Chapter 7 Content – Flashcards
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Overrun is the additional percentage amount by which estimates exceed actual costs.
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False
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The primary output of the planning cost management process is a change request.
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False
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IT project managers must be able to present and discuss project information both in financial and technical terms.
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True
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Project managers must conduct cash flow analysis to determine net present value.
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True
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Intangible costs can be easily measured in monetary terms.
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False
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When deciding what projects to invest in or continue, one should include sunk costs
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False
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If an important supplier goes out of business, management reserves can be set aside to cover the resulting costs.
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True
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Contingency reserves are also known as unknown unknowns.
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False
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Budgetary estimates are made even before a project is officially started.
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False
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Estimates should become more accurate as time progresses.
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True
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Supporting details for an estimate include the ground rules and assumptions used in creating the estimate.
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True
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Analogous estimates are the most accurate technique to estimate costs.
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False
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In a bottom-up estimate, the size of the individual work items is one of the factors that drives the accuracy of the estimates.
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True
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Parametric models are reliable when the models are flexible in terms of the project's size.
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True
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One of the reasons why project cost estimates are inaccurate is because human beings are biased toward underestimation.
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True
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It is important for project managers to understand that every cost estimate is unique.
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True
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The project management plan and project funding requirements are inputs of the process of controlling costs.
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True
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The formulas for variances and indexes start with EV, the earned value.
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False
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If the cost performance index (CPI) is less than 100 percent, the project is under budget.
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False
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A schedule performance index of one means that the project is on schedule
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True
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_____ includes the processes required to ensure that a project team completes a project within an approved budget.
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Project Cost Management
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Which of the following involves developing an approximation of the costs of resources needed to complete a project?
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Estimating Costs
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____ helps develop an accurate projection of a project's financial expenses and benefits.
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Life-cycle costing
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_____ are those costs that are difficult to measure in monetary terms.
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Intangible Coata
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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
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Direct
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Direct costs are:
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Not directly related to the products or services of a project.
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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?
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Electricity used to run its locations
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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.
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Sunk
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The first step in project cost management is:
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Develop estimates
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A rough order of magnitude estimate can be referred to as a _____ estimate.
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Ballpark
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A cost estimation tool which is used to allocate money into an organization's budget is known as a _____ estimate.
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Buggetary
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A _____ estimate is used for making many purchasing decisions for which accurate estimates are required and for estimating final project costs.
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Definitive
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Analogous estimates are also known as _____ estimates
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Top-Down
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_____ uses project characteristics in a mathematical model to estimate project costs.
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Parametric Estimating
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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
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Definitive
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Which of the following is true of earned value?
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t is an estimate of the value of the physical work actually completed.
