Question 1

The _________is the approved budget,usually in a time distribution format,that is used to estimate,monitor,and control the overall cost performance of the project.
A) management baseline. 
B) cost baseline. 
C) cost benchmark 
D) control account

Accepted Answer

The approved budget, usually in a time distribution format, is known as the cost baseline. The cost baseline is used to estimate, monitor, and control the overall cost performance of the project. The management baseline is a broader term that encompasses both the cost and schedule baselines. Cost benchmark and control account are not equivalent to the cost baseline.

Question 2

The process of developing an approximation of monetary resources needed to complete project activities is known as:​ 
A) determine budget. 
B) estimate resources. 
C) estimate cost. 
D) estimate activities.

Accepted Answer

The process of developing an approximation of monetary resources needed to complete project activities is known as estimating cost. Option A refers to determining the overall cost baseline for the project. Option B is related to determining the type and quantity of resources needed for the project. Option D refers to estimating the duration, effort, and resources needed for each individual activity within the project.

Question 3

There are many causes of variation in project costs.Which of the following accurately describes the nature of this variation?​ 
A) Variation is generally greater on projects that use well-known technology and an experienced project team. 
B) Variation occurs in all work processes and the novelty associated with most projects creates many opportunities for variation. 
C) Special cause variation comes from many small causes that are inherent in a work process. 
D) Normal cause variation is when something out of the ordinary occurs

Accepted Answer

Novelty associated with most projects creates many opportunities for variation. While experienced project teams and well-known technology may help reduce variation, it is not a guarantee. Variation can occur in all work processes, regardless of experience or technology. Additionally, A, C, and D do not accurately describe the nature of variation in project costs.

Question 4

The documentation of a project cost estimate generally requires substantial supporting detail to include all of these EXCEPT:​ 
A) a description of scope. 
B) management reserve needs 
C) the estimating methods and a range of possible outcomes. 
D) assumptions and constraints.

Accepted Answer

While management reserve needs could be included, it is not explicitly required for the documentation of a project cost estimate. The other three options (description of scope, estimating methods and possible outcomes, assumptions and constraints) are typically included to provide thorough documentation of the estimate.

Question 5

Which estimating technique uses a statistical relationship to calculate cost or duration based on historical data and other project parameters?​ 
A) empirical estimating 
B) parametric estimating 
C) grass roots estimating 
D) analogous estimating

Accepted Answer

Parametric estimating uses statistical relationships to calculate cost or duration based on historical data and other project parameters. Empirical estimating relies on experience and past performance, while analogous estimating involves using past projects as a reference point. Grass roots estimating involves breaking down the project into smaller components and estimating each one individually. Therefore, parametric estimating is the best choice for the given scenario.

Question 6

Value engineering is aimed at increasing the value or productivity of a work element while minimizing the cost.

Accepted Answer

Value engineering is a process that involves identifying and analyzing the various elements of a project with a view to improving their value or productivity while minimizing the cost. The aim is to increase the overall value of the project without increasing the cost.

Question 7

Projects often include indirect costs that are necessary to keep the organization running,but are not associated with one specific project.Which of the following items are most typically considered to be indirect costs?​ 
A) costs associated with material and purchased parts 
B) the cost of labor provided by project team members, consultants and subcontractors 
C) executive salaries, utilities and insurance 
D) travel cost for the project team

Accepted Answer

Executive salaries, utilities, and insurance are considered indirect costs as they are essential expenses for the organization's overall operation and not directly linked to any specific project.

Options A and D are direct costs as they are specifically associated with a particular project. However, option B is not a clear distinction between direct and indirect costs as labor costs can be considered either direct or indirect depending on the specific circumstances.

Question 8

Which estimating technique decomposes the work into lower,more detailed pieces,preferably the lowest level of WBS work elements,for which estimates are prepared and then aggregates them into a total quantity for the project?​ 
A) piece meal pricing 
B) decomposition estimating 
C) bottom-up estimating 
D) grass roots estimating

Accepted Answer

Bottom-up estimating involves breaking down the work into smaller, more detailed pieces (preferably down to the lowest level of the WBS), estimating the effort or cost for each piece, and then aggregating them up into a total quantity for the project. This is a more accurate and reliable technique than piece meal pricing or grass roots estimating because it takes into account all of the individual components of the project. Decomposition estimating is a more general term that could refer to any technique that breaks down the work into smaller pieces, so it is not as specific to the bottom-up approach.

