Chapter 7

Front 1

The Cost Management Plan is created as part of the ________ ________ ________ _______ process in integration management.

Back 1

Develop Project Management Plan

Front 2

Estime Costs is done during ____ process group.

Back 2

Planning

Front 3

Determine budget is done during __________ process group.

Back 3

Planning

Front 4

Control Costs is done during _________ ___ _______ process group.

Back 4

Monitoring and Controlling

Front 5

The __________ __________ includes:

1. Specifications for how estimates should be stated (in what currency).

2. The level or accuracy needed for estimates.

3. Reporting formats to be used.

4. Rules for measuring cost performance.

5. Whether costs will include both direct and indirect costs

6. Control thresholds.

Back 5

Cost Management

Front 6

The creation of the Cost Management Plan requires thinking ahead about how costs will be ____________.

Back 6

controlled

Front 7

__________ __________ __________ is looking at the cost of the whole life of the product, not just the cost of the product.

Back 7

Life Cycle Costing

Front 8

__________ ___________ involves finding a less costly way to do the same work.

Back 8

Value Analysis

Front 9

Value analysis requires the sytematic use of tehniques to identify the required project functions, assign values to these functions, and provide functions a the lowest overall cost without __________ __ _________.

Back 9

loss of performance.

Front 10

The _______ _______ process is where the estimates for each activity are made.

Back 10

Estimate Costs

Front 11

Estimatinig should be based on a ______ to improve accuracy.

Back 11

WBS

Front 12

Estimating should be done by ___________________ whenever possible to improve accuracy.

Back 12

the person doing the work

Front 13

A ________ _______ should be kept and not changed except for approved project changes.

Back 13

cost baseline

Front 14

____________ ___________ from past projects is a key to improving estimates.

Back 14

Historical information

Front 15

The project ____ should be managed to the project cost baseline.

Back 15

costs

Front 16

Changes are approved in the _____ ____________ _____________process.

Back 16

integrated change control

Front 17

Estimates are more accurate if ____________ ________ work components are estimated.

Back 17

smaller size

Front 18

Changes should be requested when __________________.

Back 18

when cost problems occur

Front 19

Plans should be revised during completion of the work as necessary with _______ ______.

Back 19

approved changes

Front 20

_____________ must be reviewed when they are received to see if they are reasonable and to check for padding risks.

Back 20

Estimates

Front 21

Estimates must be kepp ________ through the life of the project by reestimating and reviewing them periodically.

Back 21

realistic

Front 22

Estimates can be decreased by reducing or eliminating ________.

Back 22

risks

Front 23

The _____ _____ has the professional responsibility to provide estimates that are accurate as feasible and to maintain the integrity of those estimates throughout the life of the project.

Back 23

project manager

Front 24

________ costs change with the amount of production or amount of work. Examples include the cost of material, supplies, and wages.

Back 24

Variable

Front 25

______ costs are overhead items or costs incurred for the benefit of more than one project. Examples include taxes, fringe benefits, and janitorial services.

Back 25

Fixed

Front 26

In order to estimate, you need to know the detail of what you are estimating, what is out of scope, and what constraints might have been placed on the project. These can be found by looking at at:

Back 26

1. all the components of the scope baseline.

2. project scope statement

3. WBS

4. WBS Dictionary

Front 27

You need a ____ before you can come up with a budget.

Back 27

schedule

Front 28

The timing of when you buy something affects it's _____.

Back 28

cost.

Front 29

You need to develope time-phased spending plan to control project ________ so that you know how much money will be spent for periodic periods of time.

Back 29

expenditures

Front 30

_________ systems can increase productivity and save money, but they are still a cost item to be estimated

Back 30

Reward

Front 31

The ____ _______ plan also lists resources (including the quantity and their skills) intended to be used for the project.

Back 31

human resources

Front 32

____ management will save time and money, but there are costs associated with the efforts to control ______.

Back 32

- Risk
- risk.

Front 33

Risks are more properly thought of as both an input to the Estimate Cost process and an _______.

Back 33

output.

Front 34

Planning is _____.

Back 34

iterative.

Front 35

_________ help make the work of creating templates, processes, procedures, and lessons learned for the project faster and easier.

Back 35

Policies

Front 36

In ____-_______ estimating; detailed estimating is done for each activity or work package, and the estimates are then rolled up into control accounts and finally into an overall project estimate. To do this well requires an accurate ______.

Back 36

Bottom-Up
WBS

Front 37

Advantages of Analogous Estimating are:

Back 37

1. Quick

2. Activities need not be identified

3. Less costly to create

4. Gives the project mgr an idea of the level of management's expectations

5. Overall project costs will be capped

Front 38

Disadvantages of Analogous Estimating include:

Back 38

1. Less accurate

2. Estimates are prepared with a limited amount of detailed information and understanding of the project.

3. Requires considerable experiance to do well.

4. Infighting to gain the biggest piece of the budget without being able to justify the need

5. Extremely difficult for project with uncertainty

6. Does not take into account the differences between projects.

Front 39

Advantages of Bottom-Up Estimating are:

Back 39

1. More accurate

2. Gains buy-in from the team because the team creates estimates they can live with

3. Based on a detailed analysis of the project

4. Provides a basis for monitoring and controlling, performance measurement, and management.

Front 40

Disadvantages of of Bottom-Up Estimating are:

Back 40

1. Takes time and expense to do this form of estimating

2. Tendency for the team to pad estimates unless taught about reserves

3. Requires that the project be defined and well understood before work begins

4. Requires time to break the project down into smaller pieces

Front 41

Detailed cost estimating requires the knowledge of the actual cost of _____.

Back 41

labor

Front 42

It is required project management to accomodate the xost and time risk in a project estimate through use of _____.

Back 42

reserves

Front 43

In _______ _______, you identify which activities on your project have significant risks and determine how much t ime and money to set aside to deal with the risks if they happen.

Back 43

risk analysis

Front 44

_______ ________ reserves are used for the specifically identified risks, and a lump sum management reserve is used to accomodate uniditified risks.

Back 44

Ris contingency

Front 45

_______ __ ____ estimate is usually made during the intitiating process.

Back 45

Rough order of Magnitured (ROM)

Front 46

A typical range for a ROM estimate is +/- ___% from actual.

Back 46

50

Front 47

The Budget Estimate is usually made during the _______ phase and is in the range of - __% to _ + 25 from actual.

Back 47

planning
-10% to +25%

Front 48

The _______ estimate will come later during the project and project managers typically use the range of +/- __% of +/- _%

Back 48

10%

5%

Front 49

The Estimate Cost process should result in _______ ______ estimates and the basis for those estimates.

Back 49

activity cost

Front 50

The Estimate Cost process may result in:

Back 50

1. changes or updates to the risk register

2. updates to other parts of the project management plan and project documents in order to decrease project costs.

Front 51

The ____ __ of the project needs to be calculated in order to determine the amount of funds the organization needs to set aside or have available for the project.

Back 51

total cost

Front 52

A project ______ can not be completed without risk management activities and the inclusion of reserves.

Back 52

estimate

Front 53

_______ reserves are to address the cost impacts of the risks remaining during risk response planning.

Back 53

Contingency

Front 54

_____ reserves are any extra funds to be set aside to cover unforseen risks or changes to the project.

Back 54

Management

Front 55

The _____ budget is the cost baseline plus the management reserves.

Back 55

cost

Front 56

To create a budget, activity costs are rolled up to ____ ____ costs.

Back 56

work package

Front 57

Work package costs are then rolled up to ___ _____ costs and final into project costs. This process is called _______ _____.

Back 57

control account.
cost aggregation.

Front 58

The cost-baseline, therefore, is time-phased and may be shown as a _ ________,

Back 58

S curve

Front 59

After the cost baseline and cost budget are completed, many estimators will compare these numbers to parametric estimates, expert judgement, or ________ __________ in order to do a sanity check.

Back 59

historical relationships

Front 60

An unrealistic budget is the _____ _______ fault.

Back 60

project manager's

Front 61

Without oversight and _______, neither the proejct nor you will be as successful.

Back 61

Control

Front 62

________ helps you see if there are any variances.

Back 62

Measurement

Front 63

The _______ ______ plan should include what you will measure, when, and what amount of variation between planned and actual will require action.

Back 63

cost management

Front 64

To get the ______ __ you complete activity estimates, work package estimates, control account estimates, project estimates, contingency reserves, cost base, management reserves.

Back 64

cost budget

Front 65

An activity is considered 50% complete when it ________ and gets credit for the last 50% when complete.

Back 65

betgins as part of 50/50 rule

Front 66

In the ________ rule an activity is considered 20% complete when it begins and gets credit for last 80% when it is complete.

Back 66

20/80

Front 67

_______ ______ will lead to budget forecasts, change requests, and other items wthat will need to be communicated.

Back 67

Earned Value

Front 68

A sign of a poor ______ _______ is ________ ___ who has to work overtime at the end of the project because he or she did not control the project along the way

Back 68

project manager
project manager

Front 69

Results from earned value analysis indicate potential ______ of the project from scope, schedule, and cost base line.

Back 69

variation

Front 70

___ value: as of today, what is the estimated value of the work planned to be done?

Back 70

Planned

Front 71

_____ value: As of today, what is the estimated value of the work actually accomplished?

Back 71

Earned

Front 72

______ ________; As of today, what is the actual cost ihncurred for the work accomplished?

Back 72

Actual Cost

Front 73

______ ___ _______; How much did we Budget for the Total project effort?

Back 73

Budget at Completion

Front 74

_________ ____ ________; What do we currently expect the Total project to cost (forecast)?

Back 74

Estimate at Completion

Front 75

_____ __ __________; From this point on, how much More do we expect it to cost to finish the project?

Back 75

Estimate to Complete

Front 76

________ ____ ______; As of today, how much over or under budget do we expect to be at the end of the project?

Back 76

Variance at Completion

Front 77

What is the formula for Cost Variance (CV)?

Back 77

Earned Value - Actual Cost = Cost Variance

Neg is over budget
Pos is under budget

Front 78

What is the formula for Schedule Variance?

Back 78

Earned Value - Planned Value = Schedule Variance.

Neg is behind sched
Pos is ahead of sched

Front 79

What is the formula for Cost Performance Index (CPI)?

Back 79

Earned Value/Actual Cost = Cost Performance Index

Front 80

What is the formula for Schedule Performance Index?

Back 80

Earned Value/Planned Value = Schedule Performance Index.

Front 81

_______ ______ Index tells us that we are only progress at ___% of ther rate originally planned.

Back 81

Schedule Performance

Front 82

What does Cost Performance Index tell us?

Back 82

We are getting $____ worth of work out of every $1 spent. Funds are or are not being used efficiently.

Front 83

________ _________ _____ tells us that as of now, how much do we expect the total project to cost $___.

Back 83

Estimate at Completion

Front 84

Actual Cost + Bottom-up estimate/Estimate to Complete is the formula to calulate what?

Back 84

Actual plus a new estimate for the remining work. It is used when the original estimate was fundamentally flawed.

Front 85

_________/Cumulative CPI formula is used if no variances from the BAC hace occured or you will continue at the same rate of spending.

Back 85

Budget at Completion

Front 86

What formula calculates actual to date plus remaining budget. It is used when current variances are thought to be atypical of the future.

Back 86

Actual Cost +(Budget at Completion-Earned Value).

Front 87

The formual for To Complete Performance Index (TCPI) is...

Back 87

BAC-EV/BAC-AC

Front 88

What does To Complete Performance Index (TCPI) tell us?

Back 88

It answers the question of "In order to stay within budget, what rate must we meet for the remaining work?"

Front 89

EAC-AC/Restimate is the formual for...

Back 89

Estimate to Complete

Front 90

ETC tells us...

Back 90

How much more the project will cost - reestimate the remaining work from the bottom up.

Front 91

The formula for Variance at Completion (VAC) is...

Back 91

BAC-EAC

Front 92

Variance at Completion tells us how much over or under __________ we will be at the end of the project.

Back 92

budget

Front 93

Any time _____ is used in a formula it comes first.

Back 93

Earned Value

Front 94

If the formula is a ________ it is EV minus something.

Back 94

variance

Front 95

If the answer is an ______, it is EV devided by something.

Back 95

index

Front 96

If the formula relates to Cost, us ___.

Back 96

Actual Cost

Front 97

If the formula relates to schedule, use ___.

Back 97

Planned Value

Front 98

For ___ interpretation, negative is bad and positive is good.

Back 98

variances

Front 99

For _______ interpretation, greater than one is good; less than one is bad.

Back 99

indices

Front 100

_______ ______ is an effective tool for measuring performance and determining the need to request changes.

Back 100

Earned Value

Front 101

One common way to compute estimate at completion (EAC) is to take the budget at completion (BAC) and:

Back 101

Divide by Cost Performance Index (CPI). The formual for EAC is BAC/CPI.

Front 102

Estimate at completion (EAC) is a period of evaluation of:

Back 102

The anticipated total cost at project completion.

Front 103

If Earned Value (EV) = 350, actual cost (AC) = 400, planned value (PV) = 325, what is cost variance (CV)?

Back 103

EV-AC = CV so the answer is -50

Front 104

The customer responsible for overseeing your project asks you to provide a written cost estimate that is 30% higher than your estimate of the project's cost. He explains that the budgeting process requires managers to estimate pessimistically to ensure enough money is allocated for projects. What is the BEST way to handle this?

Back 104

Ask for information on risks that would cause your estimate to be too low? Presenting anything besides yoru original estimate is inaccurate and calls into question your competence and integrity as a project manager. The customer should list potential changes and risks to your estimate. If the costs and risks are justified, you can increase the budget.

Front 105

Analogous estimating:

Back 105

Uses top-down estimating techniques - Analogous estimating is used most frequently during the planning process, not the executing process. You don't need historical costs.

Front 106

All of the following are outputs of the Estimate Costs process EXCEPT:

A. An understanding of the cost risk in the work that has been estimated

B. The prevention of inappropriate changes from being included in the cst baseline.

C. An indication of the range of possible costs for the project.

D. Documentation of any assumptions made during the Estimate Cost process.

Back 106

The prevention of inappropriate changes from being included in the cost baseline.

Front 107

The main focus of life-cycle costing is to:

Back 107

Consdier operations and maintenance costs in making project decisions.

Front 108

Cost performance measurement is BEST done through...

A. Asking for a percent complete from each team member and reporting that in the monthly progress report.

B. Calculating earned value and using the indexes and other calculations to report past performance and forecast future performance.

C. Using the 50/50 rule and making sure the life cycle cost is less than project cost.

D. Focusing on the amount of expended last month and what will be expended the following month.

Back 108

Calculating earned value and using the indexes and other calculations to report past performance and forecast future performance because this answer looks at the past and uses this information to estimate future costs.

Front 109

A cost performance index (CPI) of 0.89 means:

Back 109

The project is only getting 89cents out of every $1 for project work.

Front 110

A schedule performance index of 0.76 means:

Back 110

You are only progressing at 76% of the planned rate.

Front 111

Which of the following is NOT needed in order to come up with a project estimate>

A. A WBS

B. A network diagram

C. Risks

D. A change control system

Back 111

D. A change control system as it is not required to obtain estimates.

Front 112

Which of the following is an example of parametric estimating?

A.Dollars per module

B. Learning bend

C. Bottom-up

D. CPMA

Back 112

A. Dollars per module, parametric estimates use a mathematical model to predict project cost or time.

Front 113

A rough order of magnitude estimate is made during which project management process group?

Back 113

Initiating

Front 114

A cost baseline is an output of which cost management process?

Back 114

Determine budget process

Front 115

During which project management process group are budget forecasts created?

Back 115

Monitoring and Controlling as they are outputs of cost control.

Front 116

Which type of cost is team training?

A. Direct

B. NPV

C. Indirect

D. Fixed

Back 116

A. Direct because you are training the team on skills required for the project. The cost is directly related to the project.

Front 117

Project setup costs are an example of:

A. variable costs

B. Fixed costs

C. Overhead costs

D. Opportunity costs

Back 117

B. Fixed costs as set up costs do no change as production on the project changes.

Front 118

Value analysis is performed to get.

A. More value from the cost analysis

B. Management to buy into the project.

C. The team to buy into the project.

D. A less costly way of doing the same work.

Back 118

D. A less costly way of doing the work.

Front 119

Who has the cost risk in fixed price contract?

A. the team

B. the buyer

C. the seller

D. Management

Back 119

The seller

Front 120

Which of the following represents the estimated value ofthe work actually accomplished:

A. Earned Value (EV)

B. Planned Value (PV)

C. Actual Cost (AC)

D. Cost Variance (CV)

Back 120

A. Earned Value (EV) as this is the definition of EV.

Front 121

Which of the following are ALL items inlcudded in the cost management plan?

A. The level of accuracy needed for estimates, rules for measuring cost performance, specifications for how duration estimates should be stated.

B. Specifications for how estiamtes should be stated, rule for measuring cost performance, the level of accuracy needed for estimates.

C. Rules for measuring team performance, the level of accuracy needed for estimates, specifications for how estimates should be stated.

D. Specifications for how estimates should be stated, the lovel of risk needed for estimates, rules for measuring cost performance.

Back 121

B. Specifications for how estiamtes should be stated, rule for measuring cost performance, the level of accuracy needed for estimates.

Front 122

Your project has a medium amount of risk and is not very well defined. The sponsor hands you a project charter and asks you to confirm that the project can be completed within the project cost budget. What isthe BEST method to handle this?

Back 122

Build the estimate in the form of a range of possible results.

Front 123

The cost contingency reserves should be:

A. Hidden to prevent management from disallowoing the reserve.

B. Added to each activity to provide the customer with a shorter critical path.

C. Maintained by management to cover cost overruns.

D. Added to the base costs of the project to account for risks.

Back 123

D. Added to the base costs of the project to account for risks

Front 124

The seller tells you that your activities have resulted in an increase in their costs. You should:

A. Recommend a change to the project charter

B. Have a meeting with management to find out what to do.

C. Ask the seller for supporting information.

D. Deny any wrong doing.

Back 124

C. Ask the seller for supporting information.
This is a social and professional responsibility question. This question involves a claim.

Front 125

Your cost forecast shows that you will have a cost overrun at the end of the project. Which of the following should you do?

A. Eliminate risks in estimates and reestimates

B. Meet with the sponsor to find out what work can be done sooner.

C. Cut quality

D. Decrease scope

Back 125

A. Eliminate risks in estimates and reestimates - it is the answer with the least negative response

Front 126

A new store development project requires the purchase of various equipment, machinery, and furniture. The department responsible for the development recently centralized its external purchasing process and standardized its new order systems. In which document can these new procedures be found.

A. Project Scope Statement

B. WBS

C. Staffing and Management Plan

D. Organizational Policies

Back 126

D. Organizational Policies - Procedures for the rental and purchase of supplies and equipment are found in the organizational policies part of organizational process assets.

Front 127

Early in the life cycle of your project, you are having a discussion with the sponsor about what estimating techniques should be used. you want a form of expert judgement, but the sponsor argues for analogous estimating. It would be BEST to:

A. Agree to analogous estimating, as it is a form of expert judgement

B. Suggest life cycle costing as a compromise

C. Determine why the sponsor wants such an accurate estimate.

D. Try to convince the sponsor to allow expert judgement because it is typically more accurate.

Back 127

A. Agree to analogous estimating, as it is a form of expert judgement

Front 128

You have just completed the initiating process of a small project and are moving into planning processes when a project stakeholder asks you for the project's budget and cost baseline. What should you tell her?

Back 128

The project budget and baseline will not be finalized and accepted until the planning processes are completed.

Front 129

The project manager is allocating overall cost estimates to individual activities to establish a baseline for measuring project performance. What process is this.

A. Cost Mgt

B. Estimate Costs

C. Determine Budget

D. Contorl Costs

Back 129

C. Determine Budget

Front 130

Monitoring costs expended to date in order to detect variances from the plan occurs during:

A. The creation of the cost change management plan

B. Recommending corrective actions

C. Updating the cost baseline

D. Product performance reviews.

Back 130

D. Product performance reviews.

Front 131

A manufacturing project has a schedule performance index of 0.89 and a cost performance inex of 0.9. Generally what is the BEST explanation for why this occured:

A. The scope was changed

B. A supplier went out of business and a new one needed to be found.

C. Additional equipment needed to be purchased.

D. A critical path activity took longer and needed more laborr hours to complete.

Back 131

D. A critical path activity took longer and needed more laborr hours to complete. It took longer and increased cost with less spent per $.

Front 132

Although the stakeholders thought there was enough money in the budget, halfway through the project the cost performance index (CPI) is 0.7. To determine the root cause, several stakeholders audit the project and discover the project cost budget was estimated analogously. Although the activity estimates add up to the project estimate, the stakeholders think something was missing in how the estimate was completed. Which of the following describes what was missing?

A. Estimated costs should be used to measure CPI.

B. SPI should be used, not CPI

C. Bottom-up estimating should have been used.

D. Past history was not taken into account.

Back 132

C. Bottom-up estimating should have been used.

Front 133

Earned value analysis is an example of:

A. Performance Reporting

B. Planning Control

C. Ishikawa diagrams

D. Integrating the project component into a whole.

Back 133

A. Performance Reporting

Front 134

You are about to take over a project from another project manager and find out the following information about the project. Activity Z has an early start date of 15 and a late start date of 20. Activity Z is a difficult activity. The cost performance index (CPI) is 1.1. The schedule performance index is (SPI) is 0.8. There are 11 stakeholders on the project. Based on this information, which of the following wold you be the MOST concerned about?

A. Schedule

B. Float

C. Cost

D. The number of available resources.

Back 134

A. Schedule because SPI is less than 1

Front 135

The difference between the cost baseline and the cost budget can be BEST described as:

A. The management reserve

B. The contingency reserve

C. The project cost estimate

D. The cost amount

Back 135

A. The management reserve

Front 136

You provide a project cost estimate for the project to the project sponsor. He is unhappy with the estimate, because he thinks the price should be lower. He asks you to cut 15% off the project estimate. What should you do?

Back 136

Inform the sponsor of activities to be cut to meet the difference.

Front 137

Cost risk means:

Back 137

There is a risk that project costs could go higher than planned.

Front 138

A project manager needs to analyze the proejct costs to find ways to decrease costs. It would be BEST if the project manager looks at...

Back 138

Direct costs and variable costs as theses costs are directly contributed to the project or vary with the amount of work accomplished.