Cost Flashcards
Which of the following best describes the purpose of a Cost Management Plan in project management?
A) A document that defines how project costs will be estimated, budgeted, and controlled, including the techniques for cost estimation and the processes for tracking expenditures and managing changes.
B) A guide for identifying potential project risks and outlining strategies for their mitigation.
C) A schedule that outlines the timeline for project deliverables and milestones.
D) A plan detailing the communication strategies and methods for stakeholder engagement throughout the project lifecycle.
A) A document that defines how project costs will be estimated, budgeted, and controlled, including the techniques for cost estimation and the processes for tracking expenditures and managing changes.
In a predictive or traditional project management approach, how is the project budget typically managed?
A) The budget is determined dynamically as the project progresses and is adjusted based on real-time performance data.
B) The budget starts as a fixed amount and is modified through a formal change control process to accommodate any changes or unforeseen issues.
C) The budget is not fixed and is continuously adjusted according to the project’s evolving scope and stakeholder requirements.
D) The budget is primarily based on historical data and is not subject to amendments once the project is underway.
B) The budget starts as a fixed amount and is modified through a formal change control process to accommodate any changes or unforeseen issues.
In an iterative or Agile project management approach, how is budgeting typically handled, and what role do the Product Owner and team play in this process?
A. The Product Owner and team determine the total project budget upfront and do not make adjustments throughout the project.
B. The Product Owner and team collaborate with stakeholders to suggest incremental budgeting, adjusting the budget as needed based on project progress and evolving requirements.
C. The Project Manager alone is responsible for setting the budget without input from the Product Owner or team.
D. Budgeting is not a concern in Agile projects; it is handled exclusively by the finance department outside of the Agile process.
B. The Product Owner and team collaborate with stakeholders to suggest incremental budgeting, adjusting the budget as needed based on project progress and evolving requirements.
In project management, how does monitoring the burn rate help in forecasting project financials?
A. The burn rate measures how quickly money is being spent relative to the project’s budget, helping predict future expenditures and adjust forecasts as needed.
B. The burn rate indicates the total project budget remaining and helps in determining the project’s completion date.
C. The burn rate provides a detailed breakdown of expenses by department, allowing for precise allocation of resources.
D. The burn rate tracks the time spent on each task, helping to estimate the overall project timeline and milestones.
A. The burn rate measures how quickly money is being spent relative to the project’s budget, helping predict future expenditures and adjust forecasts as needed.
In project management, what is the primary purpose of the Baseline Budget, and how is it used throughout the project?
A. The Baseline Budget represents the approved budget for the project, serving as a reference point to measure and control actual spending and ensure the project stays within the allocated financial limits.
B. The Baseline Budget is used to allocate additional funds for unexpected expenses that arise during the project.
C. The Baseline Budget is a preliminary estimate that is frequently updated based on project performance and stakeholder feedback.
D. The Baseline Budget is the total amount of money allocated specifically for marketing and promotional activities during the project.
A. The Baseline Budget represents the approved budget for the project, serving as a reference point to measure and control actual spending and ensure the project stays within the allocated financial limits.
In project management, what is the purpose of an Activity Contingency Reserve, and how does it relate to the Baseline Budget?
A. The Activity Contingency Reserve provides additional funds for scope changes and is not related to the Baseline Budget or activity duration.
B. The Activity Contingency Reserve is used to cover unforeseen marketing expenses and is not included in the Baseline Budget.
C. The Activity Contingency Reserve is a separate budget created after the project is completed to cover any overspending beyond the Baseline Budget.
D. The Activity Contingency Reserve is allocated to cover additional costs if activities take longer than planned. It is a part of the Baseline Budget and helps ensure that the project stays within financial limits by accounting for potential delays.
D. The Activity Contingency Reserve is allocated to cover additional costs if activities take longer than planned. It is a part of the Baseline Budget and helps ensure that the project stays within financial limits by accounting for potential delays.
In project management, how is the Contingency Reserve Budget related to risk management, and what is its primary purpose?
A. The Contingency Reserve Budget is set aside to cover unexpected costs arising from identified risks. It is a planned amount included in the Baseline Budget to address known risks and uncertainties.
