Chapter 05 - Estimating Project Times and Costs
Chapter 05 Estimating Project Times and Costs Multiple Choice Questions
1. The process of forecasting or approximating the time and cost of completing project deliverables is called A. !dgeting . Predicting C. Estimating ". Planning E. #!esstimating
$. %n practice& estimating processes are fre'!entl( classified as A. Top do)n*bottom !p . +o!gh*polished C. Precise*order of magnit!de ". "raft*final E. oth A and are correct
,. A t(pical statement in act!al practice is that estimates sho!ld have a probabilit( of being met of the time. A. 100 . / C. /5 ". /0 E. 0
. A good starting point for developing deve loping time and cost estimates is A. Past experience . 2or3 pac3ages C. Tas3 anal(sis ". Time and motion st!dies E. 2or3 brea3do)n str!ct!re
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Chapter 05 - Estimating Project Times and Costs
5. 2hich of the follo)ing is not one of the factors that need to be considered to improve '!alit( of estimates for project times and costs4 A. Planning horion . People C. Padding estimates ". Profit E. Project str!ct!re
6. Ed is loo3ing over the act!al res!lts of projects and comparing them to )hat )as estimated. 7e notices that projects that too3 six months or longer to complete )ere noticeabl( more off the estimates. 2hich of the follo)ing factors is he recogniing4 A. Padding estimates . Planning horion C. Project str!ct!re ". People E. 8rganiation c!lt!re
9. :anet is forecasting ho) m!ch mone( her department needs to s!pport a ne) project. ;he estimates that t)o people and <$5&000 in expenses )ill cover her needs. eca!se management t(picall( insists on red!cing forecasts b( $0 percent& she increases her estimates to allo) for that red!ction. 2hich of the follo)ing factors is ill!strated in this sit!ation4 A. Padding estimates . Planning horion C. Project str!ct!re ". People E. 8rganiation c!lt!re
. 2hich of the follo)ing is a good condition for top-do)n estimating4 A. Cost and time important . =ixed price contract C. C!stomer )ants details ". %nternal& small project E. All of these are good conditions for top-do)n estimating
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Chapter 05 - Estimating Project Times and Costs
5. 2hich of the follo)ing is not one of the factors that need to be considered to improve '!alit( of estimates for project times and costs4 A. Planning horion . People C. Padding estimates ". Profit E. Project str!ct!re
6. Ed is loo3ing over the act!al res!lts of projects and comparing them to )hat )as estimated. 7e notices that projects that too3 six months or longer to complete )ere noticeabl( more off the estimates. 2hich of the follo)ing factors is he recogniing4 A. Padding estimates . Planning horion C. Project str!ct!re ". People E. 8rganiation c!lt!re
9. :anet is forecasting ho) m!ch mone( her department needs to s!pport a ne) project. ;he estimates that t)o people and <$5&000 in expenses )ill cover her needs. eca!se management t(picall( insists on red!cing forecasts b( $0 percent& she increases her estimates to allo) for that red!ction. 2hich of the follo)ing factors is ill!strated in this sit!ation4 A. Padding estimates . Planning horion C. Project str!ct!re ". People E. 8rganiation c!lt!re
. 2hich of the follo)ing is a good condition for top-do)n estimating4 A. Cost and time important . =ixed price contract C. C!stomer )ants details ". %nternal& small project E. All of these are good conditions for top-do)n estimating
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Chapter 05 - Estimating Project Times and Costs
/. 2hich of the follo)ing is a good condition for bottom-!p estimating4 A. ;trategic decision ma3ing . %nternal& small project C. =ixed price contract ". 7igh !ncertaint( E. oth C and " are good conditions for bottom-!p estimating
10. Top-do)n estimates are most li3el( to occ!r d!ring the phase. A. Concept . Planning C. Exec!tion ". "eliver( E. All of these are e'!all( li3el(
11. estimates are most li3el( to !se lo) cost& efficient methods. A. Apportion . +atio C. Top-do)n ". ottom-!p E. All of these are e'!all( li3el(
1$. 2hich of the follo)ing methods is not n ot considered a top-do)n approach to estimating project time and cost4 A. +atio . Template C. Apportion ". =!nction point E. >earning c!rve
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Chapter 05 - Estimating Project Times and Costs
1,. :ose is forecasting project time and cost for constr!cting a ne) b!ilding b( m!ltipl(ing the total s'!are footage b( a given dollar amo!nt. 2hich of the follo)ing methods is he !sing4 A. +atio . Template C. Apportion ". =!nction point E. >earning c!rve
1. ;ean is forecasting the time and cost of developing a c!stomied soft)are program b( loo3ing at the n!mber of inp!ts& o!tp!ts& in'!ires& files& and interfaces. 2hich of the follo)ing methods is he !sing4 A. +atio . Template C. Apportion ". =!nction point E. >earning c!rve
15. >a!ra is forecasting the time and cost of developing an intranet for a ne) c!stomer. 7er department has completed six s!ch intranets for c!stomers d!ring the last t)o (ears. Altho!gh the proposed s(stem is abo!t the same sie as a s the others she estimates that it )ill ta3e abo!t 10 percent less time and mone(. 2hich of the follo)ing methods is she !sing4 A. +atio . Template C. Apportion ". =!nction point E. >earning c!rve
16. >earning c!rves are more li3el( to appl( in sit!ations )here most of the costs are A. ?aterials . >abor C. 8verhead ". Evenl( spread over materials& labor& and overhead E. All of these are e'!all( li3el( sit!ations for learning c!rves
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Chapter 05 - Estimating Project Times and Costs
19. 2hich of the follo)ing is not one of the bottom-!p approaches to estimating project time and cost4 A. Parametric proced!res applied to specific tas3s . Estimates for the 2; )or3 pac3ages C. >earning c!rve ". Template method E. All of these are bottom-!p approaches
1. The approach that begins )ith a top-do)n estimate for the project and then refines estimates as the project is implemented is 3no)n as method. A. =!nction point . Template C. >earning c!rve ". Phase estimating E. Apportion
1/. 2hich of the follo)ing )o!ld be the best method for projects )here the final prod!ct is not 3no)n and the !ncertaint( is ver( large4 A. =!nction point . Template C. >earning c!rve ". Phase estimating E. Apportion
$0. The acc!rac( of top-do)n estimates )ill t(picall( be in the range of A. ?in!s 50 to pl!s 50 . ?in!s 0 to pl!s 95 C. ?in!s $0 to pl!s 60 ". ?in!s ,5 to pl!s ,5 E. ?in!s 10 to pl!s ,0
