Deck 7: Project Cost Management

Question 1

The people who develop software cost estimates often have a great deal of experience with cost estimation.

Answer 1

False

Question 2

Organizations have a history of spending too much money in the early phases of information technology projects.

Answer 2

False

Question 3

Learning curve theory does not apply to the amount of time it takes to complete some tasks.

Answer 3

False

Question 4

Many projects that are started never finish because of cost management problems.

Question 5

Preparing cost estimates is a job for accountants.

Question 6

Parametric models are least reliable when historical information was used to create the model.

Question 7

Any new technology or business process is untested and has inherent risks.

Question 8

When developing an estimate for a large software project,estimates cannot be made before clear system requirements have been produced.

Question 9

Estimates are usually done at various stages of a project and should become more accurate as time progresses.

Question 10

When justifying investments in new information systems and technology,the focus should only be on revenues or expenses.

Question 11

When deciding what projects to invest in or continue,you should include sunk costs.

Question 12

A large percentage of total project costs are often labor costs.

Question 13

Every cost estimate is unique.

Question 14

Although information technology projects have a poor track record in meeting project goals,they have a good track record in meeting budget goals.

Question 15

Direct costs cannot be directly attributed to a certain project.

Question 16

ROM estimates can be referred to as a ballpark estimate,a guesstimate,a swag,or a broad gauge.

Question 17

The cost management plan is part of the overall project management plan.

Question 18

If a project manager gets sick for two weeks or an important supplier goes out of business,management reserve could be set aside to cover the resulting costs.

Question 19

A definitive estimate should be the least accurate of the three types of estimates.

Question 20

Project managers must conduct cash flow analysis to determine net present value.

Question 21

Databases are a common tool for cost estimating,cost budgeting,and cost control.

Question 22

Three separate surveys of software project cost overruns found that the average cost overrun for all of the projects in their survey samples (not just unsuccessful projects)were ____ percent.

A)13-14
B)23-24
C)33-34
D)43-44

Question 23

Many projects,particularly information technology projects,do not have good planning information,so tracking performance against a plan might produce misleading information.

Question 24

Since organizations depend on reliable information technology,there are also huge costs associated with ____.

A)work time
B)technical planning
C)uptime
D)downtime

Question 25

In an earned value chart,when the actual cost line is right on or above the earned value line,costs are less than or equal to planned.

Question 26

____ helps you develop an accurate projection of a project's financial costs and benefits.

A)Profit cycle costing
B)Financial costing
C)Life cycle costing
D)Profit margin costing

Question 27

There does not need to be a change control system to define procedures for changing the cost baseline.

Question 28

The WBS is not a required input when developing a cost estimate.

Question 29

____ involves developing an approximation or estimate of the costs of the resources needed to complete a project.

A)Determining the budget
B)Consolidation of costs
C)Controlling costs
D)Estimating costs

Question 30

The formulas for variances and indexes start with EV,the earned value.

Question 31

____ is a method for determining the estimated annual costs and benefits for a project and the resulting annual cash flow.

A)Life cycle costing
B)Profit margin analysis
C)Cost estimating
D)Cash flow analysis

Question 32

Cost budgeting provides information for project funding requirements.

Question 33

Most organizations have a well-established process for preparing budgets.

Question 34

If cost variance is a positive number,it means that performing the work cost more than planned.

Question 35

____,with assistance from financial experts in their organizations,should create estimates of the costs and benefits of the project for its entire life cycle.

A)Financial managers
B)Project managers
C)Budget managers
D)System managers

Question 36

____ is the ratio of revenues to profits.

A)Profit
B)Profit margin
C)Cost structure
D)Cost margin

Question 37

____ involves allocating the overall cost estimate to individual work items to establish a baseline for measuring performance.

A)Determining the budget
B)Consolidation of costs
C)Controlling costs
D)Estimating costs

Question 38

The Standish Group's CHAOS studies reported an average cost overrun for unsuccessful IT projects ranged from 180 percent in 1994 to ____ percent in 2004.

A)28
B)43
C)56
D)73

Question 39

____ includes the processes required to ensure that a project team completes a project within an approved budget.

A)Cost budgeting
B)Cost estimating
C)Cost control
D)Project cost management

Question 40

If the cost performance index is less than one or less than 100 percent,the project is under budget.

Question 41

Tom DeMarco,a well-known author on software development,suggests ____ reasons for the inaccuracies of many information technology project cost estimates and some ways to overcome them.

A)three
B)four
C)five
D)six

Question 42

If the cost estimate will be the basis for contract awards and performance reporting,it should be a ____ and as accurate as possible.

