CH07 z quiz project cost management Flashcards
You are using a previous similar project to predict the costs of the current project. Which of the following best describes analogous estimating? A. Regression analysis B. Bottom-up estimating C. Organizational process assets D. Enterprise environmental factors
C. Analogous estimating is based on historical information, which is part of organizational process assets. A, regression analysis, is incorrect because this choice describes the study of a project moving backward so that it may ultimately move forward. B is incorrect because this is the most reliable cost-estimating technique and is based on the current project’s WBS. D, enterprise environmental factors, is a term that describes the internal policies and procedures a project manager must follow within the project.
You are using a previous similar project to predict the costs of the current project. Which of the following best describes analogous estimating? A. Regression analysis B. Bottom-up estimating C. Organizational process assets D. Enterprise environmental factors
You are the project manager for a new technology implementation project. Management has requested that your estimates be as exact as possible. Which one of the following methods of estimating will provide the most accurate estimate? A. Top-down estimating B. Top-down budgeting C. Bottom-up estimating D. Parametric estimating
C. Bottom-up estimating takes the longest to complete of all the estimating approaches, but it is also the most reliable approach. A, top-down estimating, is also known as analogous estimating, and it is not reliable. B, top-down budgeting, is not a valid term for this question. D, parametric estimating, is an approach that predicts the project costs based on a parameter, such as cost per hour, cost per unit, or cost per usage.
You are the project manager for a new technology implementation project. Management has requested that your estimates be as exact as possible. Which one of the following methods of estimating will provide the most accurate estimate? A. Top-down estimating B. Top-down budgeting C. Bottom-up estimating D. Parametric estimating
Amy is the project manager for her company and she’s working with the project team to determine the effect of a proposed change on the project’s budget. When Amy looks at the change, she tells the team that the change will pass through project’s cost change control system. What does the cost change control system do?
A. It defines the methods to change the cost baseline.
B. It defines the methods to create the cost baseline.
C. It evaluates changes to the project costs based on changes to the project scope.
D. This is not a valid change control system.
A. The cost change control system defines how changes to the cost baseline may be approved. B, C, and D are all invalid choices.
Amy is the project manager for her company and she’s working with the project team to determine the effect of a proposed change on the project’s budget. When Amy looks at the change, she tells the team that the change will pass through project’s cost change control system. What does the cost change control system do?
A. It defines the methods to change the cost baseline.
B. It defines the methods to create the cost baseline.
C. It evaluates changes to the project costs based on changes to the project scope.
D. This is not a valid change control system.
You have just started a project for a manufacturer. Project team members report they are 30 percent complete with the project. You have spent $25,000 of the project’s $250,000 budget. What is the earned value for this project?
A. 10 percent
B. $75,000
C. $25,000
B. Earned value is found by multiplying the percentage of the project that is completed by the project’s budget at completion. In this instance, it’s $75,000. A, C, and D are all incorrect.
You have just started a project for a manufacturer. Project team members report they are 30 percent complete with the project. You have spent $25,000 of the project’s $250,000 budget. What is the earned value for this project?
A. 10 percent
B. $75,000
C. $25,000
You and your project team are about to enter a meeting to determine project costs. You have elected to use bottom-up estimating and will base your estimate on the WBS. Which one of the following is not an attribute of bottom-up estimating?
A. People doing the work create the estimates.
B. It creates a more accurate estimate.
C. It’s more expensive to do than other methods.
D. It’s less expensive to do than other methods.
D. Bottom-up estimating is typically more expensive to do than other estimating approaches, because of the time required to create this type of estimate. A, B, and C are all accurate attributes of a bottom-up estimate.
You and your project team are about to enter a meeting to determine project costs. You have elected to use bottom-up estimating and will base your estimate on the WBS. Which one of the following is not an attribute of bottom-up estimating?
A. People doing the work create the estimates.
B. It creates a more accurate estimate.
C. It’s more expensive to do than other methods.
D. It’s less expensive to do than other methods.
You are the project manager for a consulting company. Your company has two possible projects to manage, but they can only choose one. Project WQQ is worth $217,000, while Project LB is worth $229,000. Management elects to choose Project LB. The opportunity cost of this choice is which one of the following?
A. $12,000
B. $217,000
C. $229,000
D. Zero, because project LB is worth more than Project WQQ
B. The opportunity cost is the amount of the project that the organization cannot do. A is incorrect because the $12,000 represents the difference between the two projects. C, $229,000, is incorrect because this is the amount of the LB project. D is incorrect because this is not an accurate statement.
You are the project manager for a consulting company. Your company has two possible projects to manage, but they can only choose one. Project WQQ is worth $217,000, while Project LB is worth $229,000. Management elects to choose Project LB. The opportunity cost of this choice is which one of the following?
A. $12,000
B. $217,000
C. $229,000
D. Zero, because project LB is worth more than Project WQQ
You are the project manager for the CSR Training Project, and 21,000 customer service reps are invited to attend the training session. Attendance is optional. You have calculated the costs of the training facility, but the workbook expense depends on how many students register for the class. For every 5,000 workbooks created, the cost is reduced by a percentage of the original printing cost. The workbook expense is an example of which one of the following? A. Fixed costs B. Parametric costs C. Variable costs D. Indirect costs
C. This is an example of a variable cost, since the cost of the training will fluctuate based on the number of participants that choose to come to the project session. A is incorrect because fixed costs do not vary. B is incorrect because parametric costs can be identified as cost per unit. D is incorrect because indirect costs are a way to describe costs that may be shared between projects.