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Chapter 05 - Estimating Project Times and Costs
$1. The acc!rac( of bottom-!p estimates )ill t(picall( be in the range of A. ?in!s 50 to pl!s 50 . ?in!s 0 to pl!s 95 C. ?in!s $0 to pl!s 60 ". ?in!s ,5 to pl!s ,5 E. ?in!s 10 to pl!s ,0
$$. The cost to prepare bottom-!p estimates )ill t(picall( r!n ho) m!ch more than the costs to prepare the top-do)n estimates4 A. Abo!t the same . Abo!t t)ice as m!ch C. Abo!t three times as m!ch ". Abo!t fo!r times as m!ch E. Abo!t five times as m!ch
$,. T(pical 3inds of costs fo!nd in a project incl!de A. "irect costs . Project overhead costs C. #eneral and administrative costs ". 8nl( A and are incl!ded E. A& & and C are all incl!ded
$. Project costs are t(picall( vie)ed from all of the follo)ing except@ A. ;ched!led . ;!n3 C. Act!al ". Committed E. All of these are correct
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Chapter 05 - Estimating Project Times and Costs
$5. 2hich of the follo)ing )o!ld be considered a direct project cost4 A. >abor . ?aterials C. E'!ipment ". oth A and are direct costs E. A& & and C are all considered direct costs
$6. 2hich of the follo)ing is not one of the recommended g!idelines for developing !sef!l )or3 pac3age estimates4 A. Estimates sho!ld be made b( those responsible for the )or3 . se several people to estimate the same )or3 C. Estimates sho!ld be based on normal conditions ". Estimates sho!ld incl!de a normal level of contingenc( E. Estimates sho!ld be independent of other projects
$9. Companies li3e oeing& Boda3& and %? are !sing )hich of the follo)ing for improving the estimating process4 A. Adj!sting estimates based on individ!al forecasting abilities . enchmar3ing !sing the experience of other companies C. sing time and motion st!dies ". Creating historical databases of previo!s projects E. All of these are correct
$. +easons )h( estimating time and cost are important incl!de all of the follo)ing except@ A. To sched!le )or3 . To determine ho) long the project sho!ld ta3e and cost C. To develop cash flo) needs ". To determine ho) )ell the project is progressing E. All of the above are valid reasons
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Chapter 05 - Estimating Project Times and Costs
$/. %n a learning c!rve& the improvement ratio is applied to )hich of the follo)ing items4 A. "irect materials . "irect labor C. 8verhead ". oth A and are correct E. A& & and C are all correct
,0. The bottom-!p approach for estimating times and costs that !ses costs from past projects that )ere similar to the c!rrent project is 3no)n as@ A. "etailed 2; )or3 pac3age estimates . Template method C. =!nction point method ". Time-phased cost estimates E. Phase estimating
,1. 2hich of the follo) top-do)n methods is !sed )hen projects closel( follo) past projects in feat!res and costs and res!lt in costs being assigned b( percentages to major segments of the project4 A. Apportion . =!nction point C. Phase estimating ". >earning c!rve E. Consens!s
,$. +eso!rce shortages& in the form of people& e'!ipment& or materials& is a good example of A. 7idden interaction costs . Things going )rong on a project C. ormal conditions not appl(ing ". Changes in project scope E. one of these are correct
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Chapter 05 - Estimating Project Times and Costs
,,. People )or3ing on protot(pe development needing time to interact )ith the design engineers after the design is completed is an example of@ A. 7idden interaction costs . Things going )rong on a project C. ormal conditions not appl(ing ". Changes in project scope E. one of these are correct
,. A manager getting f!rther into a project and obtaining a better !nderstanding of )hat needs to be done to accomplish a project is an example of@ A. 7idden interaction costs . Things going )rong on a project C. ormal conditions not appl(ing ". Changes in project scope E. one of these are correct
,5. "esign fla)s being revealed after the fact& extreme )eather conditions& and accidents occ!rring are examples of@ A. 7idden interaction costs . Things going )rong on a project C. ormal conditions not appl(ing ". Changes in project scope E. one of these are correct
Fill in the Blank Questions
,6. Estimates that are t(picall( based on estimates of elements fo!nd in the )or3 brea3do)n str!ct!re are called estimates.
,9. Estimates that are !s!all( derived from analog( or mathematical relationships are called estimates.
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Chapter 05 - Estimating Project Times and Costs
,. The estimating factor 3no)n as considers the decreasing acc!rac( of estimates as one forecasts activities that are f!rther into the f!t!re.
,/. The factor in estimating project times and costs can introd!ce errors d!e to staff t!rnover& the s3ills of the participants& and )hether the team members have )or3ed )ith each other on previo!s projects.
0. The tendenc( to over-estimate project time and cost in order to improve the li3elihood of meeting the estimates is 3no)n as the factor.
1. The prevailing belief in some firms that detailed estimating ta3es too m!ch time and is not )orth the effort or that it is impossible to predict the f!t!re is an example of the factor.
$. sing the method of forecasting project time and costs is the preferred method for sit!ations involving strategic decision-ma3ing& projects )ith a high degree of ! ncertaint(& and projects )ith an !nstable scope.
,. sing the method of forecasting project time and costs is the preferred method for sit!ations )here the cost and time estimates are important& in a fixed contract sit!ation& and )hen the c!stomer )ants a lot of detail.
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Chapter 05 - Estimating Project Times and Costs
. The information necessar( to cond!ct a bottom-!p estimate of project time and costs starts )ith the .
5. %n the method of top-do)n estimating& a '!antitative relationship is established bet)een the estimates and a project parameter.
6. #iven that a project closel( follo)s past projects in feat!res and costs& the method of assigns costs and times to partic!lar phases that a project )ill go thro!gh.
9. The method for estimating project time and cost !ses )eighted variables b ased on major parameters and is fre'!entl( !sed in the development of soft)are.
. The method of estimating project time and costs is !sef!l for projects re'!iring the same tas3& gro!p of tas3s& or prod!ct repeated several times& especiall( if it is labor intensive.
/. %n the method of estimating project time and costs past projects are !sed as a starting point )ith adj!stments made based on differences in the ne) project.
