FREE Project Cost Management Questions and Answers
An organization's budget is often allocated funds based on a cost estimate, or ________.
A cost estimate used to allocate money into an organization's budget is known as a "Budgetary Estimate."
Budgetary estimates are preliminary cost assessments used to allocate funds for upcoming projects or activities. They provide a rough idea of the financial resources needed for a project, program, or initiative, allowing organizations to plan and allocate budgets accordingly. These estimates are typically higher-level and less detailed compared to more precise cost estimates used during project planning.
The term of the project's initial plan including any approved amendments is ________.
In project management, a "baseline" refers to the original project plan that includes all the agreed-upon elements and specifications, as well as any approved changes that have been incorporated into the plan. The baseline serves as a reference point for measuring and comparing project progress, performance, and deviations throughout the project's lifecycle.
The proportion of earned value to real cost is ________ . It can be used to calculate the project's anticipated cost of completion.
The Cost Performance Index (CPI) is indeed the ratio of earned value to actual cost in earned value management (EVM) for project cost control. The CPI measures the efficiency of cost performance on a project and provides valuable insights into whether the project is under budget, on budget, or over budget.
Which of the following choices most accurately sums up analogous estimating?
Comparative estimating is not as precise as other estimating techniques.
What is the term for the sum of all direct and indirect expenditures involved in carrying out work on an activity during a specific time period?
The term "Actual Cost" (AC) refers to the total of direct and indirect costs that are incurred in accomplishing work on an activity or task during a given period. It represents the real expenses that have been expended on the project up to a specific point in time.
Controlling budget fluctuations for projects is referred to as _________.
Cost control is a fundamental aspect of project management that involves monitoring and managing the project's expenditures to ensure that they remain within the approved budget. It includes tracking actual costs against the planned budget, identifying any deviations, and taking corrective actions if necessary.
What are the dollars included in a cost estimate to account for unforeseen future events, sometimes known as "unknown unknowns"?
The dollars included in a cost estimate to allow for future situations that are unpredictable, often referred to as "unknown unknowns," are called "Management Reserves."
Management reserves are additional funds set aside beyond the project's budgeted costs to cover unforeseen events, risks, or changes that cannot be reasonably anticipated during project planning. Unlike contingency reserves, which address known risks (known unknowns), management reserves are intended to handle unexpected and unanticipated situations that were not accounted for in the project's initial planning.
What is planned value less earned value?
Schedule Variance measures the difference between the value of work performed (Earned Value) and the value of work that was planned to be performed (Planned Value) at a specific point in time. A positive SV indicates that the project is ahead of schedule, while a negative SV indicates that the project is behind schedule.
You recently began working on a project for a manufacturing. According to the project team, they are 30% through with it. From the project's $250,000 budget, you have already spent $25,000 of it. What is the project's earned value?
30% of the project's budget is the earned value.
Which of the following offers the lowest level of estimation accuracy?
The least accurate method is the rough order of magnitude, which might range from -25 to +75 percent.
What is the term of the additional percent or sum by which actual costs surpass projections?
An "overrun" refers to the additional percentage or dollar amount by which actual costs exceed estimates in a project. Overruns can occur in terms of time, cost, or other project resources. They signify that the project has exceeded the initially planned budget or duration, which can impact the project's overall success and objectives. Overruns are commonly encountered in project management when there are changes in scope, unexpected challenges, inefficiencies, or other unforeseen factors that lead to increased costs or extended timelines.
What are the terms of the expenses or advantages that may be quickly calculated in dollars?
Costs or benefits that can be easily measured in dollars are called "Tangible Costs" or "Tangible Benefits."
Tangible costs are those that have a direct and measurable financial impact. They can be quantified in monetary terms and are typically associated with expenses that are directly incurred, such as equipment costs, labor expenses, materials, and other tangible resources.
What do you call the money that is included in a cost estimate to cover potential future events that can only be partially planned for (also known as "known unknowns") and is included in the project cost baseline?
"Contingency Reserves" is the term used for dollars included in a cost estimate to account for future situations that may be partially planned for, often referred to as "known unknowns." These reserves are included in the project cost baseline to accommodate potential risks or uncertainties that could impact the project's cost.
What does revenue less expense mean?
A cost estimate used to allocate money into an organization's budget is known as a "Budgetary Estimate."
Budgetary estimates are preliminary cost assessments used to allocate funds for upcoming projects or activities. They provide a rough idea of the financial resources needed for a project, program, or initiative, allowing organizations to plan and allocate budgets accordingly. These estimates are typically higher-level and less detailed compared to more precise cost estimates used during project planning.
You are the GHG Project's project manager. You're about to draft the project's cost estimates. Which contribution to this process will be most helpful to you?
The WBS is the input that will be most useful to you when estimating costs.
The ratio of actual work finished to the amount of work expected to have been finished at any given point throughout the project or activity's existence is known as the _______.
The "Rate of Performance" (RP) is indeed the ratio of actual work completed to the percentage of work planned to have been completed at any given time during the life of the project or activity. The Rate of Performance provides insights into how efficiently work is progressing compared to the planned schedule.