Question 1

The process of subtotaling costs by category or activity is called _____.

Accepted Answer

The process of subtotaling costs by category or activity is called cost aggregation. Parametric estimating involves using statistical data to estimate costs. Reserve analysis is the process of continually updating and evaluating the contingency reserve for a project. Alignment process refers to the effort to ensure all team members are working towards the same goal. Reconciliation is the process of comparing different sets of financial data to ensure accuracy.

Question 2

To calculate the EAC, the estimate to complete ETC) is added to the actual cost AC) of the activities already performed.

Accepted Answer

This is the correct formula for calculating the Estimate at Completion (EAC) in project management. The ETC is added to the Actual Cost (AC) to determine the total cost of the project.

Question 3

The process of matching funds provided with funds spent is called _____.

Accepted Answer

The process of matching funds provided with funds spent is called reconciliation. It involves comparing financial records and transactions to ensure that there are no discrepancies and that the funds received and spent are accurately accounted for. Parametric estimating is a method of cost estimation that uses statistical data and mathematical models to calculate costs. Reserve analysis is a process of regularly reviewing and adjusting project reserves to ensure that they are appropriate. The alignment process involves ensuring that project goals and objectives align with the overall strategic objectives of the organization. Cost aggregation is the process of grouping individual costs into larger categories for reporting and analysis.

Question 4

_____ refers) to decisions based on incomplete information made by people who have extensive personal experience.

Accepted Answer

Expert judgment is the best choice as it refers to decisions made by people who have extensive personal experience. The other options may not necessarily involve personal experience or expertise.

Question 5

_____ is money that is available for changing the scope of the project.

Accepted Answer

The answer of _____ is money that is available for...

Question 6

Which of the following is true about managing cash flow?

Accepted Answer

The answer of Which of the following is true about...

Question 7

If the costs of the activities up to the present vary from the original estimates, it will affect the total estimate for the project cost.

Accepted Answer

If the costs of the activities up to the present vary from the original estimates, it will affect the total estimate for the project cost as the project manager will need to adjust the budget accordingly. Any increase in costs may require additional funding or a reduction in scope, while any decrease in costs may allow for additional activities or features to be added to the project.

Question 8

_____ are measurable factors that can be used in an equation to calculate a result.

Accepted Answer

Parameters are measurable factors that can be used in an equation to calculate a result. Humm factors, Free floats, Attributes, and RFPs are not related to this definition.

Question 9

_____ is the money held to pay for predictable but unspecified extra costs.

Accepted Answer

A contingency reserve is set aside to pay for predictable but unspecified extra costs that may arise during the project. It is typically used for unexpected events or risks that were not accounted for in the budget. The other options are not applicable to this scenario. A planned reserve is set aside to cover known costs, a surety reserve is a specific type of contingency reserve in construction contracts, a management reserve is held by the project sponsor or manager for unforeseeable events that may impact the project, and a budget reserve is an amount set aside in the budget for unexpected expenses.

Question 10

Estimate to complete equals budget at completion minus schedule variance, i.e., ETC = BAC − SV.

Accepted Answer

Estimate to Complete (ETC) is calculated as the Budget at Completion (BAC) minus the Earned Value (EV), not the Schedule Variance (SV). SV is calculated as EV minus Planned Value (PV).

Question 11

Contractual agreements with vendors can be managed more conveniently if the unit of measure for partial completion is the same as that used for _____.

Accepted Answer

The answer of Contractual agreements with vendors can be managed...

Question 12

Estimates in the earliest stages of project selection are usually made using estimates based from previous projects that can be _____-multiplied by an adjustment factor to make the new estimate proportional to the original.

Accepted Answer

The term "scaled" best fits the description of adjusting a previous estimate to fit a new project by multiplying it with an adjustment factor. "Aggregated" and "subtotaled" imply adding up individual estimates, "predefined" suggests using set values rather than adjusting, and "rolled up" refers to summarizing multiple estimates into a single total.

Question 13

In estimating costs to compare and select projects, which of the following is true

Accepted Answer

In the earliest stages of project selection, estimates are usually made using estimates based from previous projects. This is because there may not be enough information available yet to make detailed estimates. The other options are incorrect as social factors are not necessarily the most important consideration, estimate methods used during selection may be quicker, appropriate resources should be used regardless of project location, and experienced managers can make accurate estimates even with limited information.

Question 14

The most accurate and time-consuming estimating method:

Accepted Answer

Identifying the cost of each item in each activity of the schedule, including labor and materials, is known as bottom-up estimating or the most detailed estimating method. It is the most accurate but also the most time-consuming method.

Question 15

A request for proposal RFP):

Accepted Answer

A request for proposal (RFP) is a document that outlines a project's requirements and solicits proposals from potential vendors or contractors. The purpose of an RFP is to receive suggestions and ideas from bidders on how to perform the scope of work and at what price. Option A is incorrect because the RFP is meant to generate a response from vendors, not to create a list of prospects. Option B is incorrect because it describes a joint agreement rather than an RFP. Option C is incorrect because it refers to preferential treatment instead of the RFP process. Option E is incorrect because it describes subcontractors rather than the RFP process.

Question 16

If the money needed to pay for a project is transferred to the project too far in advance:

Accepted Answer

Transferring money too far in advance means the organization cannot use those funds for other potentially urgent or high-return opportunities, leading to a loss of flexibility in financial management.

Question 17

Which of the following is true about management reserves versus contingency reserves?

Accepted Answer

Management reserves are not part of the project's budget baseline, but rather a separate budget for unforeseen events and risks. Contingency reserves, on the other hand, are included in the project's budget baseline and are intended to be spent if needed for known risks. Therefore, options A, C, D, and E are not correct.

Question 18

Reconsidering the selection of the project should take into consideration the _____ of the competing projects that were not chosen and who the _____ are for the projects that would be affected.

Accepted Answer

Reconsidering a project selection involves evaluating the economic viability (economic ratings) of unchosen projects and understanding the impact on key supporters or advocates (project champions) of the projects that would be affected.

Question 19

If a project consists of activities that are common to many other projects, _____ are available per unit.

Accepted Answer

When activities are common to many other projects, they can be averaged out to find the average cost per unit. This is because the resources and time needed to complete those activities are not unique to the project, and can be easily estimated based on past experiences. Fixed costs, variable costs, total costs, and marginal costs are all more specific and dependent on the unique characteristics of the project.

Question 20

A budget estimate based on a similar project is an) _____ estimate.

Accepted Answer

A budget estimate based on a similar project is an analogous estimate. Analogous estimation relies on historical information from projects with similar scope, scale, and risks to provide a top-level estimate of project costs.

Quiz 9: Estimating and Managing Costs