50. Probabl( the most reliable method for estimating time and cost is to !se the and to as3 the people responsible for the )or3 pac3age to ma3e the estimates.
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Chapter 05 - Estimating Project Times and Costs
51. The approach to estimating project time and cost begins )ith an overall estimate for the project and then refines estimates for vario!s stages of the project as it is implemented.
5$. The cost to prepare a top-do)n b!dget )ill t(picall( r!n percent of the total project cost.
5,. The cost to prepare a bottom-!p b!dget )ill t(picall( r!n percent of the total project cost.
5. Project costs s!ch as labor and materials are t(picall( classified as costs.
55. The salar( of the project manager and temporar( rental space for the project team )o!ld be classified as costs.
56. Estimates sho!ld be made based on conditions& efficient methods& and a normal level of reso!rces.
59. The method is a top-do)n approach that !ses the pooled experience of senior and*or middle managers to estimate the total project d!ration an d cost.
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Chapter 05 - Estimating Project Times and Costs
5. Costs that are not directl( related to a specific project& s!ch as advertising& acco!nting& and senior management& are classified as .
True / False Questions
5/. Project estimates sho!ld be bro3en do)n into as m!ch detail than and )ith as m!ch acc!rac( as possible. Tr!e =alse
60. ottom-!p-estimating is another name for overealo!s top management estimates. Tr!e =alse
61. The !se of past experience is almost al)a(s !sed primaril( in the initial phases of a project. Tr!e =alse
6$. "!e to the averaging o!t of !nder-estimates and over-estimates& a long d!ration project is more li3el( to be on target than a short term& small project. +efer to ;napshot from Practice Page 10. Tr!e =alse
6,. The project str!ct!re chosen to manage the project )ill have little impact on the act!al project )or3 to be accomplished. Tr!e =alse
6. As long as ever(one in a project adds j!st a little padding to red!ce ris3& the project d!ration and costs are probabl( overstated b( a small amo!nt. Tr!e =alse
5-1,
Chapter 05 - Estimating Project Times and Costs
65. 8rganiation c!lt!re can significantl( infl!ence project time an d cost estimates. Tr!e =alse
66. %f a project is internal to the compan( and relativel( small& the bottom-!p approach to estimating time and costs for the project is the best choice. +efer to Table 5.1 Tr!e =alse
69. %f time and costs are important to a project the top-do)n approach to estimating time and costs for the project is the best choice. Tr!e =alse
6. The ideal approach to estimating project time and costs is to !se both the top-do)n and the bottom-!p approach. Tr!e =alse
6/. At the strategic level top-do)n estimating methods are !sed to eval!ate a project proposal. +efer to Table 5.1 Tr!e =alse
90. Top-do)n estimates !s!all( are derived from someone )ho !ses experience and*or information to determine the project d!ration and total cost. Tr!e =alse
91. Estimating the total cost of a ho!se b( m!ltipl(ing the total s'!are feet b( a cost per s'!are foot is an example of the apportion method of estimating costs. Tr!e =alse
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Chapter 05 - Estimating Project Times and Costs
9$. Estimating the total cost of a project b( m!ltipl(ing each major f!nction b( a complexit( factor is an example of the apportion method of estimating costs. Tr!e =alse
9,. Phase estimating is !sed )hen a project cannot be rigoro!sl( defined beca!se of the !ncertaint( of design or the final prod!ct. Tr!e =alse
9. Phase estimating !ses both the bottom-!p and top-do)n methods for estimating project time and costs. Tr!e =alse
95. sing a 2; permits the !se of different levels of detail for different levels of management. Tr!e =alse
96. The Consens!s method of estimating costs is a bottom-!p techni'!e. Tr!e =alse
99. The salar( of the project manager and her administrative assistant is classified as direct labor costs. Tr!e =alse
9. #eneral and Administrative costs are !s!all( allocated as a percent of the total of a direct cost s!ch as labor& materials& or e'!ipment. Tr!e =alse
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Chapter 05 - Estimating Project Times and Costs
9/. The apportion method is a top-do)n approach that !ses the pooled experience of senior and*or middle managers to estimate the total project d!ration an d cost. Tr!e =alse
0. The f!nction point method of time and cost estimating is best applied to projects that have large& complex ph(sical deliverables& s!ch as a bridge or b!ilding. Tr!e =alse
Short ns!er Questions
1. %dentif( and briefl( describe the t)o major categories of estimating project time and costs.
$. 2h( are the estimates for a projectDs time and costs important for all phases of a project4
,. %dentif( the factors that sho!ld be considered to improve the '!alit( of estimates for project times and costs.
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Chapter 05 - Estimating Project Times and Costs
. nder )hat conditions )o!ld the top-do)n approach to estimating project times and costs be the best choice4
5. nder )hat conditions )o!ld the bottom-!p approach to estimating project times and costs be the best choice4
6. "escribe the ideal approach for a project manager to develop optimal estimates for a projectDs time and costs.
9. %dentif( and briefl( describe the five major methods of top-do)n estimating.
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Chapter 05 - Estimating Project Times and Costs
. %dentif( and briefl( describe the fo!r major methods of bottom-!p estimating.
/. %dentif( the dra)bac3s to an excessive level of detail in project times and costs.
/0. %dentif( the three major categories of project costs and give an example of each.
/1. The best )a( to improve estimates is to collect and archive data on past project estimates and act!als. Agree or disagree and s!pport (o!r ans)er.
5-1
Chapter 05 - Estimating Project Times and Costs
Chapter 05 Estimating Project Times and Costs Ans)er Be(
Multiple Choice Questions
1. The process of forecasting or approximating the time and cost of completing project deliverables is called A. !dgeting . Predicting C" Estimating ". Planning E. #!esstimating Estimating is the process of forecasting or approximating the time and cost of completing project deliverables.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: !actors "nfl#encing the $#alit% of &stimates Level: &as%
$. %n practice& estimating processes are fre'!entl( classified as " Top do)n*bottom !p . +o!gh*polished C. Precise*order of magnit!de ". "raft*final E. oth A and are correct Estimating processes are fre'!entl( classified as top-do)n and bottom-!p. Top-do)n estimates are !s!all( done b( senior management.
