Project Cost Management – Ch 7 (True/False) – 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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It is important for project managers to focus on indirect costs because they can be easily controlled.
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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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A cost management plan can include organizational procedures links, control thresholds, and process descriptions.
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True
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A budgetary estimate is the most accurate of the three types of estimates.
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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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Definitive estimates are made one year or less prior to project completion.
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True
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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 called activity based costing.
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False
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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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Determining the budget involves allocating the project cost estimate to individual work items over time.
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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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True
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If cost variance is a positive number, it means that performing the work costs more than planned.
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False
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A negative schedule variance means that it took lesser than planned to perform the work.
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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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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.
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False
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Spreadsheets are a common tool for cost estimating, cost budgeting, and cost control.
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True
