Chapter 7: Project Cost Management
c.
rough order of magnitude
d.
ballpark
Budgetary estimates are made one to two years prior to project completion.
1
Difficulty: Easy
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Bloom’s: Knowledge
52. A _____ estimate is used for making many purchasing decisions for which accurate estimates are required and for
estimating final project costs.
a.
budgetary
b.
definitive
c.
rough order of magnitude
d.
final
b
1
Difficulty: Easy
p.272
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Estimating Costs
Bloom’s: Knowledge
53. 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?
a.
Definitive estimates
b.
Parametric estimates
c.
Bottom-up estimates
d.
Analogous estimates
d
judgment and is generally less costly than other techniques, but it is also less accurate.
1
Difficulty: Easy
p.273
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Bloom’s: Knowledge
54. Analogous estimates are also known as _____ estimates.
Chapter 7: Project Cost Management
a.
bottom-up
b.
top-down
c.
parametric
d.
budgetary
b
for estimating the cost of the current project. They are also called top-down estimates.
1
Difficulty: Easy
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Bloom’s: Knowledge
55. Which of the following is true of analogous estimates?
a.
Their main disadvantage is that they cost more than other techniques.
b.
They are the only technique which do not require expert judgement.
c.
They are most reliable when previous projects are similar in fact with current projects.
d.
They use project characteristics in a mathematical model to estimate project costs.
1
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Bloom’s: Comprehension
56. 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.
a.
budgetary
b.
parametric
c.
bottom-up
d.
analogous
1
Difficulty: Easy
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57. Which of the following is true of bottom-up estimates?
a.
They are based on the actual cost of a previous, similar project.
b.
They are also known as parametric estimating.
c.
They are most accurate when they involve large, extensive work items.
d.
They are time-intensive and expensive to develop.
Difficulty: Moderate
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Estimating Costs
Bloom’s: Comprehension
58. _____ uses project characteristics in a mathematical model to estimate project costs.
a.
Rough order of magnitude estimating
b.
Parametric estimating
c.
Bottom-up estimating
d.
Analogous estimating
model to estimate project costs.
Difficulty: Knowledge
INFO.SCHW.14.51 – LO: 7-4
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Estimating Costs
Bloom’s: Knowledge
59. Which of the following is most likely to be a reason for inaccuracies in information technology cost estimates?
a.
Estimates take a long time to be worked out.
b.
People lack estimating experience.
c.
Human beings are biased toward overestimation.
d.
Only software development provides the scope for estimates to be accurate.
60. 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.
a.
budgetary
b.
definitive
c.
rough order of magnitude
d.
analogous
reporting, it should be a definitive estimate and as accurate as possible.
1
Difficulty: Moderate
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Bloom’s: Comprehension
61. The main goal of the _____ process is to produce a cost baseline for measuring project performance and project
funding requirements.
a.
cost budgeting
b.
cost planning
c.
cost controlling
d.
cost estimating
Difficulty: Moderate
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Determining the Budget
Bloom’s: Comprehension
62. Which of the following is an output of the process of controlling costs?
a.
Cost forecasts
b.
Project funding requirements
c.
Basis of estimates
d.
Scope baselines
organizational process asset updates.
1
United States – BUSPROG: Technology
Estimating Costs
Bloom’s: Comprehension
63. Which of the following is an input of the process of controlling costs?
a.
Cost forecasts
b.
Work performance data
c.
Change requests
d.
Scope baseline
Difficulty: Moderate
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Controlling Costs
Bloom’s: Knowledge
64. The budget is one of the three values of earned value management and is also known as _____.
a.
earned value
b.
actual cost
c.
indirect cost
d.
planned value
cost estimate planned to be spent on an activity during a given period.
Difficulty: Easy
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Controlling Costs
Bloom’s: Knowledge
65. Which of the following is true of earned value?
a.
It is the actual cost plus the planned cost.
b.
It is based solely on the total cost estimate to be spent on an activity.
c.
It is an estimate of the value of the physical work actually completed.
d.
It is also known as the planned value.
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Controlling Costs
Bloom’s: Comprehension
66. Variances are calculated by subtracting the actual cost from _____.
a.
earned value
b.
schedule variance
c.
planned value
d.
rate of performance
Difficulty: Moderate
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Controlling Costs
Bloom’s: Comprehension
67. Cost variance is:
a.
the planned value plus actual costs.
b.
the earned value minus the actual cost.
c.
the rate of performance minus earned value.
d.
the planned value minus the rate of performance.
