Ch 7. Review Flashcards
You are asked to prepare an estimate for a project that involves planting new trees in the parking lot. The trees cost $800 each, and the labor to install them is $75 per hour. You are planting 10 new trees, and each tree takes one hour of labor to plant, stake, and water. What is the estimated cost of the labor for this project, and which technique are you using to determine this estimate? Choose two.
A. $8,000
B. Three-point estimate
C. Bottom-up method
D. $750
E. Analogous method
F. Parametric method
G. $8,750
D. $750
F. Parametric method
The labor is $75/hour times 10 trees is $750. This is the parametric method of estimating because you are multiplying the quantity times the rate. Analogous estimating involves using estimates from similar projects, and three-point estimates use the average of three estimates.
Top-down estimating is another name for which type of estimating technique?
A. Parametric estimating
B. Analogous estimating
C. Three-point estimating
D. Expert judgment
B. Analogous estimating
Top-down estimating is another name for analogous estimating.
The total time it will take for one person to complete a task from beginning to end without taking into account holidays, time off, or other project work is known as this.
A. Duration estimate
B. Work effort estimate
C. Bottom-up estimate
D. Parametric estimate
B. Work effort estimate
A work effort estimate or person-hour estimate is used to develop the cost estimates. This is the amount of time it will take to complete the task from beginning to end without accounting for work breaks, holidays, and so on. Duration estimates account for holidays, work breaks, and so on. Bottom-up estimates are estimates for individual components of work that are rolled up into the overall estimate, and parametric estimates are usually derived by multiplying quantity by rate.
A discretionary fund used by the project manager to cover the cost of possible adverse events during the project is known as which of the following?
A. Management reserve
B. Chart of accounts
C. Contingency fund
D. Cost baseline
C. Contingency fund
A contingency fund is an amount allocated to cover the cost of possible adverse events, and the project manager generally has the ability to use this fund. The project manager does not usually have the authority to spend money from the management reserve. The chart of accounts is a description of the accounts listed in the accounting ledger, and the cost baseline is the total expected cost for the project.
You are in the process of determining the cost baseline. All of the following are used in the cost baseline except for which one?
A. Management reserves
B. Chart of accounts
C. Human resource cost estimates
D. Materials and equipment estimates
A. Management reserves
Management reserves are not part of the project cost budget or cost baseline.
You are developing a bottom-up estimate for the first phase of your project. Which of the following is the most important input to complete this task?
A. Historic data from a similar project
B. Chart of accounts
C. The WBS
D. The scope statement
C. The WBS
Bottom-up estimates start at the work package level of the WBS. Each work package on the WBS for the first phase of the project is summed to come up with an overall estimate for this phase. Historical data would be useful if you were using the analogous estimating technique. The chart of accounts doesn’t help at all with this exercise, and the scope statement will give you an understanding of what’s detailed on the WBS, but it won’t help with estimating.
What is considered the most accurate estimate?
A. Analogous estimate
B. Bottom-up estimate
C. Estimates based on expert judgment
D. Parametric estimate
B. Bottom-up estimate
Bottom-up estimates are the most accurate estimates, and analogous estimates are the least accurate. Estimates based on expert judgment are analogous estimates. Parametric estimates are only as accurate as the data you’re using for the parametric model.
You are asked to present and explain your project cost baseline. All of the following are true except which one?
A. The baseline will be used to track actual spending against the cost estimates.
B. The baseline can be used to predict future project costs.
C. The baseline is calculated and approved by the project manager.
D. The baseline is the total expected cost for the project.
C. The baseline is calculated and approved by the project manager.
The cost baseline is approved by the project sponsor, not the project manager.
Your project task is complex and you decide to use a three-point estimating technique. Which of the following options determine the three-point estimate? Choose three.
A. Quantity estimate
B. Work package level estimate
C. Materials estimate
D. Pessimistic estimate
E. Resource estimate
F. Rate estimate
G. Optimistic estimate
H. Most likely estimate
D. Pessimistic estimate
G. Optimistic estimate
H. Most likely estimate
Three-point estimates are the average of the most likely, optimistic, and pessimistic estimates.
How is burn rate typically calculated?
A. CV
B. Determining spending rates over time
C. CPI
D. AC—PV
C. CPI
The burn rate is typically calculated using the cost performance index (CPI). This tells you the efficiency or benefits of the money spent at any point in the project.
The work effort multiplied by which of the following will bring about the total estimate for each task?
A. Duration
B. Rate
C. Number of resources
D. Number of hours
B. Rate
The rate that is established for a given resource times the work effort (usually expressed in hours) will yield the total estimate for the task.
Your project has a potential for a future risk event. The sponsor has told you that the organization cannot sustain the consequences of this risk. You recommend purchasing insurance so that if the risk event occurs, the organization can recoup their expenditures for the impacts of the risk. What risk strategy is this known as?
A. Avoid
B. Mitigate
C. Accept
D. Transfer
D. Transfer
Transfer is a risk strategy that transfers the consequences of the risk to another party.
This technique can be used to help identify risks.
A. SWOT
B. CPI
C. EVM
D. CV
A. SWOT
SWOT stands for strengths, weaknesses, opportunities, and threats. Examining the project from each of these perspectives helps you identify risks. The other options are cost performance measurements.
The risk register typically contains several pieces of information. Which of the following would you expect to see on a risk register? Choose three.
A. Risk owner
B. Description of risk
C. Risk score
D. Cost estimate for response plan
E. Resource costs to track risks
F. Cost estimate of the consequences of the risk
A. Risk owner
B. Description of risk
C. Risk score
During the early stages of risk planning, a risk register typically has a risk identification number, a description of the risk, the probability and impact of the risk event, risk score, and risk owner. Your risk register could also contain the risk trigger and other pertinent information about the risk.
You have identified a risk on your project, and the team decides they won’t create a response plan; if the risk happens, they’ll deal with consequences when they occur. This is an example of which risk strategy?
A. Exploit
B. Avoid
C. Mitigate
D. Accept
D. Accept
The risk strategy of accepting a risk involves dealing with the consequences when they occur. You don’t prepare a risk response plan for risks you plan to accept.
