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Exam 7: Project Cost Management

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Question 41

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 Which process 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 costs

E) A) and B)
F) All of the above

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Question 42

Multiple Choice

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 Which statement is true regarding indirect costs?

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.

E) B) and C)
F) A) and B)

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Question 43

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

 Analogous estimates are called activity-based costing.

 In addition to providing input for budgetary estimates, the process of _____ provides a cost baseline.

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

 Contingency reserves are also known as unknown unknowns.

 Analogous estimates are the most accurate technique to estimate costs.

 What type of estimate is used for making many purchasing decisions for which accurate estimates are required and for estimating final project costs?

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

 Which method is used for determining the estimated annual costs and benefits for a project?

 _____ theory states that when many items are produced repetitively, the unit cost of those items decreases in a regular pattern as more units are produced.

 Work performance information and cost forecasts are main outputs of which process?

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

 Project costs, like project schedules, grow out of the basic documents that initiate a project, like the _____.

 How are profits best defined?

 The main outputs of the _____ process are a cost performance baseline, project funding requirements, and project document updates.

 Describe three tools used in developing a good cost estimate.

 Estimates should become more accurate as time progresses.

 Which statement is true of bottom-up estimates?