiate a project, like the _____. --Ch. 7
project charter
A cost management plan is a subsidiary of the _____ plan. --Ch. 7
project management
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 is known as the _____. --Ch. 7
rate of performance (RP)
Profits may be defined as: --Ch. 7
revenues minus expenditures.
A(n) _____ estimate is done very early in a project or even before a project is officially started. --Ch. 7
rough order of magnitude (ROM)
The timeframe for a(n) _____ estimate is often three or more years prior to project completion. --Ch. 7
rough order of magnitude (ROM)
The _____ index is the ratio of earned value to planned value. --Ch. 7
schedule performance
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. --Ch. 7
sunk
Cost variance is: --Ch. 7
the earned value minus the actual cost.
Schedule variance is: --Ch. 7
the earned value minus the planned value.
The first step in project cost management is: --Ch. 7
to plan how costs will be managed.
Analogous estimates are also known as _____ estimates. --Ch. 7
top-down
Project cost estimates are allocated to work items which are based on the activities in the _____ for the project. --Ch. 7
work breakdown structure