Question 9

Which estimating technique uses a statistical relationship between historical data and other variables (e.g.,square footage in construction,lines of code in software development)to calculate an estimate for scope,cost and duration? 
A) analogous estimating 
B) parametric estimating 
C) bottom-up estimating 
D) Monte Carlo estimating

Accepted Answer

Parametric estimating uses statistical relationships between historical data and other variables to estimate project scope, cost, and duration. This technique is particularly useful in industries such as construction and software development, where there are established relationships between variables like square footage and lines of code and project costs. Analogous estimating relies on historical data from similar projects to estimate project costs, whereas bottom-up estimating requires a detailed breakdown of individual project tasks and associated costs. Monte Carlo estimating is a simulation technique that generates multiple scenario outcomes based on probabilities and variables, which can be helpful in resource allocation and risk management.

Question 10

Costs that repeat as project work continues such as the cost of writing code or laying bricks are appropriately classified as:​ 
A) fixed costs. 
B) indirect costs. 
C) nonrecurring costs. 
D) recurring costs

Accepted Answer

Recurring costs are costs that repeat as project work continues, such as the cost of writing code or laying bricks. This is in contrast to non-recurring costs, which are one-time costs such as purchasing equipment, or indirect costs, which are costs that cannot be directly attributed to a specific project but are necessary for the business to operate. Fixed costs are costs that do not change with the level of production or sales, such as rent or salaries. Therefore, the appropriate classification for costs that repeat as project work continues is recurring costs.

Question 11

All of the following factors must be in place in order to develop an analogous estimate effectively EXCEPT:​ 
A) An organization must know details behind the time value of money. 
B) An organization must know how and to what extent the proposed project differs from the previous project. 
C) An organization must have experience in performing similar projects. 
D) An organization must know how much previous projects actually cost.

Accepted Answer

While understanding the time value of money can be helpful in estimating project costs, it is not a requirement for developing an analogous estimate. The other factors listed, such as project similarities, past experience, and knowledge of previous project costs, are crucial in accurately estimating costs for a new project based on similar past projects.

Question 12

Activity based costing allocates overhead (indirect costs)to fixed costs based upon four different types of drivers.Which of the following is one of the cost drivers that serves as a basis of cost allocation?​ 
A) number of units produced 
B) number of labor hours 
C) quantity of materials used 
D) direct equipment costs

Accepted Answer

The answer of Activity based costing allocates overhead (indirect costs)to...

Question 13

What type of cost is incurred when a project must be conducted faster than normal,and overtime for workers and / or extra charges for rapid delivery from suppliers are necessary? 
A) marginal costs 
B) expedited costs 
C) nonrecurring costs 
D) variable costs.

Accepted Answer

Expedited costs are incurred when a project must be conducted faster than normal, and overtime for workers and/or extra charges for rapid delivery from suppliers are necessary. Marginal costs refer to the additional cost associated with producing one more unit of a product. Nonrecurring costs refer to one-time costs that are not expected to repeat in the future. Variable costs are costs that vary with the level of production or sales. None of these options accurately describe the type of cost incurred when a project is rushed and requires expedited measures.

Question 14

Complex projects such as research and development for new products often employ rolling wave planning to estimate costs.Which of the following best describes "rolling wave" planning? 
A) Project managers render a definitive estimate for the first stage and an order of magnitude estimate for the remainder of the project. 
B) Project managers render an order of magnitude estimate for the first stage and a definitive estimate for the remainder of the project. 
C) Project managers render definitive estimates for all stages of the project during initiation. 
D) Project managers render an order of magnitude estimate for all stages of the project.

Accepted Answer

Rolling wave planning involves only estimating the costs and requirements for the immediate future, typically the next phase or stage of the project. This allows for flexibility and adjustment as the project progresses and more information becomes available. Therefore, project managers would render a definitive estimate for the first stage and an order of magnitude estimate for the remainder of the project.

Question 15

Vendor bid analysis is used to determine whether the price being asked by the vendors appears to be reasonable.