B. The Contingency Reserve Budget is a flexible fund used to extend the project timeline in case of delays caused by unforeseen issues unrelated to risk.
C. The Contingency Reserve Budget is used exclusively for covering additional marketing costs that were not anticipated in the initial budget.
D. The Contingency Reserve Budget is created after the project’s completion to address any financial discrepancies that occur during the project.
A. The Contingency Reserve Budget is set aside to cover unexpected costs arising from identified risks. It is a planned amount included in the Baseline Budget to address known risks and uncertainties.
In project management, which of the following accurately describes the control and purpose of the Cost Baseline, Contingency Reserve, and Management Reserve?
A. The Project Manager controls all project reserves, including the Cost Baseline, Contingency Reserve, and Management Reserve, to handle any project expenses and changes.
B. The Project Manager controls both the Cost Baseline and Contingency Reserve, while the Management Reserve is controlled by higher management.
C. The Management Reserve is used exclusively for cost overruns related to scope changes, while the Cost Baseline and Contingency Reserve are managed by the Project Manager.
D. The Contingency Reserve is used for routine project expenses, while the Cost Baseline and Management Reserve are controlled by the Project Manager and higher management, respectively.
B. The Project Manager controls both the Cost Baseline and Contingency Reserve, while the Management Reserve is controlled by higher management.
In project management, which of the following best describes the use of historical data and lessons learned when estimating project costs?
A. Historical data and lessons learned are used exclusively for bottom-up estimating, where costs are estimated for each individual task or work package based on detailed analysis.
B. Historical data and lessons learned are utilized for both analogous estimating, which involves using data from similar projects for a best guess, and bottom-up estimating, where each activity’s cost is calculated in detail.
C. Historical data and lessons learned are only applied to top-down estimating, where the overall budget is divided into pieces based on past experiences.
D. Historical data is used solely for top-down estimating by dividing the overall budget into pieces without considering specific past project details.
B. Historical data and lessons learned are utilized for both analogous estimating, which involves using data from similar projects for a best guess, and bottom-up estimating, where each activity’s cost is calculated in detail.
Which estimating technique involves using historical data and experience to predict the cost of a project by dividing the overall budget into smaller, manageable pieces?
A. Top-Down Estimating
B. Bottom-Up Estimating
C. Analogous Estimating
D. Parametric Estimating
A. Top-Down Estimating
This technique involves using historical data and experience to estimate the overall project cost and then dividing this budget into smaller pieces or categories based on similar past projects.
In the context of project cost estimation, how does bottom-up estimating differ from analogous estimating?
A. Bottom-up estimating involves detailed cost estimation for each activity or work package, while analogous estimating uses historical data from similar projects for a broader, less detailed cost estimate.
B. Bottom-up estimating uses historical data and experience for broad cost estimation, while analogous estimating requires detailed analysis of each task.
C. Bottom-up estimating is used to estimate the overall budget without breaking it into smaller pieces, while analogous estimating focuses solely on past project lessons learned.
D. Bottom-up estimating is typically used for initial project budgeting, whereas analogous estimating is applied only after the project is completed.
A. Bottom-up estimating involves detailed cost estimation for each activity or work package, while analogous estimating uses historical data from similar projects for a broader, less detailed cost estimate.
Give a few examples of direct costs:
labor, physical resources
Give a few examples of indirect costs:
overhead like HR, accounting facilities
In a predictive project management approach, which of the following methods is most likely to produce stronger and more accurate estimates for project costs and durations?
A. Analogous Estimating - Using data from similar past projects to make broad estimates based on experience and best guesses.
B. Top-Down Estimating - Dividing the overall project budget into smaller pieces without detailed analysis of individual activities.
C. Bottom-Up Estimating - Estimating the cost and duration of each activity or work package in detail and aggregating these estimates to form the overall project estimate.
D. Parametric Estimating - Using historical data and statistical relationships to estimate project costs based on unit rates and parameters.
C. Bottom-Up Estimating - Estimating the cost and duration of each activity or work package in detail and aggregating these estimates to form the overall project estimate.
What does the Iterative/Agile approach focus on most during budgeting?
Short Term
(cost is mostly labor in iterative)
