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Chapter 5. Creating the Budget > Quiz Answers
Quiz Answers
| 1. | A. Bottom-up estimating requires the project manager to account for all expenses within the project to arrive at a grand total for the project. |
| 2. | D. This is an example of a parametric estimate. The units will cost $129 each; this is the parameter. As there are 1,200 units on the project, the estimate is calculated by multiplying the parameter of $129 by the total number of units needed, 1,200, for an estimate of $154,800. |
| 3. | D. Bottom-up estimating is a process that requires the project manager to create a detailed estimate for each work package in the WBS. Every work package can be cost estimated, and it’s the sum of the work package’s cost estimates that help determine the bottom-up estimate. |
| 4. | A. This is an example of an analogous estimate. By creating an analogy between the current project and the previous project, the project manager can predict current costs. To use an analogous estimate, you must have accurate historical information. |
| 5. | C. The project manager should not create one grand total for a project. In order for the project manager to see a true picture of the work, she should segment the project into phases and assign each phase a dollar amount based on the work to be completed within it. |
| 6. | C. A fully burdened workload is the prediction of the actual hours required by the team members to complete a given project. This process allows the project manager to predict the financial obligations corresponding to time and create a sense of urgency as to when each task must be completed. |
| 7. | C. The most likely, optimistic, and pessimistic scenarios allow a project manager to predict the average amount of time the team member requires to complete a task. The project manager uses this value to assign a dollar amount to the work to be completed. |
| 8. | D. This is an example of gold plating. Gold plating happens when the project manager or team adds deliverables that were not in the project scope in an effort to consume all of the project budget. |
| 9. | D. A fixed quote allows the project manager to use that dollar amount in a budget to predict the funds required to complete a project. It can also be used to determine which vendor will actually be awarded the job based on the price and hours to complete the work. |
| 10. | B. The budget at completion (BAC) is the predicted amount of the entire project before the project has been completed. |
| 11. | B. The Program Evaluation Review Technique (PERT) is a time-estimating formula that accounts for the optimistic, pessimistic, and most likely estimates. The formula is P+O+(4ML)/6. In this example, the closest result if 46 hours. |
| 12. | A. PERT does use a weighted average to predict the cost or time of an activity. It’s considered weighted because the formula is P+O+(4ML)/6. The three-point estimate is just an average of the pessimistic, optimistic, and most likely estimates. |
| 13. | C. To determine the make or buy, you’ll first find the difference between the in-house solution and the vendor’s solution. In this example the difference is $6,500. Then you’ll find the difference of the monthly support for each solution, which is $600. The $6,500 is divided by $600, which tells you how long you’ll need to use the in-house solution to equate to the cost of the vendor’s solution. In this example, it’s nearly 11 months, which means you should buy the solution if you’ll keep it for less than 11 months or build the solution if you’ll keep it for more than 11 months. |
| 14. | C. If you use the three-point estimate approach in this example, you will record the cost estimate as $158 per workstation. |
| 15. | C. A parametric model is a value that can serve as a parameter to determine the project costs. In this example, the 7,100 network drops at $175 each is an example of a parametric model. |
