Chapter 5 - Exam Flashcards
◦Ways of obtaining estimates
Experience
Documentation
Expert opinion
risk analysis
◦Cost estimation: Project Manager’s role
Allocate resources, monitor progress, control quality, maintain team moral, award merit, ultimately ensure project success
◦Valuation methods of cost
‣ Payback -
‣ ROI (return on investment)
‣ NPV -
◦Type of costs
‣ Direct material
‣ Indirect material
‣ Tangible assets
‣ Intangible asset
◦Cost estimates associated with work units
‣ Working unit is the bottom level
Intangible asset
difficult to evaluate.
E.g., cost benefit analysis of outsourcing or offshoring information outsourcing or offshoring information system function in terms of security, system function in terms of security, privacy, know how, innovation, etc.
Tangible assets
easier to estimate.
E.g., routers, switches, connectors, cables, servers, and human resources.
Indirect material
difficult to assign
E.g., promotional expenses for the entire organization; difficult to prorate entire organization; difficult to prorate portion of this cost to a work unit or a portion of this cost to a work unit or a project.
Direct material
associated with a work unit
E.g., hours worked on a unit or the portion of management time (portion of management time (direct direct overhead costs)overhead costs) used for a work unit. used for a work unit.
Payback
the length of time that it takes to recover the amount of money invested in the technology.
NPV
used a specified rate of interest, this formula sums up the present value for the number of years that estimates have been made.
ROI stands for
return on investment
Experience
individuals within the organization.
Documentation
archival information from previous projects.
Expert opinion
widely used and includes a broad pool of internal and external experts.
