Estimate & Cost Types

Question 1

Reversed

Simple, early estimate. Range of variance is -25% to +75% for the project completion.

Answer 1

Rough order of magnitude

Question 2

Reversed

Early planning estimate and/or top-down approach. Range of variance is -10% to +25% for the project completion.

Answer 2

Budget estimate

Question 3

Reversed

Most accurate estimate, but takes longest to complete; uses the bottom-up approach. Range of variance is -5% to +10% for the project completion.

Answer 3

Definitive estimate

Question 4

Reversed

Requires a WBS and accounts for each work package

Answer 4

Bottom-up

Question 5

Reversed

Creates an analogy between projects; also known as a top down estimate

Answer 5

Analogous

Question 6

Reversed

Uses a parameter (cost per ton, cost per unit) for the estimate.

Answer 6

Parametric

Question 7

Reversed

The cost of the deliverable, service, or materials can fluctuate based on varying factors

Answer 7

Variable costs

Question 8

Reversed

A cost that does not change with an increase or decrease in the amount of goods or services produced or sold

Answer 8

Fixed costs

Question 9

Reversed

An expense that can be shared with other projects or the organization, such as rent, phone, or equipment.

Answer 9

Indirect costs

Question 10

Reversed

Costs that are directly tied to the project.

Answer 10

Direct costs

Question 11

Reversed

monies that have been invested into a project. Cost that has already been incurred and cannot be recovered.

Answer 11

Sunk costs

Question 12

Reversed

The loss of potential gain from other alternatives when one alternative is chosen.Consider: Project A is worth $55,000 and Project B is worth $89,000, you’d choose Project B to do. The opportunity is $55,000—the amount of Project A that you can’t do because of the opportunity of Project B.

Answer 12

Opportunity cost