Accepted Answer

Vendor bid analysis involves comparing the prices offered by different vendors for a particular product or service, and evaluating whether the prices are reasonable and competitive based on factors such as market rates, industry standards, and the quality or features of the product/service being offered. The goal of vendor bid analysis is to ensure that buyers are not overpaying for goods or services, and are getting the best value for their money.

Question 16

The cost management plan provides guidelines to the project manager and other stakeholders and serves all of the following purposes EXCEPT:​ 
A) It shows how to develop and share relevant, accurate and timely information on cost that the project manager, sponsor and other stakeholders can use to make intelligent and ethical decisions. 
B) It documents how the project statement of work and business case should be created. 
C) It helps all project stakeholders focus appropriately on schedule and cost performance. 
D) It provides feedback, thereby showing how the project's success is linked to the business objectives for which it was undertaken.

Accepted Answer

The cost management plan provides guidelines for managing the project's costs, including processes for estimating, budgeting, monitoring, and controlling costs. It does not document how the project statement of work and business case should be created, which is covered by the project charter and other planning documents.

Question 17

Figure 9-1 Time-phased budget
-Consider the time-phased budget presented in Figure 9-1.What is the cumulative project budget through the end of April?​ 
A) $ 8.000 
B) $20,000 
C) $38,000 
D) $46,000

Accepted Answer

The answer of  Figure 9-1 Time-phased budget
-Consider the time-phased...

Question 18

A project manager needs to ensure that the cumulative amount of cash coming into the project either from internal budgeting or from customer payments meets or exceeds the demands for paying cash out.

Accepted Answer

This is true because a project manager must ensure that the project remains financially stable by managing the cash inflows and outflows effectively. It is important to have enough cash coming in to cover the expenses of the project to avoid any financial crises.

Question 19

All of the following items describe an aspect of life cycle costing EXCEPT:​ 
A) Life cycle cost includes the cost of both creating the project and of using the result of the project during its useful life. 
B) Many project selection decisions are made based upon life cycle cost. 
C) Life cycle cost only includes the project cost from initiating through closing 
D) Project managers may need to consider disposal costs of the product after its useful life is complete to calculate total life cycle cost.

Accepted Answer

Life cycle cost includes all costs associated with the project or product from its creation to its disposal, including planning, execution, maintenance, and disposal. It does not only include the project cost from initiating through closing.

Question 20

Which of the following terms best describes extra money in the project budget to be used if necessary - usually if a risk event occurs? 
A) reserve 
B) insurance 
C) padding 
D) discretionary fund

Accepted Answer

Reserve is the term used for extra money in the project budget that is set aside to be used if necessary, typically in case of a risk event. Insurance and discretionary fund have different meanings, and padding implies the addition of unnecessary extra expenses.

Quiz 10: Budgeting Projects

The _________is the approved budget,usually in a time distribution format,that is used to estimate,monitor,and control the overall cost performance of the project.

The process of developing an approximation of monetary resources needed to complete project activities is known as:

There are many causes of variation in project costs.Which of the following accurately describes the nature of this variation?

The documentation of a project cost estimate generally requires substantial supporting detail to include all of these EXCEPT:

Which estimating technique uses a statistical relationship to calculate cost or duration based on historical data and other project parameters?

Value engineering is aimed at increasing the value or productivity of a work element while minimizing the cost.

Projects often include indirect costs that are necessary to keep the organization running,but are not associated with one specific project.Which of the following items are most typically considered to be indirect costs?

Which estimating technique decomposes the work into lower,more detailed pieces,preferably the lowest level of WBS work elements,for which estimates are prepared and then aggregates them into a total quantity for the project?

Which estimating technique uses a statistical relationship between historical data and other variables (e.g.,square footage in construction,lines of code in software development) to calculate an estimate for scope,cost and duration?

Costs that repeat as project work continues such as the cost of writing code or laying bricks are appropriately classified as:

All of the following factors must be in place in order to develop an analogous estimate effectively EXCEPT:

Activity based costing allocates overhead (indirect costs) to fixed costs based upon four different types of drivers.Which of the following is one of the cost drivers that serves as a basis of cost allocation?

What type of cost is incurred when a project must be conducted faster than normal,and overtime for workers and / or extra charges for rapid delivery from suppliers are necessary?

Complex projects such as research and development for new products often employ rolling wave planning to estimate costs.Which of the following best describes "rolling wave" planning?

