Chapter 7 T/F

Question 1

1. Overrun is the additional percentage amount by which estimates exceed actual costs.

Answer

true

Question 2

2. The primary output of the planning cost management process is a change request.

Answer

true

Question 3

3. IT project managers must be able to present and discuss project information both in financial and technical terms

Answer

true

Question 4

4. Project managers must conduct cash flow analysis to determine net present value.

Answer

true

Question 5

5. Intangible costs can be easily measured in monetary terms.

Answer

true

Question 6

6. When deciding what projects to invest in or continue, one should include sunk costs

Answer

true

Question 7

7. It is important for project managers to focus on indirect costs because they can be easily controlled.

Answer

true

Question 8

8. If an important supplier goes out of business, management reserves can be set aside to cover the resulting costs.

Answer

true

Question 9

9. Contingency reserves are also known as unknown unknowns.

Answer

true

Question 10

10. A cost management plan can include organizational procedures links, control thresholds, and process descriptions.

Answer

true

Question 11

11. A budgetary estimate is the most accurate of the three types of estimates

Answer

true

Question 12

12. Budgetary estimates are made even before a project is officially started

Answer

true

Question 13

13. Definitive estimates are made one year or less prior to project completion.

Answer

true

Question 14

14. Estimates should become more accurate as time progresses.

Answer

true

Question 15

15. Supporting details for an estimate include the ground rules and assumptions used in creating the estimate.

Answer

true

Question 16

16. Analogous estimates are called activity-based costing.

Answer

true

Question 17

17. Analogous estimates are the most accurate technique to estimate costs.

Answer

true

Question 18

18. In a bottom-up estimate, the size of the individual work items is one of the factors that drives the accuracy of the
estimates

Answer

true

Question 19

19. Parametric models are reliable when the models are flexible in terms of the project’s size.

Answer

true

Question 20

20. One of the reasons why project cost estimates are inaccurate is because human beings are biased toward
underestimation.

Answer

true

Question 21

21. It is important for project managers to understand that every cost estimate is unique

Answer

true

Question 22

22. Determining the budget involves allocating the project cost estimate to individual work items over time.

Answer

true

Question 23

23. The project management plan and project funding requirements are inputs of the process of controlling costs.

Answer

true

Question 24

24. The formulas for variances and indexes start with EV, the earned value.

Answer

true

Question 25

25. If cost variance is a positive number, it means that performing the work costs more than planned.

Answer

true

Question 26

26. A negative schedule variance means that it took lesser than planned to perform the work.

Answer

true

Question 27

27. If the cost performance index (CPI) is less than 100 percent, the project is under budget.

Answer

true

Question 28

28. A schedule performance index of one means that the project is on schedule.

Answer

true

Question 29

29. In an earned value chart, when the actual cost line is right on or above the earned value line, it indicates that costs are
less than planned.

Answer

true

Question 30

30. Spreadsheets are a common tool for cost estimating, cost budgeting, and cost control.

Answer

true

Chapter 7 T/F

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