AACSB: Anal%tic Bloom's: Knowledge Learning Obective: !actors "nfl#encing the $#alit% of &stimates Level: &as%
5-1/
Chapter 05 - Estimating Project Times and Costs
,. A t(pical statement in act!al practice is that estimates sho!ld have a probabilit( of being met of the time. A. 100 . / C" /5 ". /0 E. 0 !t past experience estimates m!st almost al)a(s be refined b( other considerations to reach the /5 percent probabilit( level.
AACSB: Anal%tic Bloom's: Knowledge Learning Obective: !actors "nfl#encing the $#alit% of &stimates Level: &as%
. A good starting point for developing time and cost estimates is " Past experience . 2or3 pac3ages C. Tas3 anal(sis ". Time and motion st!dies E. 2or3 brea3do)n str!ct!re Past experience is a good starting point for developing time and cost estimates.
AACSB: Reflective Thinking Bloom's: Comrehension Learning Obective: !actors "nfl#encing the $#alit% of &stimates Level: &as%
5-$0
Chapter 05 - Estimating Project Times and Costs
5. 2hich of the follo)ing is not one of the factors that need to be considered to improve '!alit( of estimates for project times and costs4 A. Planning horion . People C. Padding estimates #" Profit E. Project str!ct!re ;ee >ist on Page 1$-1$/.
AACSB: Reflective Thinking Bloom's: Comrehension Learning Obective: !actors "nfl#encing the $#alit% of &stimates Level: (edi#m
6. Ed is loo3ing over the act!al res!lts of projects and comparing them to )hat )as estimated. 7e notices that projects that too3 six months or longer to complete )ere noticeabl( more off the estimates. 2hich of the follo)ing factors is he recogniing4 A. Padding estimates B" Planning horion C. Project str!ct!re ". People E. 8rganiation c!lt!re The '!alit( of the estimate depends on the planning horionF estimates of c!rrent events are close to 100 percent acc!rate b!t are red!ced for more distant events. The acc!rac( of time and cost estimates sho!ld improve as (o! move from the concept!al phase to the point )here individ!al )or3 pac3ages are defined.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: !actors "nfl#encing the $#alit% of &stimates Level: (edi#m
5-$1
Chapter 05 - Estimating Project Times and Costs
9. :anet is forecasting ho) m!ch mone( her department needs to s!pport a ne) project. ;he estimates that t)o people and <$5&000 in expenses )ill cover her needs. eca!se management t(picall( insists on red!cing forecasts b( $0 percent& she increases her estimates to allo) for that red!ction. 2hich of the follo)ing factors is ill!strated in this sit!ation4 " Padding estimates . Planning horion C. Project str!ct!re ". People E. 8rganiation c!lt!re %n )or3 sit!ations )here (o! are as3ed for time and cost estimates& most of !s are inclined to add a little padding to increase the probabilit( and red!ce the ris3 of being late. %f ever(one at all levels of the project adds a little padding to red!ce ris3& the project d!ration and cost are serio!sl( overstated.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: !actors "nfl#encing the $#alit% of &stimates Level: (edi#m
. 2hich of the follo)ing is a good condition for top-do)n estimating4 A. Cost and time important . =ixed price contract C. C!stomer )ants details #" %nternal& small project E. All of these are good conditions for top-do)n estimating ;ee table 5-1 on Page 1,$.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: To)*own vers#s Bottom)+ &stimating Level: (edi#m
5-$$
Chapter 05 - Estimating Project Times and Costs
/. 2hich of the follo)ing is a good condition for bottom-!p estimating4 A. ;trategic decision ma3ing . %nternal& small project C" =ixed price contract ". 7igh !ncertaint( E. oth C and " are good conditions for bottom-!p estimating ;ee table 5-1 on Page 1,$.
AACSB: Anal%tic Bloom's: Knowledge Learning Obective: To)*own vers#s Bottom)+ &stimating Level: (edi#m
10. Top-do)n estimates are most li3el( to occ!r d!ring the phase. " Concept . Planning C. Exec!tion ". "eliver( E. All of these are e'!all( li3el( Top-do)n estimates are onl( a ro!gh c!t and t(picall( occ!r in the concept!al stage of the project.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: To)*own vers#s Bottom)+ &stimating Level: &as%
5-$,
Chapter 05 - Estimating Project Times and Costs
11. estimates are most li3el( to !se lo) cost& efficient methods. A. Apportion . +atio C. Top-do)n #" ottom-!p E. All of these are e'!all( li3el( The bottom-!p approach also provides the c!stomer )ith an opport!nit( to compare the lo)cost& efficient method approach )ith an( imposed restrictions.
