question

Actual cost (AC)

answer

The total of direct and indirect costs incurred in accomplishing work on an activity during a given period; formerly called the actual cost of work performed (ACWP).

question

Analogous estimate

answer

A cost-estimating technique that uses the actual cost of a previous, similar project as the basis for estimating the cost of the current project; also called top-down estimate.

question

Baseline

answer

The original project plan plus approved changes.

question

Bottom-up estimate

answer

A cost-estimating technique based on estimating individual work items and summing them to get a project total.

question

Budget at completion (BAC)

answer

The original total budget for a project.

question

Budgetary estimate

answer

A cost estimate used to allocate money into an organization's budget.

question

Cash flow analysis

answer

A method for determining the estimated annual costs and benefits for a project.

question

COCOMO II

answer

A newer, computerized cost-estimating tool based on Barry Boehm's original model that allows one to estimate the cost, effort, and schedule when planning a new software development activity.

question

Computerized tools

answer

Cost-estimating tools that use computer software, such as spreadsheets and project management software.

question

Constructive Cost Model (COCOMO)

answer

A parametric model developed by Barry Boehm for estimating software development costs.

question

Contingency reserves

answer

Dollars included in a cost estimate to allow for future situations that may be partially planned for (sometimes called known unknowns) and are included in the project cost baseline.

question

Cost baseline

answer

A time-phased budget that project managers use to measure and monitor cost performance.

question

Cost budgeting

answer

Allocating the overall cost estimate to individual work items to establish a baseline for measuring performance.

question

Cost control

answer

Controlling changes to the project budget.

question

Cost estimating

answer

Developing an approximation or estimate of the costs of the resources needed to complete the project.

question

Cost management plan

answer

A document that describes how cost variances will be managed on the project.

question

Cost performance index (CPI)

answer

The ratio of earned value to actual cost; can be used to estimate the projected cost to complete the project.

question

Cost variance (CV)

answer

The earned value minus the actual cost.

question

Definitive estimate

answer

A cost estimate that provides an accurate estimate of project costs.

question

Direct costs

answer

Costs that can be directly related to producing the products and services of the project.

question

Earned value (EV)

answer

The percentage of work actually completed multiplied by the planned cost; formerly called the budgeted cost of work performed (BCWP).

question

Earned value management (EVM)

answer

A project performance measurement technique that integrates scope, time, and cost data.

question

Estimate at completion (EAC)

answer

An estimate of what it will cost to complete the project based on performance to date.

question

Function points

answer

Technology-independent assessments of the functions involved in developing a system.

question

Indirect costs

answer

Costs that are not directly related to the products or services of the project, but are indirectly related to performing the project.

question

Intangible costs or benefits

answer

Costs or benefits that are difficult to measure in monetary terms.

question

Learning curve theory

answer

A theory that states that when many items are produced repetitively, the unit cost of those items normally decreases in a regular pattern as more units are produced.

question

Life cycle costing

answer

Considers the total cost of ownership, or development plus support costs, for a project.

question

Management reserves

answer

Dollars included in a cost estimate to allow for future situations that are unpredictable (sometimes called unknown unknowns).

question

Overrun

answer

The additional percentage or dollar amount by which actual costs exceed estimates.

question

Parametric modeling

answer

A cost-estimating technique that uses project characteristics (parameters) in a mathematical model to estimate project costs.

question

Planned value (PV)

answer

The portion of the approved total cost estimate planned to be spent on an activity during a given period; formerly called the budgeted cost of work scheduled (BCWS).

question

Profit margin

answer

The ratio between revenues and profits.

question

Profits

answer

Revenues minus expenses.

question

Project cost management

answer

The processes required to ensure that the project is completed within the approved budget.

question

Rate of performance (RP)

answer

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.

question

Reserves

answer

Dollars included in a cost estimate to mitigate cost risk by allowing for future situations that are difficult to predict.

question

Rough order of magnitude (ROM) estimate

answer

A cost estimate prepared very early in the life of a project to provide a rough idea of what a project will cost.

question

Schedule performance index (SPI)

answer

The ratio of earned value to planned value; can be used to estimate the projected time to complete a project.

question

Schedule variance (SV)

answer

The earned value minus the planned value.

question

Source Lines of Code (SLOC)

answer

A human-written line of code that is not a blank line or comment.

question

Sunk cost

answer

Money that has been spent in the past.

question

Tangible costs or benefits

answer

Costs or benefits that can be easily measured in dollars

question

3 Project Management Processes

answer

1 - Estimating the cost 2 - Determining the budget 3 - Controlling costs

question

Outputs of estimating costs

answer

activity cost estimates basis of estimates project document updates

question

Outputs of determining the budget

answer

cost performance baseline project funding requirements project document updates

question

Outputs of controlling costs

answer

work performance measurements budget forecasts organizational process asset updates change requests project management plan updates project document updates

question

Why do many projects never finish?

answer

Cost management problems cause many problems to never finish.

question

What are most executives concerned with more than other issues?

answer

profits

question

When do organizations have a history of not spending enough money and what does it impact?

answer

They have a history of not spending enough money in the early phases of projects and it impacts the total cost of ownership.

question

Why is cash flow important?

answer

If top management selects too many projects that have high cash flow needs in the same year, the company will not be able to support all of its projects and maintain profitability.

question

Why is it important to define clearly the year on which the company bases its dollar amounts?

