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Flashcards

Chapter 7: Project Cost Management

Technology Technology CIS 4375 English 70 cards

Cards in this deck (70)

  1. 1_____ includes the processes required to ensure that a project team completes a project within an approved budget. a. Project scope management b. Project quality management c. Project time management d. Project cost managementd. Project cost management
  2. 2Which of the following involves developing an approximation of the costs of resources needed to complete a project? a. Determining the budget b. Finalising the cost baseline c. Controlling costs d. Estimating costsd. Estimating costs
  3. 3_____ involves allocating the overall cost estimate to individual work items to establish a baseline for measuring performance. a. Determining the budget b. Finalizing policies for project costs c. Controlling costs d. Estimating costsa. Determining the budget
  4. 4One of the main outputs of the _____ process is a cost baseline. a. cost controlling b. cost estimating c. cost budgeting d. cost planningc. cost budgeting
  5. 5The process of controlling costs primarily involves: a. determining the policies for project costs. b. managing changes to the project budget. c. finalizing the procedures for project costs. d. determining a basis for estimates.b. managing changes to the project budget.
  6. 6Work performance information and cost forecasts are main outputs of the _____ process. a. cost budgeting b. cost estimating c. cost control d. cost pricingc. cost control
  7. 7Profits may be defined as: a. expenses plus net income. b. costs plus revenues. c. revenues plus expenses. d. revenues minus expenditures.d. revenues minus expenditures.
  8. 8_____ helps develop an accurate projection of a project’s financial expenses and benefits. a. Critical path analysis b. Fast tracking c. Life cycle costing d. Crashingc. Life cycle costing
  9. 9_____ is a method for determining the estimated annual costs and benefits for a project. a. Critical path analysis b. Cash flow analysis c. Present value analysis d. Requirements analysisb. Cash flow analysis
  10. 10Which of the following is true of tangible costs? a. They cannot be calculated in monetary terms. b. They can be easily measured. c. They are difficult to quantify. d. Their examples include goodwill and prestige.b. They can be easily measured.
  11. 11_____ are those costs that are difficult to measure in monetary terms. a. Intangible costs b. Direct costs c. Tangible costs d. Fixed costsa. Intangible costs
  12. 12Newtech Inc. hires John for the position of a software programmer to work on their new project. Salary paid to John by Newtech Inc. would be an example of _____ costs. a. direct b. indirect c. sunk d. intangiblea. direct
  13. 13Indirect costs are: a. directly related to performing the project. b. those that cannot be allocated to projects. c. those that can be easily controlled by managers. d. not directly related to the products or services of a project.d. not directly related to the products or services of a project.
  14. 14Soles is a footwear company which has recently set up its store in Ambrosia. To manufacture its products, Soles incurs a range of different costs. Which of the following would be an example of an indirect cost? a. Cost of machines to produce shoes b. Salary paid to factory workers c. Electricity used to run its factories d. Cost of leather used to manufacture shoesc. Electricity used to run its factories
  15. 15Good Earth, a company manufacturing packaged food products, sets up its stores in Baltonia. However, a year later, the company closes the store down due to high operating costs. In such a scenario, the money spent in paying for the rent of the store in Baltonia would be an example of _____ costs. a. recurring b. direct c. sunk d. intangiblec. sunk
  16. 16Which of the following is true of contingency reserves? a. They allow for future situations that can be partially planned for. b. They are also known as unknown unknowns. c. They are not included in a cost baseline. d. They allow for dollar amounts to be used to cover existing, fixed costs.a. They allow for future situations that can be partially planned for.
  17. 17Which of the following reserves allows for future situations that are unpredictable? a. Contingency reserves b. Management reserves c. Known unknowns d. Cost baseline reservesb. Management reserves
  18. 18The first step in project cost management is: a. to allocate project cost estimates to individual material resources. b. to plan how costs will be managed. c. to control project costs and monitor cost performance. d. to develop several estimates of costs for different types of resources.b. to plan how costs will be managed.
