Chapter 8: Project Cost Management

Question 1

A cost that changes as the project progresses.

Answer 1

Variable Cost

Question 2

A cost that stays the same as the project progresses.

Answer 2

Fixed Cost

Question 3

A cost that the project work incurs directly, included in the cost baseline.

Answer 3

Direct Cost

Question 4

A cost that is not included in the project’s budget.

Answer 4

Indirect Cost

Question 5

The amount of money that has already been spent on the project.

Answer 5

Sunk Cost

Question 6

Finding a less costly way of doing the work.

Answer 6

Value Engineering (AKA Value Analysis)

Question 7

Traditional project funding is done ______, while in an agile project funding is done _______ .

Answer 7

Upfront, Incrementally

Question 8

The process in which the cost management plan is created.

Answer 8

Plan Cost Management

Question 9

The plan that directs how to estimate the cost of each activity, create the project budget and monitor and control the cost of a project.

Answer 9

Cost Management Plan

Question 10

The process in which each individual activity is analyzed and assigned a cost.

Answer 10

Estimate Costs

Question 11

The most inaccurate estimate.
-25% to +75%

Answer 11

Rough Order of Magnitude (ROM)

Question 12

An estimate expected to have about -10% to +25% variance.

Answer 12

Budget Estimate

Question 13

The most accurate estimate. -5% to +10% Variance

Answer 13

Definitive Estimate

Question 14

Analogous estimation is ______, but not accurate. Bottom-up estimating is ______, but very accurate.

Answer 14

Quick, Long

Question 15

Reserves added to the cost baseline to cover project unknowns.

Answer 15

Contingency Reserves (AKA Known Unknowns)

Question 16

Reserves added to the project by the organization’s management that are not included in the cost baseline.

Answer 16

Management Reserves (AKA Unknown Unknowns)

Question 17

The amount of money spent to ensure quality requirements are met on a project.

Answer 17

Cost of Quality

Question 18

How the estimates were developed and their ranges, can also include all of the assumptions and constraints made to create the estimate.

Answer 18

Basis of Estimates

Question 19

The process in which the activity cost estimates are aggregated into the project cost baseline.

Answer 19

Determine Budget

Question 20

The technique of rolling up the activity costs into work packages and then the work packages into deliverables.

Answer 20

Cost Aggregation

Question 21

A form of parametric estimating that uses data from previous projects to estimate project cost.

Answer 21

Historical Information Review

Question 22

When project funding is limited by the organization.

Answer 22

Funding Limit Reconciliation

Question 23

Acquiring money for the project from external sources.

Answer 23

Financing

Question 24

The estimated cost of a project including contingency reserves.

Answer 24

Cost Baseline (AKA Budget at Completion)

Question 25

The total budget is equal to:

Answer 25

Cost Baseline + Management Reserves

Question 26

Cost baseline can be represented graphically by an

Answer 26

S-Curve Graph

Question 27

This document states how and when a project will be funded.

Answer 27

Project Funding Requirements

Question 28

This process is a monitoring and controlling process where you will try to keep the project on budget.

Answer 28

Control Costs

Question 29

A series of calculations that will give you important statistics about a project.

Answer 29

Earned Value Management

Question 30

Services that cover any unknown risks that might arise as you execute the project.

Answer 30

Reserve Analysis

Question 31

A tool that determines if there is any variance between the planned work and the actual work completed.

Answer 31

Variance Analysis

Question 32

A tool used to determine if a trend is emerging as the project is progressing.

Answer 32

Trend Analysis

Question 33

A method of agile budgeting that considers the average cost per hour per person for each iteration.

Answer 33

Burn Rate Cost Approach

Question 34

A method of agile budgeting that estimates costs that would be assigned to each individual feature in the product backlog.

Answer 34

Cost Per Feature

Question 35

The original value of a project.

Answer 35

Budget at Completion (BAC)

Question 36

A formula that represents the amount of money worth of work that should have been completed on a project.

Answer 36

Planned Value (PV) PV = Planned % Complete * Budget at Completion (BAC)

Question 37

A formula that represents the amount of money worth of work that has actually been completed on a project.

Answer 37

Earned Value (EV) EV = Actual % Complete * Budget at Completion (BAC)

Question 38

Amount of money you have already spent on a project.

Answer 38

Actual Cost (AC)

Question 39

A formula that represents the difference between the work done and money spent.

Answer 39

Cost Variance (CV) CV = Earned Value - Actual Cost

Question 40

A formula that represents the rate of money being spent to earned on a project.

Answer 40

Cost Performance Index (CPI) CPI = Earned Value/Actual Cost

Question 41

A formula that represents the difference between the actual work that's been completed and what should have been completed.

Answer 41

Schedule Variance (SV) SV = Earned Value - Planned Value

Question 42

A formula that represents the rate of how closely the project schedule is being met.

Answer 42

Schedule Performance Index (SPI) SPI + Earned Value/Planned Value

Question 43

A formula that is used to forecast the total cost of the project at the end based on the current spending rate.

Answer 43

Estimate at Completion (EAC) EAC = Budget at Completion/Cost Performance Index

Question 44

A formula that is used to forecast the amount that will be needed to complete the project based on the current cost performance index.

Answer 44

Estimate to Completion (ETC) ETC = Estimate at Completion - Actual Cost

Question 45

A formula that represents the difference between the original budget and new forecasted budget.

Answer 45

Variance at Completion (VAC) VAC = Budget at Completion - Estimate at Completion

Question 46

A formula that represents the performance that needs to be met to finish the project within budget.

Answer 46

To-Complete Performance Index (TCPI) TCPI = (Budget at Completion - Earned Value) / (Budget at Completion - Actual Cost)