Project Cost Management - Ch 7 (True/False)

Overrun is the additional percentage amount by which estimates exceed actual costs.

The primary output of the planning cost management process is a change request.

IT project managers must be able to present and discuss project information both in financial and technical terms.

Project managers must conduct cash flow analysis to determine net present value.

Intangible costs can be easily measured in monetary terms.

When deciding what projects to invest in or continue, one should include sunk costs.

It is important for project managers to focus on indirect costs because they can be easily controlled.

If an important supplier goes out of business, management reserves can be set aside to cover the resulting costs.

Contingency reserves are also known as unknown unknowns.

A cost management plan can include organizational procedures links, control thresholds, and process descriptions.

A budgetary estimate is the most accurate of the three types of estimates.

Budgetary estimates are made even before a project is officially started.

Definitive estimates are made one year or less prior to project completion.

Estimates should become more accurate as time progresses.

Supporting details for an estimate include the ground rules and assumptions used in creating the estimate.

Analogous estimates are called activity based costing.

Analogous estimates are the most accurate technique to estimate costs.

In a bottom up estimate, the size of the individual work items is one of the factors that drives the accuracy of the estimates.

Parametric models are reliable when the models are flexible in terms of the project's size.

One of the reasons why project cost estimates are inaccurate is because human beings are biased toward underestimation.

It is important for project managers to understand that every cost estimate is unique.

Determining the budget involves allocating the project cost estimate to individual work items over time.

The project management plan and project funding requirements are inputs of the process of controlling costs.

The formulas for variances and indexes start with EV, the earned value.

If cost variance is a positive number, it means that performing the work costs more than planned.

A negative schedule variance means that it took lesser than planned to perform the work.

If the cost performance index (CPI) is less than 100 percent, the project is under budget.

A schedule performance index of one means that the project is on schedule.

In an earned value chart, when the actual cost line is right on or above the earned value line, it indicates that costs are less than planned.

Spreadsheets are a common tool for cost estimating, cost budgeting, and cost control.