AACSB: Anal%tic Bloom's: Knowledge Learning Obective: To)*own vers#s Bottom)+ &stimating Level: (edi#m
1$. 2hich of the follo)ing methods is not considered a top-do)n approach to estimating project time and cost4 A. +atio B" Template C. Apportion ". =!nction point E. >earning c!rve Template ?ethods are !sed in bottom-do)n approach to estimating.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
5-$
Chapter 05 - Estimating Project Times and Costs
1,. :ose is forecasting project time and cost for constr!cting a ne) b!ilding b( m!ltipl(ing the total s'!are footage b( a given dollar amo!nt. 2hich of the follo)ing methods is he !sing4 " +atio . Template C. Apportion ". =!nction point E. >earning c!rve Top-do)n methods Gsometimes called parametricH !s!all( !se ratios& or s!rrogates& to estimate project times or costs. Top-do)n approaches are often !sed in the concept or need phase of a project to get an initial d!ration and cost estimate for the project.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
1. ;ean is forecasting the time and cost of developing a c!stomied soft)are program b( loo3ing at the n!mber of inp!ts& o!tp!ts& in'!ires& files& and interfaces. 2hich of the follo)ing methods is he !sing4 A. +atio . Template C. Apportion #" =!nction point E. >earning c!rve %n the soft)are ind!str(& soft)are development projects are fre'!entl( estimated !sing )eighted macro variables called f!nction points or major parameters s!ch as n!mber of inp!ts& n!mber of o!tp!ts& n!mber of in'!iries& n!mber of data files& and n!mber of interfaces.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
5-$5
Chapter 05 - Estimating Project Times and Costs
15. >a!ra is forecasting the time and cost of developing an intranet for a ne) c!stomer. 7er department has completed six s!ch intranets for c!stomers d!ring the last t)o (ears. Altho!gh the proposed s(stem is abo!t the same sie as the others she estimates that it )ill ta3e abo!t 10 percent less time and mone(. 2hich of the follo)ing methods is she !sing4 A. +atio . Template C. Apportion ". =!nction point E" >earning c!rve A phenomenon of tas3s that are labor intensive. %n these circ!mstances the pattern of improvement phenomenon can be !sed to predict the red!ction in time to perform the tas3. =rom empirical evidence across all ind!stries& the pattern of this improvement has b een '!antified in the learning c!rve Galso 3no)n as improvement c!rve& experience c!rve& and ind!strial progress c!rveH.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
16. >earning c!rves are more li3el( to appl( in sit!ations )here most of the costs are A. ?aterials B" >abor C. 8verhead ". Evenl( spread over materials& labor& and overhead E. All of these are e'!all( li3el( sit!ations for learning c!rves A phenomenon of tas3s that are labor intensive. %n these circ!mstances the pattern of improvement phenomenon can be !sed to predict the red!ction in time to perform the tas3. =rom empirical evidence across all ind!stries& the pattern of this improvement has b een '!antified in the learning c!rve Galso 3no)n as improvement c!rve& experience c!rve& and ind!strial progress c!rveH.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
5-$6
Chapter 05 - Estimating Project Times and Costs
19. 2hich of the follo)ing is not one of the bottom-!p approaches to estimating project time and cost4 A. Parametric proced!res applied to specific tas3s . Estimates for the 2; )or3 pac3ages C" >earning c!rve ". Template method E. All of these are bottom-!p approaches >earning c!rve is part of top-do)n approach to estimating.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
1. The approach that begins )ith a top-do)n estimate for the project and then refines estimates as the project is implemented is 3no)n as method. A. =!nction point . Template C. >earning c!rve #" Phase estimating E. Apportion This approach begins )ith a top-do)n estimate for the project and then refines estimates for phases of the project as it is implemented.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: (ethods for &stimating ,roect Times and Costs Level: &as%
5-$9
Chapter 05 - Estimating Project Times and Costs
1/. 2hich of the follo)ing )o!ld be the best method for projects )here the final prod!ct is not 3no)n and the !ncertaint( is ver( large4 A. =!nction point . Template C. >earning c!rve #" Phase estimating E. Apportion Phase estimating is !sed )hen an !n!s!al amo!nt of !ncertaint( s!rro!nds a project and it is impractical to estimate times and costs for the entire project.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
$0. The acc!rac( of top-do)n estimates )ill t(picall( be in the range of A. ?in!s 50 to pl!s 50 . ?in!s 0 to pl!s 95 C" ?in!s $0 to pl!s 60 ". ?in!s ,5 to pl!s ,5 E. ?in!s 10 to pl!s ,0 ;ee Table 5. on page 11.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
5-$
Chapter 05 - Estimating Project Times and Costs
$1. The acc!rac( of bottom-!p estimates )ill t(picall( be in the range of A. ?in!s 50 to pl!s 50 . ?in!s 0 to pl!s 95 C. ?in!s $0 to pl!s 60 ". ?in!s ,5 to pl!s ,5 E" ?in!s 10 to pl!s ,0 ;ee Table 5. on page 11.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
$$. The cost to prepare bottom-!p estimates )ill t(picall( r!n ho) m!ch more than the costs to prepare the top-do)n estimates4 A. Abo!t the same . Abo!t t)ice as m!ch C" Abo!t three times as m!ch ". Abo!t fo!r times as m!ch E. Abo!t five times as m!ch ;ee Table 5. on page 11.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
5-$/
Chapter 05 - Estimating Project Times and Costs
$,. T(pical 3inds of costs fo!nd in a project incl!de A. "irect costs . Project overhead costs C. #eneral and administrative costs ". 8nl( A and are incl!ded E" A& & and C are all incl!ded ;ee list on Page 1$.
AACSB: Reflective Thinking Bloom's: Comrehension Learning Obective: Level of *etail Level: &as%
$. Project costs are t(picall( vie)ed from all of the follo)ing except@ A. ;ched!led B" ;!n3 C. Act!al ". Committed E. All of these are correct ;ee =ig!re 5.6 on Page 1,.
AACSB: Reflective Thinking Bloom's: Comrehension Learning Obective: Level of *etail Level: &as%
5-,0
Chapter 05 - Estimating Project Times and Costs
$5. 2hich of the follo)ing )o!ld be considered a direct project cost4 A. >abor . ?aterials C. E'!ipment ". oth A and are direct costs E" A& & and C are all considered direct costs "irect project overhead costs can be tied to project deliverables or )or3 pac3ages. Examples incl!de the salar( of the project manager and temporar( rental space for the project team.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: Level of *etail Level: &as%
$6. 2hich of the follo)ing is not one of the recommended g!idelines for developing !sef!l )or3 pac3age estimates4 A. Estimates sho!ld be made b( those responsible for the )or3 . se several people to estimate the same )or3 C. Estimates sho!ld be based on normal conditions #" Estimates sho!ld incl!de a normal level of contingenc( E. Estimates sho!ld be independent of other projects ;ee list on pages 1-15.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: Refining &stimates Level: (edi#m
5-,1
Chapter 05 - Estimating Project Times and Costs
$9. Companies li3e oeing& Boda3& and %? are !sing )hich of the follo)ing for improving the estimating process4 A. Adj!sting estimates based on individ!al forecasting abilities . enchmar3ing !sing the experience of other companies C. sing time and motion st!dies #" Creating historical databases of previo!s projects E. All of these are correct ;ome organiations have large estimating departments of professional estimatorsIe.g.& oeing& Boda3& %?Ithat have developed large time and cost databases.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: Creating a *atabase for &stimating Level: &as%
$. +easons )h( estimating time and cost are important incl!de all of the follo)ing except@ A. To sched!le )or3 . To determine ho) long the project sho!ld ta3e and cost C. To develop cash flo) needs ". To determine ho) )ell the project is progressing E" All of the above are valid reasons ;ee Exhibit 5.1 on Page 1$9.