  19. 19Which of the following is true of a rough order of magnitude estimate? a. It is used to allocate money into an organization’s budget. b. It provides an estimate of what a project will cost. c. Its time frame is always less than a year prior to project completion. d. It is a type of estimate that is done in the final stages of a project.b. It provides an estimate of what a project will cost.
  20. 20A rough order of magnitude estimate can be referred to as a _____ estimate. a. definitive b. budgetary c. final d. ballparkd. ballpark
  21. 21A cost estimation tool which is used to allocate money into an organization’s budget is known as a _____ estimate. a. budgetary b. definitive c. rough order of magnitude d. ballparka. budgetary
  22. 22A _____ estimate is used for making many purchasing decisions for which accurate estimates are required and for estimating final project costs. a. budgetary b. definitive c. rough order of magnitude d. finalb. definitive
  23. 23Which of the following types of estimate use the actual cost of a previous, similar project as the basis for estimating the cost of the current project? a. Definitive estimates b. Parametric estimates c. Bottom-up estimates d. Analogous estimatesd. Analogous estimates
  24. 24Analogous estimates are also known as _____ estimates. a. bottom-up b. top-down c. parametric d. budgetaryb. top-down
  25. 25Which of the following is true of analogous estimates? a. Their main disadvantage is that they cost more than other techniques. b. They are the only technique which do not require expert judgement. c. They are most reliable when previous projects are similar in fact with current projects. d. They use project characteristics in a mathematical model to estimate project costs.c. They are most reliable when previous projects are similar in fact with current projects.
  26. 26A cost estimation tool which involves estimating individual work items or activities and summing them to get a project total is known as a(n) _____ estimate. a. budgetary b. parametric c. bottom-up d. analogousc. bottom-up
  27. 27Which of the following is true of bottom-up estimates? a. They are based on the actual cost of a previous, similar project. b. They are also known as parametric estimating. c. They are most accurate when they involve large, extensive work items. d. They are time-intensive and expensive to develop.d. They are time-intensive and expensive to develop.
  28. 28_____ uses project characteristics in a mathematical model to estimate project costs. a. Rough order of magnitude estimating b. Parametric estimating c. Bottom-up estimating d. Analogous estimatingb. Parametric estimating
  29. 29Which of the following is most likely to be a reason for inaccuracies in information technology cost estimates? a. Estimates take a long time to be worked out. b. People lack estimating experience. c. Human beings are biased toward overestimation. d. Only software development provides the scope for estimates to be accurate.b. People lack estimating experience.
  30. 30If the cost estimate for a project is a basis for contract awards and performance reporting, it should be a(n) _____ estimate and as accurate as possible. a. budgetary b. definitive c. rough order of magnitude d. analogousb. definitive
  31. 31The main goal of the _____ process is to produce a cost baseline for measuring project performance and project funding requirements. a. cost budgeting b. cost planning c. cost controlling d. cost estimatinga. cost budgeting
  32. 32Which of the following is an output of the process of controlling costs? a. Cost forecasts b. Project funding requirements c. Basis of estimates d. Scope baselinesa. Cost forecasts
  33. 33Which of the following is an input of the process of controlling costs? a. Cost forecasts b. Work performance data c. Change requests d. Scope baselineb. Work performance data
  34. 34The budget is one of the three values of earned value management and is also known as _____. a. earned value b. actual cost c. indirect cost d. planned valued. planned value
  35. 35Which of the following is true of earned value? a. It is the actual cost plus the planned cost. b. It is based solely on the total cost estimate to be spent on an activity. c. It is an estimate of the value of the physical work actually completed. d. It is also known as the planned value.c. It is an estimate of the value of the physical work actually completed.
  36. 36Variances are calculated by subtracting the actual cost from _____. a. earned value b. schedule variance c. planned value d. rate of performancea. earned value
  37. 37Cost variance is: a. the planned value plus actual costs. b. the earned value minus the actual cost. c. the rate of performance minus earned value. d. the planned value minus the rate of performance.b. the earned value minus the actual cost.