A)budgetary estimate
B)definitive estimate
C)rough order of magnitude estimate
D)final estimate

Question 43

The project management plan,project funding requirements,work performance data,and organizational process assets are inputs for the process of ____.

A)controlling costs
B)budgeting costs
C)consolidating costs
D)estimating costs

Question 44

____ are those costs that an organization can easily measure in dollars.

A)Intangible costs
B)Direct costs
C)Tangible costs
D)Indirect costs

Question 45

____ allow for future situations that may be partially planned for.

A)Contingency reserves
B)Management reserves
C)Unknown unknowns
D)Direct reserves

Question 46

____ use the actual cost of a previous,similar project as the basis for estimating the cost of the current project.

A)Actual estimates
B)Parametric estimates
C)Bottom-up estimates
D)Analogous estimates

Question 47

Project managers should focus on ____,since they can control them.

A)sunk costs
B)indirect costs
C)direct costs
D)intangible costs

Question 48

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

A)budgetary estimate
B)definitive estimate
C)rough order of magnitude estimate
D)final estimate

Question 49

____ involve estimating individual work items or activities and summing them to get a project total.

A)Actual estimates
B)Parametric estimates
C)Bottom-up estimates
D)Analogous estimates

Question 50

A ____ is used to allocate money into an organization's budget.

A)budgetary estimate
B)definitive estimate
C)rough order of magnitude estimate
D)final estimate

Question 51

The ____ is that portion of the approved total cost estimate planned to be spent on an activity during a given period.

A)AC
B)EV
C)RP
D)PV

Question 52

____ allow for future situations that are unpredictable.

A)Contingency reserves
B)Management reserves
C)Known unknowns
D)Indirect reserves

Question 53

A(n)____ 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.

A)analogous cost estimate
B)parametric model
C)bottom-up estimate
D)reserve analysis

Question 54

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 consolidation
C)cost control
D)cost estimating

Question 55

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

A)Intangible costs
B)Tangible costs
C)Direct costs
D)Indirect costs

Question 56

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

A)Cost baseline
B)Earned value management
C)Constructive cost modeling
D)Parametric modeling

Question 57

____ should be forgotten.

A)Sunk costs
B)Indirect costs
C)Direct costs
D)Intangible costs

Question 58

A ____ provides an estimate of what a project will cost.

A)budgetary estimate
B)definitive estimate
C)rough order of magnitude estimate
D)final estimate

Question 59

A ____ is done very early in a project or even before a project is officially started.

A)budgetary estimate
B)definitive estimate
C)rough order of magnitude estimate
D)final estimate

Question 60

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

A)budget baseline
B)ledger
C)cost baseline
D)cost line

Question 61

Variances are calculated by subtracting the actual cost or planned value from ____.

A)EV
B)AC
C)PV
D)RP

Question 62

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

Question 63

The ____ is the total direct and indirect costs incurred in accomplishing work on an activity during a given period.

A)AC
B)EV
C)RP
D)PV

Question 64

Information technology project managers need to be able to present and discuss project information in ____________________ terms as well as in technical terms.

Question 65

The main outputs of the ____________________ process are activity cost estimates,basis of estimates,and project document updates.

Question 66

____________________ costs or benefits are costs or benefits that are difficult to measure in monetary terms.

Question 67

____________________ cost is money that has been spent in the past.

Question 68

____________________ allows you to see a big-picture view of the cost of a project throughout its life cycle.

Question 69

The ____ is an estimate of what it will cost to complete the project based on performance to date.

A)CPI
B)SV
C)EAC
D)SPI

Question 70

____________________ are revenues minus expenditures.

Question 71

____ is the earned value minus the actual cost.

A)SV
B)CV
C)CPI
D)SPI

Question 72

Using good _________________________ can change the false perception that costs grow and failures are to be expected.

Question 73

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.

Question 74

The main outputs of the ____________________ process are a cost performance baseline,project funding requirements,and project document updates.

Question 75

The ____ is the ratio of earned value to planned value and can be used to estimate the projected time to complete the project.

A)SV
B)CV
C)CPI
D)SPI

Question 76

The ____ is 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.

A)AC
B)EV
C)RP
D)PV

Question 77

The ____ is the ratio of earned value to actual cost and can be used to estimate the projected cost of completing the project.

A)SV
B)CV
C)CPI
D)SPI

Question 78

____ is the earned value minus the planned value.

A)SV
B)CV
C)CPI
D)SPI

Question 79

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

A)AC
B)EV
C)RP
D)PV

Question 80

Using simplified percentage complete amounts for a one-year project with weekly reporting and an average task or work packet size of one week,you can expect about a(n)____ percent error rate.

A)1
B)5
C)11
D)15