Podcast
Questions and Answers
What is the main objective of a Cost Management Plan?
What is the main objective of a Cost Management Plan?
- To allocate resources
- To develop and control the project budget (correct)
- To manage project risks
- To determine project quality standards
Which of the following is a unit of measure commonly used in cost management?
Which of the following is a unit of measure commonly used in cost management?
- Stakeholder engagement
- Earned Value
- Dollars or staff hours (correct)
- Milestones
What does the 'level of accuracy' in a cost estimate indicate?
What does the 'level of accuracy' in a cost estimate indicate?
- The methodology used for estimating costs
- The confidence level in the estimated value, typically expressed as a percentage range (correct)
- The number of stakeholders involved
- The project scope
What type of cost includes office rent, which remains constant regardless of the project size?
What type of cost includes office rent, which remains constant regardless of the project size?
What are sunk costs?
What are sunk costs?
Which of the following is an example of a direct cost?
Which of the following is an example of a direct cost?
Which estimating approach uses data from similar past projects to estimate current project costs?
Which estimating approach uses data from similar past projects to estimate current project costs?
Which estimating technique involves calculating cost by multiplying parameters like quantity by rate?
Which estimating technique involves calculating cost by multiplying parameters like quantity by rate?
What is a primary disadvantage of analogous estimating?
What is a primary disadvantage of analogous estimating?
In three-point estimating, what does 'cM' represent?
In three-point estimating, what does 'cM' represent?
What is the formula for calculating the expected cost using the beta distribution in three-point estimating?
What is the formula for calculating the expected cost using the beta distribution in three-point estimating?
What type of estimate provides a cost range of -25% to +75% accuracy?
What type of estimate provides a cost range of -25% to +75% accuracy?
When is a definitive estimate typically prepared?
When is a definitive estimate typically prepared?
What is the purpose of a cost baseline in project management?
What is the purpose of a cost baseline in project management?
Which of the following is a time-phased budget used to monitor and control project costs?
Which of the following is a time-phased budget used to monitor and control project costs?
What type of cost is associated with ongoing maintenance after the project's completion?
What type of cost is associated with ongoing maintenance after the project's completion?
What does Earned Value Management (EVM) help project managers measure?
What does Earned Value Management (EVM) help project managers measure?
Which term refers to the amount of money added to a budget to cover known risks with active response strategies?
Which term refers to the amount of money added to a budget to cover known risks with active response strategies?
What is a characteristic of management reserves?
What is a characteristic of management reserves?
Which type of estimating involves breaking down the project into smaller components and estimating each one individually?
Which type of estimating involves breaking down the project into smaller components and estimating each one individually?
What is an advantage of using bottom-up estimating?
What is an advantage of using bottom-up estimating?
Which estimating technique is most suitable when project details are not yet finalized?
Which estimating technique is most suitable when project details are not yet finalized?
Which of the following describes opportunity cost?
Which of the following describes opportunity cost?
What is Parkinson’s Law in the context of project management?
What is Parkinson’s Law in the context of project management?
Which type of cost estimating is described as 'involving a mathematical model to estimate project costs'?
Which type of cost estimating is described as 'involving a mathematical model to estimate project costs'?
What is the primary purpose of the cost aggregation process?
What is the primary purpose of the cost aggregation process?
Which of the following reserves is typically not part of the project cost baseline?
Which of the following reserves is typically not part of the project cost baseline?
What does the S-curve represent in project cost management?
What does the S-curve represent in project cost management?
What is the definition of 'fixed cost'?
What is the definition of 'fixed cost'?
In the context of cost estimating, what does 'level of precision' refer to?
In the context of cost estimating, what does 'level of precision' refer to?
What is a primary benefit of using historical databases in cost estimating?
What is a primary benefit of using historical databases in cost estimating?
What is the function of a cost baseline in project management?
What is the function of a cost baseline in project management?
Which of the following tools helps manage cost performance throughout the project lifecycle?
Which of the following tools helps manage cost performance throughout the project lifecycle?
In Agile, what is an item in the product backlog that estimates the effort required called?
In Agile, what is an item in the product backlog that estimates the effort required called?
What is the purpose of resource leveling?
What is the purpose of resource leveling?
Which estimating approach can be done at any point during the project?
Which estimating approach can be done at any point during the project?
What are indirect costs in project management?
What are indirect costs in project management?
Which type of costs are constant and do not change with the project’s size or scope?
Which type of costs are constant and do not change with the project’s size or scope?
What is the main risk of using top-down (analogous) estimating?
What is the main risk of using top-down (analogous) estimating?
Which type of estimate is used to put dollars in the budget plan during early to mid-planning?
Which type of estimate is used to put dollars in the budget plan during early to mid-planning?
Which type of estimate is typically the most accurate?
Which type of estimate is typically the most accurate?
What is 'cost aggregation' in project management?
What is 'cost aggregation' in project management?
What role do contingency reserves play in the project budget?
What role do contingency reserves play in the project budget?
What type of estimating is 'bottom-up estimating'?
What type of estimating is 'bottom-up estimating'?
Which estimating technique uses parameters like size, weight, or complexity as inputs to determine cost estimates?
Which estimating technique uses parameters like size, weight, or complexity as inputs to determine cost estimates?
What does a cost baseline typically include?
What does a cost baseline typically include?
In resource planning, what type of resources must be considered?
In resource planning, what type of resources must be considered?
Which estimating method allows you to quickly compare items in a product backlog to each other to assign sizes?
Which estimating method allows you to quickly compare items in a product backlog to each other to assign sizes?
What are 'control accounts' in project management?
What are 'control accounts' in project management?
What is the main purpose of the S-curve in project cost management?
What is the main purpose of the S-curve in project cost management?
Flashcards
Cost Management Plan
Cost Management Plan
A plan developed to control the project budget.
Units of Measure (Cost Management)
Units of Measure (Cost Management)
Common units like dollars or staff hours used in project costing.
Level of Accuracy (Cost Estimates)
Level of Accuracy (Cost Estimates)
The confidence level in a cost estimate, often expressed as a range.
Fixed Costs
Fixed Costs
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Sunk Costs
Sunk Costs
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Direct Costs
Direct Costs
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Variable Costs
Variable Costs
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Analogous Estimating
Analogous Estimating
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Parametric Estimating
Parametric Estimating
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Three-Point Estimating
Three-Point Estimating
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ROM Estimate
ROM Estimate
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Definitive Estimate
Definitive Estimate
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Cost Baseline
Cost Baseline
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Earned Value Management (EVM)
Earned Value Management (EVM)
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Contingency Reserves
Contingency Reserves
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Management Reserves
Management Reserves
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Cost Aggregation
Cost Aggregation
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S-Curve (Project Cost)
S-Curve (Project Cost)
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Opportunity Cost
Opportunity Cost
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Parkinson’s Law
Parkinson’s Law
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Indirect Costs
Indirect Costs
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Bottom-Up Estimating
Bottom-Up Estimating
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Resource Planning
Resource Planning
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Control Accounts
Control Accounts
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Agile Estimation
Agile Estimation
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Relative Estimating
Relative Estimating
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Study Notes
Cost Management Plan
- Primary objective is to develop and control the project budget.
Units of Measure in Cost Management
- Common measures include dollars or staff hours.
Level of Accuracy in Cost Estimates
- Indicates confidence level in estimated value, expressed as a percentage range.
Types of Costs
- Fixed costs: Remain constant regardless of project size (e.g., office rent).
- Sunk costs: Already spent and cannot be recovered.
- Direct costs: Attributable costs, such as salaries for team members exclusively working on the project.
- Variable costs: Costs that vary with project parameters.
Estimating Techniques
- Analogous estimating: Uses data from similar past projects for current costs.
- Parametric estimating: Calculates costs by multiplying parameters (e.g., quantity by rate).
- Three-point estimating: Uses optimistic, most likely, and pessimistic cost scenarios to derive expected cost.
Cost Estimates and Accuracy
- Rough Order of Magnitude (ROM) estimate provides a cost range of -25% to +75% accuracy.
- Definitive estimates are prepared just before execution after planning is complete.
Cost Baseline and Performance Measurement
- Cost baseline serves as the budget to measure and control cost performance.
- Earned Value Management (EVM) helps track project performance against the budget.
Reserves in Budgeting
- Contingency reserves are for known risks with active response strategies.
- Management reserves are for unforeseen work within the project scope.
Cost Aggregation
- Primary purpose is to compile individual cost estimates into a total project cost.
S-Curve in Project Cost Management
- Represents cumulative costs, labor hours, or quantities monitored over time.
Opportunity Cost
- The cost of an alternative that is forgone to pursue a certain action.
Parkinson’s Law
- Work expands to fill the time available for its completion.
Indirect Costs
- Related to the general operation of the business, allocated to the project.
Bottom-Up Estimating
- Involves breaking down the project into smaller components and estimating costs individually, providing a very accurate total project cost.
Resource Planning
- Considers people, equipment, facilities, and materials as necessary resources.
Control Accounts
- Management control points where scope, budget, actual cost, and schedule are integrated.
Agile Estimation
- In Agile, user stories estimate the effort required for items in the product backlog.
Relative Estimating
- Quickly compares items in a product backlog to assign sizes, aiding in project prioritization.
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Description
This quiz covers essential concepts of cost management in project management. Topics include units of measure, types of costs, estimating techniques, and accuracy levels in cost estimation. Understanding these principles is crucial for effective budget development and control.