AACSB: Comrehension Bloom's: Knowledge Learning Obective: !actors "nfl#encing the $#alit% of &stimates Level: &as%
5-,$
Chapter 05 - Estimating Project Times and Costs
$/. %n a learning c!rve& the improvement ratio is applied to )hich of the follo)ing items4 A. "irect materials B" "irect labor C. 8verhead ". oth A and are correct E. A& & and C are all correct These costs are clearl( chargeable to a specific )or3 pac3age. "irect costs can be infl!enced b( the project manager& project team& and individ!als implementing the )or3 pac3age. These costs represent real cash o!tflo)s and m!st be paid as the project progressesF therefore& direct costs are !s!all( separated from overhead costs. >o)er-level project roll!ps fre'!entl( incl!de onl( direct costs.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
,0. The bottom-!p approach for estimating times and costs that !ses costs from past projects that )ere similar to the c!rrent project is 3no)n as@ A. "etailed 2; )or3 pac3age estimates B" Template method C. =!nction point method ". Time-phased cost estimates E. Phase estimating %f the project is similar to past projects& the costs from past projects can be !sed as a starting point for the ne) project. "ifferences in the ne) project can be noted and past times and costs adj!sted to reflect these differences.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: (ethods for &stimating ,roect Times and Costs Level: &as%
5-,,
Chapter 05 - Estimating Project Times and Costs
,1. 2hich of the follo) top-do)n methods is !sed )hen projects closel( follo) past projects in feat!res and costs and res!lt in costs being assigned b( percentages to major segments of the project4 " Apportion . =!nction point C. Phase estimating ". >earning c!rve E. Consens!s Apportionment is !sed )hen projects closel( follo) past projects in feat!res and costs. #iven good historical data& estimates can be made '!ic3l( )ith little effort and reasonable acc!rac(. This method is ver( common in projects that are relativel( standard b!t have some small variation or c!stomiation.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
,$. +eso!rce shortages& in the form of people& e'!ipment& or materials& is a good example of A. 7idden interaction costs . Things going )rong on a project C" ormal conditions not appl(ing ". Changes in project scope E. one of these are correct Estimates are s!pposed to be based on normal conditions. 2hile this is a good starting point& it rarel( holds tr!e in real life. This is especiall( tr!e )hen it comes to the availabilit( of reso!rces. +eso!rce shortages& )hether in the form of people& e'!ipment& or materials& can extend original estimates.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: Refining &stimates Level: (edi#m
5-,
Chapter 05 - Estimating Project Times and Costs
,,. People )or3ing on protot(pe development needing time to interact )ith the design engineers after the design is completed is an example of@ " 7idden interaction costs . Things going )rong on a project C. ormal conditions not appl(ing ". Changes in project scope E. one of these are correct %nteraction costs are hidden in estimates. According to the g !idelines& each tas3 estimate is s!pposed to be done independentl(. 7o)ever& tas3s are rarel( completed in a vac!!m. 2or3 on one tas3 is dependent !pon prior tas3s& and the hand-offs bet)een tas3s re'!ire time and attention. =or example& people )or3ing on protot(pe development need to interact )ith design engineers after the design is completed& )hether to simpl( as3 clarif(ing '!estions or to ma3e adj!stments in the original design.
AACSB: Anal%tic Bloom's: Knowledge Learning Obective: Refining &stimates Level: (edi#m
,. A manager getting f!rther into a project and obtaining a better !nderstanding of )hat needs to be done to accomplish a project is an example of@ A. 7idden interaction costs . Things going )rong on a project C. ormal conditions not appl(ing #" Changes in project scope E. one of these are correct As one gets f!rther and f!rther into the project& a manager obtains a better !nderstanding of )hat needs to be done to accomplish the project. This ma( lead to major changes in project plans and costs. >i3e)ise& if the project is a commercial project& changes often have to be made midstream to respond to ne) demands b( the c!stomer and*or competition.
AACSB: Anal%tic Bloom's: Knowledge Learning Obective: Refining &stimates Level: (edi#m
5-,5
Chapter 05 - Estimating Project Times and Costs
,5. "esign fla)s being revealed after the fact& extreme )eather conditions& and accidents occ!rring are examples of@ A. 7idden interaction costs B" Things going )rong on a project C. ormal conditions not appl(ing ". Changes in project scope E. one of these are correct "esign fla)s are revealed after the fact& extreme )eather conditions occ!r& accidents happen& and so forth. Altho!gh (o! sho!ldnDt plan for these ris3s to happen )hen estimating a partic!lar tas3& the li3elihood and impact of s!ch events need to be considered.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: Refining &stimates Level: (edi#m
Fill in the Blank Questions
,6. Estimates that are t(picall( based on estimates of elements fo!nd in the )or3 brea3do)n str!ct!re are called estimates. $ottom%up The bottom-!p approach at the )or3 pac3age level can serve as a chec3 on cost elements in the 2; b( rolling !p the )or3 pac3ages and associated cost acco!nts to major deliverables.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: !actors "nfl#encing the $#alit% of &stimates Level: &as%
5-,6
Chapter 05 - Estimating Project Times and Costs
,9. Estimates that are !s!all( derived from analog( or mathematical relationships are called estimates. top%do!n Top-do)n estimates are !s!all( done b( senior management. ?anagement )ill often derive estimates from analog(& gro!p consens!s& or mathematical relationships.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: !actors "nfl#encing the $#alit% of &stimates Level: &as%
,. The estimating factor 3no)n as considers the decreasing acc!rac( of estimates as one forecasts activities that are f!rther into the f!t!re. planning hori&on The '!alit( of the estimate depends on the planning horionF estimates of c!rrent events are close to 100 percent acc!rate b!t are red!ced for more distant events. The acc!rac( of time and cost estimates sho!ld improve as (o! move from the concept!al phase to the point )here individ!al )or3 pac3ages are defined.
AACSB: Anal%tic Bloom's: Knowledge Learning Obective: !actors "nfl#encing the $#alit% of &stimates Level: (edi#m
,/. The factor in estimating project times and costs can introd!ce errors d!e to staff t!rnover& the s3ills of the participants& and )hether the team members have )or3ed )ith each other on previo!s projects. people The people factor can also introd!ce errors in estimating times and cost. =or example& acc!rac( of estimates depends on the s3ills of the people ma3ing the estimates. A close match of people s3ills to the tas3 )ill infl!ence prod!ctivit( and learning time.