You are the project manager for the CSR Training Project, and 21,000 customer service reps are invited to attend the training session. Attendance is optional. You have calculated the costs of the training facility, but the workbook expense depends on how many students register for the class. For every 5,000 workbooks created, the cost is reduced by a percentage of the original printing cost. The workbook expense is an example of which one of the following? A. Fixed costs B. Parametric costs C. Variable costs D. Indirect costs
You are the project manager of a construction project scheduled to last 24 months. You have elected to rent a piece of equipment for the project’s duration, even though you will need the equipment only periodically throughout the project. The costs of the equipment rental per month are $890. This is an example of which of the following? A. Fixed costs B. Parametric costs C. Variable costs D. Indirect costs
A. This is an example of a fixed cost. The cost of the equipment will remain uniform, or fixed, throughout the duration of the project. B is incorrect because parametric costs can be identified as cost per unit. C is incorrect because the cost of the equipment does not fluctuate. D is incorrect because indirect costs are a way to describe costs that may be shared between projects.
You are the project manager of a construction project scheduled to last 24 months. You have elected to rent a piece of equipment for the project’s duration, even though you will need the equipment only periodically throughout the project. The costs of the equipment rental per month are $890. This is an example of which of the following? A. Fixed costs B. Parametric costs C. Variable costs D. Indirect costs
You are the project manager of the BHG Project. Your BAC is $600,000. You have spent $270,000 of your budget. You are now 40 percent done with the project, though your plan called for you to be 45 percent done with the work by this time. What is your CPI? A. 100 B. 89 C. .89 D. .79
C. The CPI is found by dividing the earned value by the actual costs. A is incorrect because the project is not performing at 100 percent. B is incorrect because “89” is not the same value as C. D is an incorrect calculation of the CPI.
You are the project manager of the BHG Project. Your BAC is $600,000. You have spent $270,000 of your budget. You are now 40 percent done with the project, though your plan called for you to be 45 percent done with the work by this time. What is your CPI? A. 100 B. 89 C. .89 D. .79
Management has requested that you complete a definitive cost estimate for your current project. Which one of the following must exist in order to complete this estimate? A. Project scope statement B. Work breakdown structure C. Project team D. Expert judgment
B. The WBS is needed in order to create a definitive cost estimate. This is the most accurate estimate type, but it also takes the longest to complete. A, C, and D are all incorrect because these items are not required to complete a definitive estimate.
Management has requested that you complete a definitive cost estimate for your current project. Which one of the following must exist in order to complete this estimate? A. Project scope statement B. Work breakdown structure C. Project team D. Expert judgment
You need to procure a highly specialized chemical for a research project. There is only one vendor available that provides the materials you need. This scenario is an example of what market condition? A. Constraint B. Single source C. Sole source D. Oligopoly
C. Sole source is the best choice because it describes the marketplace condition in which only one vendor can provide the goods or services your project requires. A, constraint, is not a valid market condition. B, single source, describes the marketplace condition in which there are multiple vendors that can provide the goods or services your project demands, but you prefer to work with just one in particular. D, an oligopoly, is a market condition in which the actions of one vendor affect the actions of the other vendors.
You need to procure a highly specialized chemical for a research project. There is only one vendor available that provides the materials you need. This scenario is an example of what market condition? A. Constraint B. Single source C. Sole source D. Oligopoly
You are the project manager of the Network Upgrade Project for your company. Management has asked that you create a cost estimate of the project so they can determine the project funding. You gather the inputs for the cost estimate and begin the process of cost estimating. Of the following cost-estimating inputs, which one is the least reliable? A. Team member recollections B. Historical information C. Project files D. Cost-estimating templates
A. Team member recollections are the least reliable input to cost estimating. B, C, and D are all valid inputs to the cost-estimating process.
You are the project manager of the Network Upgrade Project for your company. Management has asked that you create a cost estimate of the project so they can determine the project funding. You gather the inputs for the cost estimate and begin the process of cost estimating. Of the following cost-estimating inputs, which one is the least reliable? A. Team member recollections B. Historical information C. Project files D. Cost-estimating templates
You can purchase pea gravel for your project at $437 per metric ton. You need four tons of the pea gravel, so you predict your costs will be $1,748. This is an example of which cost-estimating approach? A. Parametric B. Analogous C. Bottom-up D. Top-down
A. The cost of the pea gravel is a parametric estimate. B, analogous, is incorrect because no other project cost estimate is being referenced. C, bottom-up, is not described in this instance because the WBS and each work package is not being estimated for cost. D, top-down estimating, is another name for A, analogous estimating, so this choice is invalid.
You can purchase pea gravel for your project at $437 per metric ton. You need four tons of the pea gravel, so you predict your costs will be $1,748. This is an example of which cost-estimating approach? A. Parametric B. Analogous C. Bottom-up D. Top-down
Which one of the following is an example of resource cost rates that a project manager could use to predict the cost of the project? A. Analogous estimating B. Bottom-up estimating C. Commercial database D. Procurement bid analysis
C. Commercial databases often provide resource cost rates for project estimating, so this is the correct answer for this question. A, B, and D do not include resource cost rates, so these are all incorrect.
Which one of the following is an example of resource cost rates that a project manager could use to predict the cost of the project? A. Analogous estimating B. Bottom-up estimating C. Commercial database D. Procurement bid analysis
You have created a cost estimate for a new project that you’ll be managing in your organization. All of the following should be included in your cost estimate except for which one?
A. Description of the schedule activity’s project scope of work
B. Assumptions made
C. Constraints
D. Team members the project will utilize
D. The team members that the project manager will utilize are not included in the cost estimate. The project manager will include the project scope of work, the assumptions made, and the constraints considered when creating a cost estimate, so A, B, and C are incorrect.
You have created a cost estimate for a new project that you’ll be managing in your organization. All of the following should be included in your cost estimate except for which one?
A. Description of the schedule activity’s project scope of work
B. Assumptions made
C. Constraints
D. Team members the project will utilize
