Question 1

What are four major categories of costs? Provide descriptions for each category.

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Question 2

Big Mike has to prepare a bid for the swimming pools to be placed in every backyard in a new housing addition. Each swimming pool represents only a slight variation on the other, so there is a good opportunity to leverage learning effects in the bid process. A swimming pool installation can be broken down into four major steps: excavation, concrete, plumbing, and finish work. Mike has found the best contractors and asks each of them how long it will take to complete work on the first pool and what their learning rates are. Amazingly, each contractor is intimately familiar with learning curve theory and knows what his learning rate is for this type of work. This information is summarized in the table. How long will it take to complete the 25^th pool for the subdivision? How long will it take to complete all 25 pools for the subdivision?

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Question 3

Explain the difference between normal and expedited costs, fixed and variable costs, and recurring or nonrecurring costs. Create a 2x2x2 matrix and provide one example each (8 total examples) of each combination of these costs.

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Question 4

What is a budget contingency and what are three reasons it might be useful?

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Question 5

Rank the four different types of cost estimates from most to least accurate and explain what the inputs are to each type.

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Question 6

What is activity-based costing and how is it performed?

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Question 7

How are top-down and bottom-up budgets created? What advantages does each approach hold over the other?

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Question 8

What is a time-phased budget and how does it help a project manager control costs?

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Question 9

Describe any three reasons that cost overruns occur in project work.

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Question 10

What are three benefits to the use of contingency funds?

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Question 11

What are parametric cost estimates and how are they developed?

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Question 12

Provide examples and discuss the differences between direct and indirect costs.

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Question 13

What's the relationship between WBS, scheduling, and budgeting?

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Question 14

What are the major issues with cost estimation of software projects?

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Question 15

Define learning curve theory and describe how learning curves are used in project management.

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Quiz 8: Cost Estimation and Budgeting