Chapter 5 - PM

Question 1

The financial plans for allocating organization resources to project activities

Answer 1

Project budget

Question 2

Recognize an expense when a invoice is received and the cost is actually incurred

Answer 2

Accountants

Question 3

perceive an expense when the check for the invoice is mailed. Concerned with managing an organization’s cash flows

Answer 3

Controllers

Question 4

Based on the collective judgement and experiences of top and middle managers concerning similar past projects

Answer 4

Top-down budgeting

Question 5

WBS or action plan identifies the elemental tasks which are converted to costs and combined to determine an overall direct cost for the project

Answer 5

Bottom-up budgeting

Question 6

statement within a proj contract that allows for renegotiation of price and schedule for client-ordered changes in performance

Answer 6

Change control procedure

Question 7

Itemization of the estimated costs for ea. proj activity. Prepared by a PM based on WBS

Answer 7

Detailed Budget Estimate

Question 8

Expenditures for resources that are used soley to perform project activities

Answer 8

Direct costs

Question 9

Indirect costs that keep the organization operational

Answer 9

General and administrative costs

Question 10

Expenditures that are incurred to support project activities but that aren’t tracked individually

Answer 10

Indirect costs

Question 11

Percentage at which unit performance improves each time the total production quantity doubles

Answer 11

Learning rate

Question 12

Designated amt of time & money to acct for parts of proj that cannot be predicted

Answer 12

Management reserve

Question 13

Indirect costs assoc. with resources used to perform proj activities, but are difficult to subdivide and allocate directly

Answer 13

Overhead costs

Question 14

Initial estimate of costs that is based on general sense of the type of work the proj will likely entail. AKA ballpark estimate

Answer 14

Rough order-of-magnitude (ROM) estimate

Question 15

A number proj mgr can calculate to reveal whether cost estimates have a systematic bias in cost and whether the bias is positive or negative

Answer 15

Tracking signal

Question 16

Budget allowance for surprising, unplanned incidents

Answer 16

Unexpected contingency

Question 17

T or F: A budget ties a project to the organization’s aims and objectives.

Answer 17

True

Question 18

To a controller a budget is

Answer 18

an expense when the check for the invoice is mailed.

Question 19

You hire a part-time technical writer for your team’s upcoming project. The tech writer is contracted only to work the project for 40 hours total. What type of cost is the writer’s salary?

Answer 19

Direct project cost

Question 20

During the conceive phrase of a project, the project manager should develop a budget that’s

Answer 20

a rough, order-of-magnitude estimate

Question 21

To create a bottom-up budget estimate, the project manager needs to consider

Answer 21

direct labor costs, direct non-labor costs, and indirect costs.

Question 22

Use of a tracking signal to evaluate your estimate reveals that you consistently over-estimate costs by an average of 15%. Your over-estimates can be considered

Answer 22

a systematic error

Question 23

To determine the accuracy of an estimate over time, you need to take into account:

Answer 23

the learning rate and learning curve

Question 24

Vince’s new product development team estimated cost to new team member training, but his project is still over-budget. One possible reason might be

Answer 24

Vince didn’t take into account the time established team members would be required to help train new team members.

Question 25

The main causes of budget change on projects are

Answer 25

cost estimator error, new learning, and mandated change

Question 26

T or F: A formal change control procedure allows the organization to renegotiate with the client on future projects if project costs differ drastically from estimates.

Answer 26

False