Vendor bid analysis is used to determine whether the price being asked by the vendors appears to be reasonable.

The cost management plan provides guidelines to the project manager and other stakeholders and serves all of the following purposes EXCEPT:

Figure 9-1 Time-phased budget -Consider the time-phased budget presented in Figure 9-1.What is the cumulative project budget through the end of April?

A project manager needs to ensure that the cumulative amount of cash coming into the project either from internal budgeting or from customer payments meets or exceeds the demands for paying cash out.

All of the following items describe an aspect of life cycle costing EXCEPT:

Which of the following terms best describes extra money in the project budget to be used if necessary - usually if a risk event occurs?

Quiz 10: Budgeting Projects

The _________is the approved budget,usually in a time distribution format,that is used to estimate,monitor,and control the overall cost performance of the project.

The process of developing an approximation of monetary resources needed to complete project activities is known as:​

There are many causes of variation in project costs.Which of the following accurately describes the nature of this variation?​

The documentation of a project cost estimate generally requires substantial supporting detail to include all of these EXCEPT:​

Which estimating technique uses a statistical relationship to calculate cost or duration based on historical data and other project parameters?​

Value engineering is aimed at increasing the value or productivity of a work element while minimizing the cost.

Projects often include indirect costs that are necessary to keep the organization running,but are not associated with one specific project.Which of the following items are most typically considered to be indirect costs?​

Which estimating technique decomposes the work into lower,more detailed pieces,preferably the lowest level of WBS work elements,for which estimates are prepared and then aggregates them into a total quantity for the project?​

Which estimating technique uses a statistical relationship between historical data and other variables (e.g.,square footage in construction,lines of code in software development) to calculate an estimate for scope,cost and duration?

Costs that repeat as project work continues such as the cost of writing code or laying bricks are appropriately classified as:​

All of the following factors must be in place in order to develop an analogous estimate effectively EXCEPT:​

Activity based costing allocates overhead (indirect costs) to fixed costs based upon four different types of drivers.Which of the following is one of the cost drivers that serves as a basis of cost allocation?​

What type of cost is incurred when a project must be conducted faster than normal,and overtime for workers and / or extra charges for rapid delivery from suppliers are necessary?

Complex projects such as research and development for new products often employ rolling wave planning to estimate costs.Which of the following best describes "rolling wave" planning?

Vendor bid analysis is used to determine whether the price being asked by the vendors appears to be reasonable.

The cost management plan provides guidelines to the project manager and other stakeholders and serves all of the following purposes EXCEPT:​

Figure 9-1 Time-phased budget -Consider the time-phased budget presented in Figure 9-1.What is the cumulative project budget through the end of April?​

A project manager needs to ensure that the cumulative amount of cash coming into the project either from internal budgeting or from customer payments meets or exceeds the demands for paying cash out.

All of the following items describe an aspect of life cycle costing EXCEPT:​

Which of the following terms best describes extra money in the project budget to be used if necessary - usually if a risk event occurs?

The process of developing an approximation of monetary resources needed to complete project activities is known as:

There are many causes of variation in project costs.Which of the following accurately describes the nature of this variation?

The documentation of a project cost estimate generally requires substantial supporting detail to include all of these EXCEPT:

Which estimating technique uses a statistical relationship to calculate cost or duration based on historical data and other project parameters?

Projects often include indirect costs that are necessary to keep the organization running,but are not associated with one specific project.Which of the following items are most typically considered to be indirect costs?

Which estimating technique decomposes the work into lower,more detailed pieces,preferably the lowest level of WBS work elements,for which estimates are prepared and then aggregates them into a total quantity for the project?

Costs that repeat as project work continues such as the cost of writing code or laying bricks are appropriately classified as:

All of the following factors must be in place in order to develop an analogous estimate effectively EXCEPT:

Activity based costing allocates overhead (indirect costs) to fixed costs based upon four different types of drivers.Which of the following is one of the cost drivers that serves as a basis of cost allocation?

The cost management plan provides guidelines to the project manager and other stakeholders and serves all of the following purposes EXCEPT:

Figure 9-1 Time-phased budget -Consider the time-phased budget presented in Figure 9-1.What is the cumulative project budget through the end of April?

All of the following items describe an aspect of life cycle costing EXCEPT: