7 - Defining the Project Budget and Risk Plans Flashcards

1
Q

What are the main topics covered in this chapter?

A

Security, budgeting, risk activities and strategies for your project

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are the four types of security mentioned?

A
  • Physical security
  • Operational security
  • Digital security
  • Data security
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What constitutes the classic definition of the triple constraints?

A
  • Scope statement
  • Schedule
  • Budget
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Define a security policy.

A

A document outlining the minimum standards required to secure the organization’s technology-related systems, assets, and data

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What sections are typically included in a security policy?

A
  • Purpose
  • Scope
  • Definitions
  • Appendix
  • Roles and responsibilities
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is the purpose section of a security policy?

A

It states what the policy is protecting and why

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What does the scope section of a security policy define?

A

The people impacted by the policy and a description of the systems covered

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is the difference between a policy and a procedure document?

A

A policy outlines what to accomplish, while a procedure outlines how to accomplish it

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

List some examples of IT security policies.

A
  • Acceptable use policy
  • Protection for electronic confidential information
  • Network and system configuration
  • Cybersecurity incident response
  • Acquisition and disposal of technology assets
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is an acceptable use policy?

A

A policy instructing how to use the organization’s technology resources

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What are branding restrictions in the context of security?

A

Regulations related to trademarks, copyrights, and patents

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is a trademark?

A

A symbol used to identify a company, brand names, logos, etc.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

How are security clearances categorized for government organizations?

A
  • Confidential
  • Secret
  • Top secret
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is operational security?

A

Policies for performing background checks and security clearances

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What does digital security focus on?

A

Access and permissions to digital assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is multifactor authentication (MFA)?

A

A process requiring two or more methods to verify a user’s identity during sign-in

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is data classification?

A

Describing data according to its sensitivity, type, and value to the organization

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What are two types of sensitive data classifications mentioned?

A
  • Personally identifiable information (PII)
  • Personal health information (PHI)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What is the ‘need-to-know’ principle?

A

Information should only be shared with those who need it to perform a task

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is the primary role of a project manager regarding project costs?

A

Estimating costs to complete the work of the project and determining the project budget

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What are the four cost-estimating techniques?

A
  • Analogous (top-down)
  • Parametric
  • Bottom-up
  • Three-point estimates
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

True or False: Cost estimates become final once the cost baseline is determined.

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What are the four techniques for cost estimating discussed?

A

Analogous, parametric, bottom-up, and three-point estimates.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What is analogous estimating also known as?

A

Top-down estimating.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

At what stage is an analogous estimate typically performed?

A

During the early stages of scope planning.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

What does an analogous estimate rely on?

A

Historical data and expert judgment.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Which estimating technique is the least accurate?

A

Analogous estimating.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

What is parametric estimating based on?

A

A mathematical model that computes costs using the quantity of work multiplied by the rate.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

What is the most precise cost-estimating technique?

A

Bottom-up estimating.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

What critical inputs are needed for a bottom-up estimate?

A

The WBS and project resource requirements.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

What does the sum of all work package estimates provide?

A

The estimate of the total project cost.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

What is the difference between work effort and activity duration?

A

Work effort is the total time to complete a task, while activity duration is the estimated time it will take.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

What are three-point estimates based on?

A

The most likely estimate, optimistic estimate, and pessimistic estimate.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

How is the three-point estimate calculated?

A

By averaging the sum of the most likely, optimistic, and pessimistic estimates.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

What should you document when performing cost estimates?

A

Any assumptions made during the estimating process.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

What is the purpose of the project budget?

A

To aggregate all cost estimates and establish a cost baseline for the project.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

What are capital expenses typically associated with?

A

Assets providing long-term benefits.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

What types of expenses do project budgets usually include?

A

Salary, hardware, software, travel, training, and materials.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

Who is ultimately accountable for project expenditures?

A

The project manager.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

True or False: Bottom-up estimates are the most time-consuming to perform.

A

True.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

Fill in the blank: The cost estimate is calculated by multiplying the _______ for each resource by the rate for that resource.

A

work effort.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

What is a key consideration when using parametric estimating?

A

The accuracy of the data used to create the model.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

What should you do to ensure comprehensive cost estimating?

A

Brainstorm with your project team and subject matter experts.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

What is the most likely estimate in three-point estimating?

A

The estimate assuming costs will come in as expected.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

What potential costs should be discussed during team brainstorming?

A

Special training and travel costs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

What is the role of accounting or finance departments in budget tracking?

A

They may perform the actual tracking of expenses.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

What is a loaded rate?

A

A percentage of the employee’s salary that covers benefits.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

What may the project budget include regarding expenses?

A

Both capital expenses (CapEx) and operational expenses (OpEx).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

What are capital expenses?

A

Expenses for assets providing long-term benefits, such as:
* Equipment purchases
* Software purchases
* Building purchases
* Vehicle purchases

Capital expenses are managed differently than operational expenses.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
50
Q

What are operational expenses?

A

Expenses for day-to-day operations, including:
* Administrative costs
* Training
* Travel
* Supplies
* Salaries
* Rent

Understanding cost categories is essential for tracking resources.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
51
Q

What is a project budget?

A

A financial plan outlining estimated costs for a project, varying by project type.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
52
Q

How can project budgets be created?

A

Budgets can be created in:
* Spreadsheet format
* Budgeting software

They may be divided into monthly or quarterly increments.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
53
Q

What is a contingency reserve?

A

Funds set aside to cover unexpected costs due to:
* Scope creep
* Risks
* Change requests
* Variances in estimates

Typically a percentage of total project cost.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
54
Q

What is a management reserve?

A

Funds allocated by upper management for unforeseen costs, requiring approval for use.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
55
Q

What is the difference between contingency and management reserves?

A

Contingency reserves are controlled by the project manager, while management reserves require upper management approval.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
56
Q

What is a cost baseline?

A

The total approved expected cost for the project, used to measure future expenditures.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
57
Q

What is the purpose of expenditure tracking?

A

To measure project spending, determine burn rate, and compare actual expenditures to the cost baseline.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
58
Q

What is a budget burndown chart?

A

A visual representation showing the burn rate of the budget over time.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
59
Q

What is earned value management (EVM)?

A

A performance measurement technique comparing planned value, earned value, and actual costs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
60
Q

Define Planned Value (PV).

A

The cost of work authorized and budgeted for a specific schedule activity.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
61
Q

Define Actual Cost (AC).

A

The actual cost incurred for completing a work component during a specific time period.

62
Q

Define Earned Value (EV).

A

The value of work completed to date, expressed as a percentage of the planned budget.

63
Q

What is Cost Variance (CV)?

A

The difference between earned value and actual cost, indicating if costs are over or under budget.

64
Q

What is Schedule Variance (SV)?

A

The difference between earned value and planned value, indicating schedule performance.

65
Q

What are Performance Indexes?

A

Metrics used to calculate efficiency and predict future project performance, including CPI.

66
Q

Fill in the blank: The formula for Cost Variance (CV) is CV = ______ - AC.

67
Q

Fill in the blank: The formula for Schedule Variance (SV) is SV = ______ - PV.

68
Q

True or False: Management reserves are included in the project budget.

69
Q

What should be communicated to the project stakeholders regarding the budget?

A

The cost baseline and any specific budget information they require.

70
Q

What is the burn rate?

A

The rate at which project funds are spent over time.

71
Q

What is the significance of a negative Cost Variance?

A

It indicates that costs are higher than budgeted.

72
Q

What are efficiency indicators for project performance?

A

EV and SV

EV stands for Earned Value, and SV stands for Schedule Variance.

73
Q

What do cost performance index (CPI) and schedule performance index (SPI) measure?

A

CPI measures cost efficiency; SPI measures schedule efficiency.

74
Q

How is the cost performance index (CPI) calculated?

A

CPI = EV / AC

75
Q

What does a CPI greater than 1 indicate?

A

Spending is less than anticipated.

76
Q

What does a CPI less than 1 indicate?

A

Spending is more than anticipated.

77
Q

How is the schedule performance index (SPI) calculated?

A

SPI = EV / PV

78
Q

What does an SPI greater than 1 indicate?

A

Performance is better than expected.

79
Q

What does an SPI less than 1 indicate?

A

Performance is worse than expected.

80
Q

What is burn rate?

A

The rate of spending money over time.

81
Q

What is the formula for estimating burn rate?

A

Burn rate = Cost Performance Index (CPI) calculation.

82
Q

What are the main cost processes in project management?

A
  • Cost estimating
  • Creating the project budget
  • Controlling costs
83
Q

What forms can expenditure reporting take?

A
  • Simple spreadsheets
  • Project management software
  • Pie charts
  • Bar charts
84
Q

What is risk in project management?

A

A potential future event with negative or positive impacts.

85
Q

What are the three major components of risk planning?

A
  • Identifying potential risks
  • Analyzing potential impact
  • Developing appropriate responses
86
Q

What is risk identification?

A

The process of determining and documenting potential risks.

87
Q

What techniques can be used for risk identification?

A
  • Brainstorming
  • Interviews
  • Facilitated workshops
88
Q

What are common potential risks in projects?

A
  • Budgets or funding
  • Schedules
  • Scope
  • Requirements changes
  • Contracts
  • Hardware
  • Political concerns
  • Management risks
  • Legal risks
  • Technical issues
89
Q

What is a risk register?

A

A list of risks with identification number, name, description, owner, and response plan.

90
Q

What is force majeure in risk management?

A

Catastrophic risks outside the control of the organization.

91
Q

What is a SWOT analysis?

A

A technique analyzing strengths, weaknesses, opportunities, and threats.

92
Q

What does impact analysis prioritize?

A

It prioritizes and quantifies risks for easy understanding.

93
Q

How is probability expressed in risk analysis?

A

As a number between 0.0 and 1.0.

94
Q

What is the purpose of risk analysis?

A

To identify risks with the greatest possibility and impact.

95
Q

What is qualitative analysis?

A

Determining probability and impact of risks and ranking them.

96
Q

What is the relationship between risk tolerance and industry?

A

Different industries have varying levels of risk tolerance.

97
Q

What are the main project constraints?

A

Scope, time, cost, and quality.

98
Q

What type of analysis involves prioritizing risks according to their probability and impact?

A

Qualitative analysis.

99
Q

When should risk analysis be performed in a project?

A

Throughout the project.

100
Q

What does urgency in risk analysis refer to?

A

Determining how quickly a response needs to be implemented.

101
Q

What is dormancy in the context of risk management?

A

The period of time between the risk occurrence and discovery of the risk.

102
Q

Define manageability in risk analysis.

A

How well the risk owner manages the risk event.

103
Q

What does controllability refer to in risk management?

A

The ability of the risk owner to control the impact of the risk.

104
Q

What is detectability in risk analysis?

A

The ability to detect a risk trigger and understand a risk event.

105
Q

What is interconnectivity in risk management?

A

The relationship between individual risks and how one may affect another.

106
Q

What is strategic impact in the context of risk events?

A

The impact to the organization’s strategic goals if the risk event occurs.

107
Q

What does propinquity refer to in risk analysis?

A

The stakeholder’s perception of the risk significance.

108
Q

What is quantitative analysis in risk management?

A

Quantifies the aggregate risk exposure by assigning numeric probabilities to risks.

109
Q

What is Monte Carlo simulation used for in risk analysis?

A

To estimate potential outcomes for project variables.

110
Q

What is the purpose of situational/scenario analysis?

A

To look at risk from the perspective of various situations that may occur.

111
Q

List some situation/scenario-based risks to consider.

A
  • New projects
  • New management
  • Regulatory environment changes
  • Digital transformation
  • Infrastructure end of life
  • Merger and acquisition
  • Reorganization
  • Cybersecurity events.
112
Q

What is risk response planning?

A

The process of reviewing risk analysis and determining actions to reduce negative impacts.

113
Q

What are the strategies to deal with negative risks?

A
  • Avoid
  • Transfer
  • Mitigate
  • Accept.
114
Q

What are the strategies associated with positive risks or opportunities?

A
  • Exploit
  • Share
  • Enhance
  • Accept.
115
Q

What is a risk register?

A

A document that records identified risks, their scores, and response plans.

116
Q

What is a risk trigger?

A

A sign or precursor signaling that a risk event is about to occur.

117
Q

Who is responsible for monitoring the risks assigned to them?

A

The risk owner.

118
Q

What should be included in the risk response plan?

A

Points of escalation for when a risk event occurs.

119
Q

What are unknown risks?

A

Risks that are not known until they occur.

120
Q

What is the best strategy to deal with unknown risks?

A

Putting aside contingency reserves and/or management reserves.

121
Q

When should risk monitoring be performed?

A

Throughout the entire project life cycle.

122
Q

How does risk probability and impact change as a project progresses?

A

They typically diminish over time.

123
Q

What is the total estimated cost for the project described?

124
Q

What is the fixed budget constraint for the project?

125
Q

What should be done if project estimates exceed the budget?

A

Negotiate lower implementation costs and review cost estimates.

126
Q

What is a budget constraint in project management?

A

A budget constraint is a limit on the amount of money available for a project.

127
Q

What should be accounted for in a project budget aside from direct costs?

A

Contingency reserves for unexpected costs.

128
Q

Who will be consulted to negotiate lower implementation costs after the RFP process?

A

Leah in procurement and Jason in IT.

129
Q

What should be reviewed with Alden, the facilities manager?

A

Cost estimates for interior design services and furniture and fixtures.

130
Q

What happens after Emma approves and signs off on the project budget?

A

It becomes the official cost baseline for the project.

131
Q

What will be monitored throughout the project?

A

Burn rate and expenditures.

132
Q

What is the risk score for a delay in IaaS implementation with a probability of 0.10 and an impact of 90?

133
Q

What is the response plan for the risk of moving company availability on moving days?

A

Yes, a response plan is needed.

134
Q

True or False: Bad weather during a move has a risk score of 2.5.

135
Q

Which type of policies is the IT department refreshing for the new digital platform?

A

Operational security, data security, and digital security policies.

136
Q

What additional security policy is being refreshed due to the new building’s data center?

A

Physical security policy.

137
Q

What does the risk register document?

A

Risks, their probability, impact, response plans, and risk owners.

138
Q

What is the threshold for risks needing a response plan?

A

A risk score of 5 or greater.

139
Q

What types of assets do security policies secure?

A

Physical, operational, digital assets.

140
Q

What does data classification involve?

A

Classifying data based on sensitivity, type, and value to the organization.

141
Q

What are the three techniques for creating project estimates?

A
  • Analogous or top-down estimates
  • Parametric estimating
  • Bottom-up method
142
Q

What does the bottom-up method in cost estimating involve?

A

Adding up individual estimates from each work package.

143
Q

What is a three-point estimate?

A

The average of the most likely, optimistic, and pessimistic estimates.

144
Q

What is the cost baseline for a project?

A

The total approved expected cost for the project.

145
Q

What does risk planning involve?

A

Identifying potential risk events during the project.

146
Q

What are some risk analysis techniques?

A
  • Impact analysis
  • Qualitative analysis
  • Quantitative analysis
  • Situational/scenario analysis
147
Q

What does qualitative analysis rank?

A

Probability and impact.

148
Q

What does quantitative analysis use to estimate potential outcomes?

A

Simulation techniques such as Monte Carlo analysis.

149
Q

What should be communicated to stakeholders throughout the project?

A

Risks and response plans.

150
Q

Fill in the blank: Probability is always expressed as a number between _______.

A

[0.0 and 1.0]

151
Q

What should be done periodically on long-term projects regarding risks?

A

Reevaluate risk processes to determine validity and identify new risks.