Cost Estimation & Budget Control Flashcards

Which estimating method is most accurate but also the most time-consuming?

Answer: Bottom-up estimating

Bottom-up estimating requires detailed estimation of each work package, making it the most accurate and most labor-intensive method.

In earned value management, what does the Budget at Completion (BAC) represent?

Answer: The total planned value when the project is complete

BAC is the total authorized budget for the project, representing the sum of all planned values at completion.

A project manager notices the SPI is 0.8 and CPI is 0.9. Which statement is most accurate?

Answer: The project is behind schedule and over budget

SPI < 1 means behind schedule; CPI < 1 means over budget — both performance indices are below 1.

What is the purpose of a cost baseline in project management?

Answer: To serve as the approved time-phased budget against which performance is measured

The cost baseline is the approved, time-phased budget used to measure and monitor project cost performance.

Rough Order of Magnitude (ROM) estimates typically carry an accuracy range of:

Answer: -25% to +75%

ROM estimates are typically accurate within -25% to +75% and are used in early project phases when limited information is available.

When applying the three-point estimating (PERT) formula for cost, what weights are applied to optimistic (O), most likely (M), and pessimistic (P)?

Answer: O×1, M×4, P×1 divided by 6

The PERT formula is (O + 4M + P) / 6, giving the most weight to the most likely estimate.

Which document formally authorizes the project cost baseline and is approved by stakeholders?

Answer: Project Budget

The approved Project Budget (which includes the cost baseline plus management reserve) is formally authorized by stakeholders.