AACSB: Anal%tic Bloom's: Knowledge Learning Obective: !actors "nfl#encing the $#alit% of &stimates Level: (edi#m
5-,9
Chapter 05 - Estimating Project Times and Costs
0. The tendenc( to over-estimate project time and cost in order to improve the li3elihood of meeting the estimates is 3no)n as the factor. padding estimates %n )or3 sit!ations )here (o! are as3ed for time and cost estimates& most of !s are inclined to add a little padding to increase the probabilit( and red!ce the ris3 of being late. %f ever(one at all levels of the project adds a little padding to red!ce ris3& the project d!ration and cost are serio!sl( overstated.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: !actors "nfl#encing the $#alit% of &stimates Level: (edi#m
1. The prevailing belief in some firms that detailed estimating ta3es too m!ch time and is not )orth the effort or that it is impossible to predict the f!t!re is an example of the factor. organi&ation culture 8rganiations var( in the importance the( attach to estimates. The prevailing belief in some organiations is that detailed estimating ta3es too m!ch time and is not )orth the effort or that itDs impossible to predict the f!t!re. 8ther organiations s!bscribe to the belief that acc! rate estimates are the bedroc3 of effective project management. 8rganiation c!lt!re shapes ever( dimension of project managementF estimating is not imm!ne to this infl!ence.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: !actors "nfl#encing the $#alit% of &stimates Level: (edi#m
$. sing the method of forecasting project time and costs is the preferred method for sit!ations involving strategic decision-ma3ing& projects )ith a high degree of ! ncertaint(& and projects )ith an !nstable scope. top%do!n ;ee table 5-1 on Page 1,$.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: To)*own vers#s Bottom)+ &stimating Level: (edi#m
5-,
Chapter 05 - Estimating Project Times and Costs
,. sing the method of forecasting project time and costs is the preferred method for sit!ations )here the cost and time estimates are important& in a fixed contract sit!ation& and )hen the c!stomer )ants a lot of detail. $ottom%up ;ee table 5-1 on Page 1,$.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: To)*own vers#s Bottom)+ &stimating Level: (edi#m
. The information necessar( to cond!ct a bottom-!p estimate of project time and costs starts )ith the . !ork package %f possible and practical& (o! )ant to p!sh the estimating process do)n to the )or3 pac3age level for bottom-!p estimates that establish lo)-cost& efficient methods. This process can ta3e place after the project has been defined in detail. #ood sense s!ggests project estimates sho!ld come from the people most 3no)ledgeable abo!t the estimate needed.
AACSB: Anal%tic Bloom's: S%nthesis Learning Obective: To)*own vers#s Bottom)+ &stimating Level: *iffic#lt
5. %n the method of top-do)n estimating& a '!antitative relationship is established bet)een the estimates and a project parameter. ratio Top-do)n methods Gsometimes called parametricH !s!all( !se ratios& or s!rrogates& to estimate project times or costs. Top-do)n approaches are often !sed in the concept or need phase of a project to get an initial d!ration and cost estimate for the project.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
5-,/
Chapter 05 - Estimating Project Times and Costs
6. #iven that a project closel( follo)s past projects in feat!res and costs& the method of assigns costs and times to partic!lar phases that a project )ill go thro!gh. apportion This method is an extension to the ratio method. Apportionment is !sed )hen projects closel( follo) past projects in feat!res and costs. #iven good historical data& estimates can be made '!ic3l( )ith little effort and reasonable acc!rac(. This method is ver( common in projects that are relativel( standard b!t have some small variation or c!stomiation.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
9. The method for estimating project time and cost !ses )eighted variables b ased on major parameters and is fre'!entl( !sed in the development of soft)are. 'unction point %n the soft)are ind!str(& soft)are development projects are fre'!entl( estimated !sing )eighted macro variables called f!nction points or major parameters s!ch as n!mber of inp!ts& n!mber of o!tp!ts& n!mber of in'!iries& n!mber of data files& and n!mber of interfaces.
AACSB: Anal%tic Bloom's: Knowledge Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
5-0
Chapter 05 - Estimating Project Times and Costs
. The method of estimating project time and costs is !sef!l for projects re'!iring the same tas3& gro!p of tas3s& or prod!ct repeated several times& especiall( if it is labor intensive. learning cur(e A phenomenon of tas3s that are labor intensive. %n these circ!mstances the pattern of improvement phenomenon can be !sed to predict the red!ction in time to perform the tas3. =rom empirical evidence across all ind!stries& the pattern of this improvement has b een '!antified in the learning c!rve Galso 3no)n as improvement c!rve& experience c!rve& and ind!strial progress c!rveH.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
/. %n the method of estimating project time and costs past projects are !sed as a starting point )ith adj!stments made based on differences in the ne) project. template %f the project is similar to past projects& the costs from past projects can be !sed as a starting point for the ne) project. "ifferences in the ne) project can be noted and past times and costs adj!sted to reflect these differences.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
5-1
Chapter 05 - Estimating Project Times and Costs
50. Probabl( the most reliable method for estimating time and cost is to !se the and to as3 the people responsible for the )or3 pac3age to ma3e the estimates. $ottom%up %f possible and practical& (o! )ant to p!sh the estimating process do)n to the )or3 pac3age level for bottom-!p estimates that establish lo)-cost& efficient methods. This process can ta3e place after the project has been defined in detail. #ood sense s!ggests project estimates sho!ld come from the people most 3no)ledgeable abo!t the estimate needed.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
51. The approach to estimating project time and cost begins )ith an overall estimate for the project and then refines estimates for vario!s stages of the project as it is implemented. phase estimating This approach begins )ith a top-do)n estimate for the project and then refines estimates for phases of the project as it is implemented. ;ome projects b( their nat!re cannot be rigoro!sl( defined beca!se of the !ncertaint( of design or the final prod!ct. Phase estimating is !sed )hen an !n!s!al amo!nt of !ncertaint( s!rro!nds a project and it is impractical to estimate times and costs for the entire project.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
5$. The cost to prepare a top-do)n b!dget )ill t(picall( r!n percent of the total project cost. one%tenth to three tenths ;ee Table 5. on page 11.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: (ethods for &stimating ,roect Times and Costs Level: &as%
5-$
Chapter 05 - Estimating Project Times and Costs
5,. The cost to prepare a bottom-!p b!dget )ill t(picall( r!n percent of the total project cost. three tenths to one ;ee Table 5. on page 11.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: (ethods for &stimating ,roect Times and Costs Level: &as%