answer

If a company bases all costs on a previous years estimates it would need to account for inflation and other factors when projecting costs and benefits in future-year dollars.

question

3 basic types of estimates

answer

1 - Rough order of magnitude (ROM) 2 - Budgetary estimate 3 - Definitive estimate

question

Tom DiMarco's 4 reasons for project cost estimate inaccuracies.

answer

1 - Estimates often are done too quickly before clear system requirements have been produced. 2 - The person doing the estimating often has a lack of estimating experience. 3 - People have a tendency to underestimate. An experienced person may estimate based on how he/she would do the task, but the task may be performed by an inexperienced worker. 4 - Management desires accuracy. They are not looking for ballpark figures and often that is what they are given.

question

Earned value management involves calculating which three values for each activity or summary activity from a project's WBS?

answer

1 - Planned Value 2 - Actual Cost 3 - Earned Value

question

Earned value formula

answer

EV = PV to date * RP

question

Cost variance formula

answer

CV = EV - AC

question

Schedule variance formula

answer

SV = EV - PV

question

Cost performance index (CPI) formula

answer

CPI = EV / AC

question

Schedule performance index (SPI) formula

answer

SPI = EV / PV

question

Estimate at completion (EAC) formula

answer

EAC = BAC / CPI

question

Estimated time to complete formula

answer

Original time estimate / SPI

question

Five levels of project portfolio management from simplest to most complex

answer

1 - Put all your projects in one database 2 - Prioritize the projects in your database 3 - Divide your projects into two or three budgets based on type of investment, such as utilities or required systems to keep things running, incremental upgrades, and strategic investments. 4 - Automate the repository 5 - Apply modern portfolio theory, including risk-return tools that map project risk on a curve.

question

_______ is a resource sacrificed or foregone to achieve a specific objective or something given up in exchange.

answer

Cost

question

What is the main goal of project cost management?

answer

to complete a project within an approved budget.

question

Which of the following is not a key output of project cost management? a - activity cost estimates b - a cost management plan c - updates to the project management plan d - a cost performance baseline

answer

b - a cost management plan

question

If a company loses $5 for every $100 in revenue for a certain product, what is the profit margin for that product?

answer

-5%

question

______ reserves allow for future situations that are unpredictable.

answer

Management

question

You are preparing a cost estimate for a building based on its location, purpose, number of square feet, and other characteristics. What cost estimating technique are you using?

answer

parametric

question

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

answer

Project cost budgeting

question

_____ is a project performance measurement technique that integrates scope, time, and cost data.

answer

Earned value analysis

question

If the actual cost for a WBS item is over $1500 and its earned value was $2000, what is its cost variance, and is it under or over budget?

answer

The cost variance is $500, which is under budget

question

If a project is halfway completed and its schedule performance index is 110 percent and its cost performance index is 95 percent, how is it progressing?

answer

It is ahead of schedule and over budget.

question

The ________ is the additional percentage or dollar amount by which actual costs exceed estimates.

answer

cost overrun

question

Which of the following processes of project cost management involves allocating the overall cost estimate to individual work items to establish a baseline for measuring performance?

answer

cost budgeting

question

Which of the following processes of project cost management involves developing an approximation of the costs of the resources needed to complete a project?

answer

cost estimating

question

The main outputs of the ________ process are work performance measurements, budget forecasts, organizational process asset updates, change requests, project management plan updates, and project document updates.

answer

cost control

question

To increase ________, a company can increase revenues, decrease expenses, or try to do both.

answer

profits

question

A company might complete a project to develop and implement a new customer service system in one or two years, but the new system could be in place for ten years. Project managers should create estimates of the costs and benefits of the project for ten years. This is an example of ________.

answer

life cycle costing

question

Avoid ________ when deciding what project to invest in or continue.

answer

sunk costs

question

________ for projects often include items like goodwill, prestige, and general statements of improved productivity that an organization cannot easily translate into dollar amounts.

answer

Intangible costs

question

________ are used for making many purchasing decisions for which accurate estimates are required and for estimating final project costs.

answer

Definitive estimates

question

Which type of estimate is done very early in a project or even before a project is officially started?

answer

rough order of magnitude (ROM) estimate

question

The drawback with ________ is that they are usually time-intensive and therefore expensive to develop.

answer

bottom-up estimates

question

A ________ might provide an estimate of $50 per line of code for a software development project based on the programming language the project is using, the level of expertise of the programmers, the size and complexity of the data involved, and so on.

answer

parametric model

question

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

answer

top-down estimate

question

A(n) ________ is a time-phased budget that project managers use to measure and monitor cost performance.

answer

cost baseline

question

The ________ is an estimate of the value of the physical work actually completed.

answer

earned value (EV)

question

Suppose a project included a summary activity of purchasing and installing a new Web server. Suppose further that, according to the plan, it would take one week and cost a total of $10,000 for the labor hours, hardware, and software involved. The ________ for that activity that week is, therefore, $10,000.

answer

planned value (PV)

question

Which of the following is the earned value minus the actual cost?

answer

cost variance (CV)

question

Which of the following is the ratio of earned value to planned value and can be used to estimate the projected time to complete the project?

answer

schedule performance index (SPI)

question

Which of the following is the earned value minus the planned value?

answer

schedule variance (SV)

question

Which of the following is the ratio of earned value to actual cost and can be used to estimate the projected cost of completing the project?

answer

cost of performance index (CPI)

Project Management – Chapter 7 – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards