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PMP Chp 05
Developing the Project Budget and Communicating the Plan
20
Business
Post-Graduate
09/24/2015

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Cards

Term
1. All of the following are true regarding the Project Cost Management Knowledge Area processes
except for which one?
A. The primary concern of the Project Cost Management Knowledge Area is determining
the amount of resources needed to complete project activities.
B. The Estimate Costs and Determine Budget processes can be combined into one process
for small projects.
C. The Estimate Cost process is closely linked with the Estimate Activity Resources process.
D. General management techniques such as ROI, discounted cash flow, and payback analysis
can be used to help derive cost estimates.
Definition
1. A. Determining the cost of resources (not the amount) to complete all the activities for the
project is the primary concern of the Project Cost Management Knowledge Area.
Term
2. This document is used to establish the criteria for planning, estimating, budgeting, and controlling
costs.
A. Cost baseline, an output of the Determine Budget process.
B. Performance management baseline, an output of the Plan Cost Management process.
C. Project funding requirements, an output of the Determine Budget process.
D. Cost management plan, an output of the Plan Cost Management process.
Definition
2. D. The cost management plan, an output of the Plan Cost Management process, is used to
establish the criteria for planning, estimating, budgeting, and controlling costs.
Term
3. You are a project manager working for iTrim Central and you’re preparing your cost management
plan. You know that all of the following are true regarding this plan except for
which one?
A. The WBS provides the framework for this plan.
B. Units of measure should be described in the plan usually as hours, days, weeks, or
lump sum.
C. This plan is a subsidiary of the project management plan.
D. Control thresholds should be described in the plan as to how estimates will adhere to
rounding ($100 or $1,000, and so on).
Definition
3. D. Control thresholds are variance thresholds (typically stated as a percentage of deviation
from the baseline) used for monitoring cost performance.
Term
4. You are a project manager working for iTrim Central. Your organization has developed a
new dieting technique that is sure to be the next craze. One of the deliverables of your feasibility
study was an analysis of the potential financial performance of this new product,
and your executives are very pleased with the numbers. You will be working with several
vendors to produce products, marketing campaigns, and software that will track customers’
progress with the new techniques. For purposes of performing earned value measurements
for project costs, you are going to place which of the following in the WBS?
A. Chart of accounts
B. Code of accounts
C. Control account
D. Reserve account
Definition
4. C. A control account can be placed at any level of the WBS and is used for earned value
measurement calculations regarding project costs.
Term
5. All of the following are inputs of the Estimate Costs process except for which one?
A. Resource calendars
B. Scope baseline
C. Project schedule
D. Human resource management plan
Definition
5. A. The inputs of Estimate Costs are cost management plan, human resource management
plan, scope baseline, project schedule, risk register, enterprise environmental factors, and
organizational process assets.
Term
6. You want to improve your activity cost estimates by taking into account estimation uncertainty
and risk. Which of the following tools and techniques will you use?
A. Analogous estimates
B. Three-point estimating
C. Parametric estimates
D. Bottom-up estimates
Definition
6. B. Three-point estimating can improve activity cost estimates because they factor in estimation
uncertainty and risk.
Term
7. You have received estimates for activity costs associated with one work package of the
WBS. Additional contingencies have been added to the estimates to account for cost uncertainty.
Which of the following tools and techniques of Estimate Costs does this describe?
A. Reserve analysis
B. Three-point estimates
C. Vendor bid analysis
D. Analogous estimates
Definition
7. A. Reserve analysis accounts for cost uncertainty by including a contingency reserve,
usually expressed as a percentage of the estimated cost.
Term
8. You have received the following estimates for a complex activity that is critical to the success
of your project. The three-point estimates are: most likely estimate is $42, the optimistic
estimate is $35, and the pessimistic estimate is $54. What is the expected activity cost of
this activity using the beta distribution formula (rounded to the nearest dollar)?
A. 49
B. 39
C. 43
D. 44
Definition
8. C. The expected activity cost using the three-point beta distribution formula (also known
as PERT) is calculated this way: ((4 × most likely) + optimistic + pessimistic) / 6. Therefore,
the answer is ((4 × 42) + 35 + 54) / 6 = 43.
Term
9. You are the project manager for a custom home-building construction company. You are
working on the model home project for the upcoming Show Homes Tour. The model home
includes Internet connections in every room, talking appliances, and wiring for home theaters.
You are working on the cost baseline for this project. All of the following statements
are true except which one?
A. This process aggregates the estimated costs of project activities.
B. The cost baseline will be used to measure variances and future project performance.
C. This process assigns cost estimates for expected future period operating costs.
D. The cost baseline is the time-phased budget at completion for the project.
Definition
9. C. Future period operating costs are considered ongoing costs and are not part of project
costs.
Term
10. Your project sponsor has requested a cost estimate for the project. She would like the cost
estimate to be as accurate as possible because this might be her one and only chance to
secure the budget for this project because of recent cuts in special projects. You decide to
use _______________.
A. analogous estimating techniques
B. bottom-up estimating techniques
C. top-down estimating techniques
D. expert judgment techniques
Definition
10. B. Bottom-up techniques are the most time-consuming and generally the most accurate estimates
you can use. With bottom-up estimating, each work item is estimated and rolled up
to a project total.
Term
11. You are the project manager for a custom-home-building construction company. You are
working on the model home project for the upcoming Show Homes Tour. The model home
includes Internet connections in every room, talking appliances, and wiring for home theaters.
You are working on the Determine Budget process. All of the following statements
are true except which one?
A. You document the funding limit reconciliation to include a contingency for unplanned
risks.
B. You discover that updates to the risk register are needed as a result of performing this
process.
C. You document that funding requirements are based on a quarterly basis and are
derived from the cost baseline.
D. The performance measurement baseline will be used to perform earned value management
calculations.
Definition
11. A. Funding limit reconciliation concerns reconciling the funds to be spent on the project
with funding limits placed on the funding commitments for the project.
Term
12. Which of the following is displayed as an S curve?
A. Funding requirements
B. Cost baseline
C. Cost estimates
D. Expenditures to date
Definition
12. B. The cost baseline is displayed as an S curve because of the way project spending occurs.
Spending begins slowly, picks up speed until the spending peak is reached, and then tapers
off as the project winds down.
Term
13. All of the following are tools and techniques of the Determine Budget process except for
which one?
A. Reserve analysis
B. Expert judgment
C. Historical relationships
D. Cost of quality
Definition
13. D. Cost of quality is a tool and technique of Estimate Costs. The tools and techniques of
Determine Budget are cost aggregation, reserve analysis, expert judgment, historical relationships,
and funding limit reconciliation.
Term
14. Your project sponsor has requested a cost estimate for the project on which you’re working.
This project is similar in scope to a project you worked on last year. She would like to get
the cost estimates as soon as possible. Accuracy is not her primary concern right now. She
needs a ballpark figure by tomorrow. You decide to use ___________________.
A. analogous estimating techniques
B. bottom-up estimating techniques
C. parametric estimating techniques
D. three-point estimating techniques
Definition
14. A. Analogous—or top-down—estimating techniques are a form of expert judgment.
Because this project is similar to another recent project, you can use the cost estimates from
the previous project to help you quickly determine estimates for the current project.
Term
15. You have eight key stakeholders (plus yourself) to communicate with on your project.
Which of the following is true?
A. There are 36 channels of communication, and this should be a consideration when
using the communications technology tool and technique.
B. There are 28 channels of communication, and this should be a consideration when
using the communications requirements analysis tool and technique.
C. There are 28 channels of communication, and this should be a consideration when
using the communications technology tool and technique.
D. There are 36 channels of communication, and this should be a consideration when
using the communications requirements analysis tool and technique.
Definition
15. D. There are 36 channels of communication, yourself plus 8 stakeholders. The formula is
9 (9 – 1) / 2 = 36. Lines of communication are considered when using the communications
requirements analysis tool and technique.
Term
16. All of the following are true regarding Plan Communications Management except for
which one?
A. The communications management plan is a subsidiary plan of the project management
plan.
B. This process should be completed as early in the project as possible.
C. It’s tightly linked with enterprise environmental factors and all organizational process
assets are used as inputs for this process.
D. Communications requirements analysis, communication technology, communication
methods, and expert judgment are tools and techniques of this process.
Definition
16. D. Communications requirements analysis, communication technology, communication
models, communication methods, and meetings are the tools and techniques of the Plan
Communications Management process.
Term
17. You are preparing your communications management plan and know that all of the following
are true except for which one?
A. Decode means to translate thoughts or ideas so they can be understood by others.
B. Transmit concerns the method used to convey the message.
C. Acknowledgment means the receiver has received and agrees with the message.
D. Encoding and decoding are the responsibility of both the sender and receiver.
Definition
17. C. Acknowledgment means the receiver has received the message but does not mean they
agree with the message.
Term
18. Which of the following ensures that information is distributed but does not acknowledge or
certify that it was understood by intended receiver(s)?
A. Push communication
B. Interactive communication
C. Transmit
D. Message and feedback message
Definition
18. A. Push communication assures that information is distributed to specific recipients but
does not certify that it was understood by the intended recipients.
Term
19. You need to communicate information in a multi-directional fashion with several stakeholders.
Which of the following is true?
A. This describes push communication, which is a communication model.
B. This describes interactive communication, which is a communication method.
C. This describes communication requirements analysis, which is a communication
model.
D. This describes pull communication, which is a communication method.
Definition
19. B. This describes interactive communication. It is a communication method, which is a tool
and technique of Plan Communications Management.
Term
20. Communication technology takes into account all of the following factors that can affect
the project except for which one?
A. Urgency of the need for information
B. Project environment
C. Reasons for the distribution of information
D. Duration of the project
Definition
20. C. Reasons for the distribution of information belong in the communications management
plan.
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