Difficulty: Moderate
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Controlling Costs
Bloom’s: Comprehension
68. Schedule variance is:
a.
the earned value minus the planned value.
b.
the earned value minus the actual cost.
c.
the planned value plus the earned value.
d.
the planned value plus the rate of performance.
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Controlling Costs
Bloom’s: Comprehension
69. The cost performance index (CPI):
a.
indicates that a project is under budget if CPI is less than one.
b.
can be used to estimate the projected cost of completing the project.
c.
indicates that the planned and actual costs are equal if CPI is more than one.
d.
is the ratio of earned value to planned value.
Difficulty: Moderate
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Controlling Costs
Bloom’s: Comprehension
70. Which of the following is true of the schedule performance index (SPI)?
a.
It can be used to estimate the projected time to complete the project.
b.
It means that a project is behind schedule if an SPI is greater than one.
c.
It means that a project is ahead of schedule if SPI is lesser than one or hundred percent.
d.
It is the ratio of planned value to actual costs.
value; it can be used to estimate the projected time to complete the project.
Difficulty: Moderate
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Controlling Costs
Bloom’s: Comprehension
71. The additional percentage or dollar amount by which actual costs exceed estimates is known as a(n) _____.
Difficulty: Moderate
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Controlling Costs
Bloom’s: Comprehension
Chapter 7: Project Cost Management
72. Accountants define _____ as a resource sacrificed or foregone to to achieve a specific objective.
73. The main output of the planning cost management process is a(n) _____.
74. The main outputs of the _____ process are activity cost estimates, basis of estimates, and project document updates.
75. The main outputs of the _____ process are a cost performance baseline, project funding requirements, and project
document updates.
76. _____ are revenues minus expenditures.
77. _____ costing helps to see a big-picture view of the cost of a project throughout its life cycle.
78. _____ costing considers the total cost of ownership, or development plus support costs, for a project.
79. Project managers must conduct cash flow analysis to determine _____.
80. 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.
learning curve
Difficulty: Moderate
United States – BUSPROG: Technology
Bloom’s: Comprehension
81. Project costs, like project schedules, grow out of the basic documents that initiate a project, like the _____.
INFO.SCHW.14.50 – LO: 7-3
Planning Cost Management
82. A(n) _____ estimate is done very early in a project or even before a project is officially started.
rough order of magnitude (ROM)
Difficulty: Easy
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Bloom’s: Knowledge
83. The timeframe for a(n) _____ estimate is often three or more years prior to project completion.
rough order of magnitude (ROM)
United States – BUSPROG: Technology
Estimating Costs
84. In practice, many people find that using a combination or hybrid approach involving analogous, bottom up, and/or
parametric modeling provides the best _____.
Bloom’s: Knowledge
Chapter 7: Project Cost Management
85. ________ are a means of measuring software size based on what the software does for end users.
86. Project cost estimates are allocated to work items which are based on the activities in the _____ for the project.
87. A(n) _____ is a time-phased budget that project managers use to measure and monitor cost performance.
88. A cost management plan is a subsidiary of the _____ plan.
89. In addition to providing input for budgetary estimates, the process of _____ provides a cost baseline.
90. _____ is a project performance measurement technique that integrates scope, time, and cost data.
91. A(n)_____ is the original project plan plus approved changes.
92. 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 _____.
93. The _____ is the portion of the approved total cost estimate planned to be spent on an activity during a given period.
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Controlling Costs
94. The total direct and indirect costs incurred in accomplishing work on an activity during a given period is known as the
_____.
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Controlling Costs
95. 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.
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Controlling Costs
96. The _____ index is the ratio of earned value to planned value.
schedule performance
Difficulty: Easy
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Bloom’s: Knowledge
97. The cost performance index can be used to calculate the _____ which gives an approximate cost of completing a
Bloom’s: Comprehension
Chapter 7: Project Cost Management
project based on performance to date.
98. List and briefly describe the four project cost management processes.
99. What are tangible and intangible costs? Distinguish between direct and indirect costs and give examples of each.
100. What are the three basic types of cost estimating? Describe each type.
101. Describe three tools used in developing a good cost estimate.
102. Earned value management involves calculating three values for each activity or summary
activity from a project’s WBS. Describe each of these three values with examples.
