Project Management Flashcards

Money that has already been spent.

Answer: Sunk Cost

A sunk cost refers to money that has already been expended and cannot be recovered, regardless of any future decisions. In project management, it's crucial to recognize sunk costs because they should not influence future decisions about a project. Rational decision-making should focus solely on future costs and benefits, not on past, unrecoverable expenditures.

Which of the following statements regarding Process Group is false?

Answer: Process Groups are Project Phases

In project management, Process Groups (Initiating, Planning, Executing, Monitoring & Controlling, Closing) are a logical grouping of project management processes, not project phases. Project phases are distinct, sequential segments of a project's lifecycle (e.g., design, development, testing). While processes from all Process Groups can occur within a single project phase, Process Groups themselves are not synonymous with phases.

The procedures that must be followed to ensure that the project is completed on time and on budget.

Answer: Project Cost Management

Project Cost Management is the knowledge area that encompasses the processes required to plan, estimate, budget, finance, fund, manage, and control costs. Its primary objective is to ensure that the project can be completed within the approved budget. By effectively managing financial resources, it directly addresses the goal of completing a project on budget and supports on-time completion through proper resource allocation.

Which of the following is not included in the three-sphere system management model?

Answer: Information

The three-sphere system management model typically refers to the intersection of Business, Organization, and Technology. This model emphasizes that successful projects require a balanced integration of these three key areas. While information is undoubtedly crucial to projects, it is usually considered an output or a component within these spheres, rather than a separate, overarching sphere in this specific management model.

Integration Management is in charge of:

Answer: Deals how to coordinate all the work and how to deal with changes

Project Integration Management is the knowledge area responsible for identifying, defining, combining, unifying, and coordinating the various processes and project management activities. Its primary role is to ensure that all project elements are properly coordinated and aligned with project objectives. This includes effectively dealing with changes throughout the project lifecycle to maintain overall project coherence and success.

An estimate of the cost of the actual physical job accomplished.

Answer: Earned Value

Earned Value (EV) represents the value of the work actually performed and completed at a given point in time, expressed in terms of the approved budget for that work. It is a key metric in Earned Value Management (EVM) that measures the physical progress of a project against its planned budget. By comparing EV to Planned Value and Actual Cost, project managers can assess project performance and forecast future outcomes.

What phrase is used to describe a framework for the phases of information system development?

Answer: Systems development life cycle

The Systems Development Life Cycle (SDLC) is a structured framework that outlines the phases involved in developing, maintaining, and enhancing information systems. It typically includes stages such as planning, analysis, design, implementation, testing, and maintenance. SDLC provides a systematic approach to managing the complexity of software and system development projects.

A method of cost estimation that involves estimating individual work items and adding them together to arrive at a project total.

Answer: Bottom-Up Estimates

Bottom-Up Estimating is a method where the cost of individual work packages or activities is estimated in detail and then aggregated to arrive at an overall project cost. This approach is highly accurate because it involves breaking down the work into its smallest components and estimating each one. It requires a detailed Work Breakdown Structure (WBS) and is typically used when there is a clear understanding of the project scope.

When an organization obtains goods and/or supplies from a third-party source in another country, what term is used?

Answer: Offshoring

Offshoring refers to the practice of relocating a business process or service to another country, often to take advantage of lower labor costs or specific expertise. While it involves obtaining goods/supplies from a third party, the key differentiator is the geographical relocation of the production or service delivery. This differs from simple importing or global sourcing, which don't necessarily imply relocating the *process* itself.

The ratio of earned value to planned value, or _________________, can be used to calculate the anticipated time needed to finish a project.

Answer: Schedule Performance Index (SPI)

The Schedule Performance Index (SPI) is a key metric in Earned Value Management (EVM), calculated as the ratio of Earned Value (EV) to Planned Value (PV). An SPI greater than 1 indicates the project is ahead of schedule, while less than 1 means it's behind. This ratio is crucial for assessing schedule efficiency and forecasting the anticipated time needed to complete the project.

What is the term of the cost estimate that offers a precise estimate of project costs?

Answer: Definitive Estimate

A Definitive Estimate is the most accurate type of cost estimate, typically performed late in the project planning phase when the scope is well-defined. It provides a precise estimate of project costs, usually within a range of -5% to +10% or -5% to +15%. This level of accuracy is achieved through detailed analysis of work packages and vendor quotes.

What is the term of the cost estimate method that involves estimating each individual work item and adding them together to get a project total?

Answer: Bottom-Up Estimates

Bottom-Up Estimating involves breaking down the project work into its smallest components (work packages or activities) and then estimating the cost or duration for each of these individual items. These detailed estimates are then rolled up to calculate the total project cost or schedule. This method provides a highly accurate estimate because it leverages detailed knowledge of the work at the lowest level.

What is the term for earned value less real cost?

Answer: Cost Variance

Cost Variance (CV) is a key metric in Earned Value Management (EVM) that measures the difference between the Earned Value (EV) and the Actual Cost (AC) of work performed. A positive CV indicates that the project is under budget, while a negative CV means it is over budget. It helps project managers understand the financial performance of the project.

What does the phrase "ratio of revenues to profits" mean?

Answer: Profit Margin

Profit Margin is a financial ratio that indicates the profitability of a business or project, calculated as the ratio of profits to revenues. It expresses how much profit an entity makes for every dollar of revenue generated. A higher profit margin suggests better financial health and efficiency in converting sales into actual profit.

What is the term of the component of the authorized total cost estimate that is anticipated to be spent on an activity during a specific period?

Answer: Planned Value

Planned Value (PV), also known as Budgeted Cost of Work Scheduled (BCWS), represents the authorized budget assigned to the work scheduled to be completed by a specific date. It is the baseline against which actual performance is measured in Earned Value Management. PV helps track whether the project is on track with its spending plan at any given point.

The sum of money in a cost estimate that is intended to reduce cost risk by accounting for difficult-to-predict future events is known as the _________.

Answer: Reserves

Reserves are funds included in a cost estimate that are intended to account for uncertainties and risks that could impact project costs. They are intended to cover difficult-to-predict future events. Contingency reserves address known-unknowns within the project scope, while management reserves are for unknown-unknowns, providing a buffer against unforeseen risks.