Chapter 6 - Project Cost Management

Front 1

TRUE/FALSE:

Many information technology projects, that have cost overruns, involve new technology or business processes.

Back 1

True.

Front 2

TRUE/FALSE:

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

Back 2

True.

Front 3

TRUE/FALSE:

Internal rate of return (IRR) is the discount rate that makes net present value greater than zero.

Back 3

False.

Front 4

TRUE/FALSE:

A rough order of magnitude (ROM) estimate provides a rough idea of how long a project will run.

Back 4

False.

Front 5

TRUE/FALSE:

Analogous estimates are also called bottom-up estimating.

Back 5

False.

Front 6

TRUE/FALSE:

Bottom up estimating involves estimating individual work items and summing them to get a project total.

Back 6

True.

Front 7

TRUE/FALSE:

Constructive Cost Model (COCOMO) is used for estimating software development costs based on parameters.

Back 7

True.

Front 8

TRUE/FALSE:

Earned Value Management (EVM) is a project performance measurement technique that integrates scope, time, and cost data.

Back 8

True.

Front 9

TRUE/FALSE:

A project baseline is the original project plan plus any changes waiting for approvals.

Back 9

False.

Front 10

Project cost management includes the following three functions: (3).

Back 10

1. Resource planning
2. Cost estimating
3. Cost budgeting

Front 11

What is a sunk cost?

Back 11

The cost of a failed project.

Front 12

Life cycle costing is a method of ________________________.

Back 12

Including all of the costs associated with the project over its entire life.

Front 13

A parametric cost estimate is a __________ estimating technique and a __________ estimating technique.

Back 13

top down

statistical

Front 14

"Earned value" can best be defined as _____________________________________________________________________.

Back 14

The actual cost of work performed (ACWP) minus the budgeted cost of work performed (BCWP).

Front 15

The cost performance index (CPI) is ____________________.

Back 15

Earned value divided by actual cost.

Front 16

The project is considered on schedule if the scheduled performance index (SPI) is _______.

Back 16

One or 100 percent.

Front 17

In a software project, the planned value (PV) was 80,000, the earned value (EV) was 75,000, and the actual cost (AC) was 71,00, what is the schedule variance (SV)?

Back 17

-5,000.

Front 18

In a software project, the planned value (PV) was 80,000, the earned value (EV) was 75,000 and the actual cost (AC) was 71,000, what is the cost performance index?

Back 18

1.056

Front 19

In a software project, the planned value (PV) was 80,000, the earned value (EV) was 75,000 and the actual cost (AC) was 71,000, what is the cost variance (CV)?

Back 19

+4,000.

Front 20

Cash flow _________ is a method for determining the estimated annual costs and benefits for a project.

Back 20

analysis.

Front 21

___________________ management plan is a document that describes how cost variances will be managed on the project.

Back 21

Cost.

Front 22

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

Back 22

estimate.

Front 23

Cost performance ______________ is the ratio of earned value to actual cost; can be used to estimate the projected cost to complete the project.

Back 23

Index.

Front 24

______________ systems are older information technology systems that usually ran on an old mainframe computer.

Back 24

Legacy.

Front 25

____________________ is equal to revenues minus expenses.

Back 25

Profit.

Front 26

Profit ________________________ is the ratio between revenues and profits.

Back 26

margin.

Front 27

________________________ modeling is a cost-estimating technique that uses project characteristics in a mathematical model to estimate project costs.

Back 27

Parametric.

Front 28

According to the 1995 CHAOS study, what was the average cost overrun on IT projects? What was it in the 2001 study?

Back 28

169 percent in the 1995 study; 45 percent in the 2001 study.

Front 29

Suppose you sell 10 widgets per day on average, and the average cost per widget is $10. If you sold 11 widgets one day, what would the affect on profits be?

Back 29

There is not enough information to answer this question. You are given costs and asked to estimate profits. You do not know what the average profit is per widget. You might lose money by selling more widgets.

Front 30

What is another name for earned value?

Back 30

BCWP or budgeted cost of work performed