  38. 38Schedule variance is: a. the earned value minus the planned value. b. the earned value minus the actual cost. c. the planned value plus the earned value. d. the planned value plus the rate of performance.a. the earned value minus the planned value.
  39. 39The cost performance index (CPI): a. indicates that a project is under budget if CPI is less than one. b. can be used to estimate the projected cost of completing the project. c. indicates that the planned and actual costs are equal if CPI is more than one. d. is the ratio of earned value to planned value.b. can be used to estimate the projected cost of completing the project.
  40. 40Which of the following is true of the schedule performance index (SPI)? a. It can be used to estimate the projected time to complete the project. b. It means that a project is behind schedule if an SPI is greater than one. c. It means that a project is ahead of schedule if SPI is lesser than one or hundred percent. d. It is the ratio of planned value to actual costs.a. It can be used to estimate the projected time to complete the project.
  41. 41Overrun is the additional percentage amount by which estimates exceed actual costs. a. True b. FalseFALSE
  42. 42The primary output of the planning cost management process is a change request. a. True b. FalseFALSE
  43. 43IT project managers must be able to present and discuss project information both in financial and technical terms. a. True b. FalseTRUE
  44. 44Project managers must conduct cash flow analysis to determine net present value. a. True b. FalseTRUE
  45. 45Intangible costs can be easily measured in monetary terms. a. True b. FalseFALSE
  46. 46When deciding what projects to invest in or continue, one should include sunk costs. a. True b. FalseFALSE
  47. 47It is important for project managers to focus on indirect costs because they can be easily controlled. a. True b. FalseFALSE
  48. 48If an important supplier goes out of business, management reserves can be set aside to cover the resulting costs. a. True b. FalseTRUE
  49. 49Contingency reserves are also known as unknown unknowns. a. True b. FalseFALSE
  50. 50A cost management plan can include organizational procedures links, control thresholds, and process descriptions. a. True b. FalseTRUE
  51. 51A budgetary estimate is the most accurate of the three types of estimates. a. True b. FalseFALSE
  52. 52Budgetary estimates are made even before a project is officially started. a. True b. FalseFALSE
  53. 53Definitive estimates are made one year or less prior to project completion. a. True b. FalseTRUE
  54. 54Estimates should become more accurate as time progresses. a. True b. FalseTRUE
  55. 55Supporting details for an estimate include the ground rules and assumptions used in creating the estimate. a. True b. FalseTRUE
  56. 56Analogous estimates are called activity-based costing. a. True b. FalseFALSE
  57. 57Analogous estimates are the most accurate technique to estimate costs. a. True b. FalseFALSE
  58. 58In a bottom-up estimate, the size of the individual work items is one of the factors that drives the accuracy of the estimates. a. True b. FalseTRUE
  59. 59Parametric models are reliable when the models are flexible in terms of the project’s size. a. True b. FalseTRUE
  60. 60One of the reasons why project cost estimates are inaccurate is because human beings are biased toward underestimation. a. True b. FalseTRUE
  61. 61It is important for project managers to understand that every cost estimate is unique. a. True b. FalseTRUE
  62. 62Determining the budget involves allocating the project cost estimate to individual work items over time. a. True b. FalseTRUE
  63. 63The project management plan and project funding requirements are inputs of the process of controlling costs. a. True b. FalseTRUE
  64. 64The formulas for variances and indexes start with EV, the earned value. a. True b. FalseTRUE
  65. 65If cost variance is a positive number, it means that performing the work costs more than planned. a. True b. FalseFALSE
  66. 66A negative schedule variance means that it took lesser than planned to perform the work. a. True b. FalseFALSE
  67. 67If the cost performance index (CPI) is less than 100 percent, the project is under budget. a. True b. FalseFALSE
  68. 68A schedule performance index of one means that the project is on schedule. a. True b. FalseTRUE
  69. 69In 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. a. True b. FalseFALSE
  70. 70Spreadsheets are a common tool for cost estimating, cost budgeting, and cost control. a. True b. FalseTRUE

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CIS 4375 Flashcards on Chapter 7: Project Cost Management, created by Technology Technology on 20/09/2018.
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