5. Project costs s!ch as labor and materials are t(picall( classified as costs. direct ;ee list on Page 1$.
AACSB: Reflective Thinking Bloom's: Comrehension Learning Obective: T%es of Costs Level: &as%
55. The salar( of the project manager and temporar( rental space for the project team )o!ld be classified as costs. direct o(erhead "irect overhead rates more closel( pinpoint )hich reso!rces of the organiation are being !sed in the project. "irect project overhead costs can be tied to project deliverables or )or3 pac3ages. Examples incl!de the salar( of the project manager and temporar( rental space for the project team.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: T%es of Costs Level: (edi#m
5-,
Chapter 05 - Estimating Project Times and Costs
56. Estimates sho!ld be made based on conditions& efficient methods& and a normal level of reso!rces. normal Estimates sho!ld be based on normal conditions& efficient methods& and a normal level of reso!rces.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: &stimating -#idelines for Times. Costs. and Reso#rces Level: &as%
59. The method is a top-do)n approach that !ses the pooled experience of senior and*or middle managers to estimate the total project d!ration an d cost. consensus The consens!s simpl( !ses the pooled experience of senior and*or middle managers to estimate the total project d!ration and cost.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: (ethods for &stimating ,roect Times and Costs Level: &as%
5. Costs that are not directl( related to a specific project& s!ch as advertising& acco!nting& and senior management& are classified as . )eneral and administrati(e o(erhead costs These represent organiation costs that are not directl( lin3ed to a specific project. These costs are carried for the d!ration of the project.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: T%es of Costs Level: (edi#m
True / False Questions
5-
Chapter 05 - Estimating Project Times and Costs
5/. Project estimates sho!ld be bro3en do)n into as m!ch detail than and )ith as m!ch acc!rac( as possible. F*SE "etailed data gathering is not al)a(s possible or practical and other methods are !sed to develop project estimates.
AACSB: Reflective Thinking Bloom's: Comrehension Learning Obective: !actors "nfl#encing the $#alit% of &stimates Level: (edi#m
60. ottom-!p-estimating is another name for overealo!s top management estimates. F*SE Top-do)n estimates !s!all( are derived from someone )ho !ses experience and*or information to determine the project d!ration and total cost. These estimates are sometimes made b( top managers )ho have ver( little 3no)ledge of the processes !sed to complete the project.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: To)*own vers#s Bottom)+ &stimating Level: &as%
61. The !se of past experience is almost al)a(s !sed primaril( in the initial phases of a project. T+,E Past experience is a good starting point for developing time and cost estimates.
AACSB: Reflective Thinking Bloom's: Comrehension Learning Obective: !actors "nfl#encing the $#alit% of &stimates Level: (edi#m
5-5
Chapter 05 - Estimating Project Times and Costs
6$. "!e to the averaging o!t of !nder-estimates and over-estimates& a long d!ration project is more li3el( to be on target than a short term& small project. +efer to ;napshot from Practice Page 10. F*SE The smaller the element of a )or3 pac3age& the more acc!rate the overall estimate is li3el( to be.
AACSB: Reflective Thinking Bloom's: Comrehension Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
6,. The project str!ct!re chosen to manage the project )ill have little impact on the act!al project )or3 to be accomplished. F*SE 2hich project str!ct!re is chosen to manage the project )ill infl!ence time and cost estimates.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: !actors "nfl#encing the $#alit% of &stimates Level: (edi#m
6. As long as ever(one in a project adds j!st a little padding to red!ce ris3& the project d!ration and costs are probabl( overstated b( a small amo!nt. F*SE This phenomenon ca!ses some managers or o)ners to call for a 10-15 percent c!t in time and*or cost for the project. 8f co!rse the next time the game is pla(ed& the person estimating cost and*or time )ill pad the estimate to $0 percent or more.
AACSB: Reflective Thinking Bloom's: Comrehension Learning Obective: !actors "nfl#encing the $#alit% of &stimates Level: (edi#m
5-6
Chapter 05 - Estimating Project Times and Costs
65. 8rganiation c!lt!re can significantl( infl!ence project time an d cost estimates. T+,E 8rganiation c!lt!re can significantl( infl!ence project estimates.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: !actors "nfl#encing the $#alit% of &stimates Level: &as%
66. %f a project is internal to the compan( and relativel( small& the bottom-!p approach to estimating time and costs for the project is the best choice. +efer to Table 5.1 F*SE ;ee Table 5.1 on page 1,$.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: To)*own vers#s Bottom)+ &stimating Level: &as%
69. %f time and costs are important to a project the top-do)n approach to estimating time and costs for the project is the best choice. F*SE The bottom-!p approach at the )or3 pac3age level can serve as a chec3 on cost elements in the 2; b( rolling !p the )or3 pac3ages and associated cost acco!nts to major deliverables. ;imilarl(& reso!rce re'!irements can be chec3ed. >ater& the time& reso!rce& and cost estimates from the )or3 pac3ages can be consolidated into time-phased net)or3s& reso!rce sched!les& and b!dgets that are !sed for control.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: To)*own vers#s Bottom)+ &stimating Level: &as%
5-9
Chapter 05 - Estimating Project Times and Costs
6. The ideal approach to estimating project time and costs is to !se both the top-do)n and the bottom-!p approach. T+,E The ideal approach is for the project manager to allo) eno!gh time for both the top-do)n and bottom-!p estimates to be )or3ed o!t so a complete plan based on reliable estimates can be offered to the c!stomer. %n this )a( false expectations are minimied for all sta3eholders and negotiation is red!ced.
AACSB: Reflective Thinking Bloom's: Comrehension Learning Obective: To)*own vers#s Bottom)+ &stimating Level: (edi#m
6/. At the strategic level top-do)n estimating methods are !sed to eval!ate a project proposal. +efer to Table 5.1 T+,E ;ee Table 5.1 on page 1,$.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: To)*own vers#s Bottom)+ &stimating Level: &as%
90. Top-do)n estimates !s!all( are derived from someone )ho !ses experience and*or information to determine the project d!ration and total cost. T+,E Top-do)n estimates !s!all( are derived from someone )ho !ses experience and*or information to determine the project d!ration and total cost.
AACSB: Reflective Thinking Bloom's: Comrehension Learning Obective: To)*own vers#s Bottom)+ &stimating Level: &as%
5-
Chapter 05 - Estimating Project Times and Costs
91. Estimating the total cost of a ho!se b( m!ltipl(ing the total s'!are feet b( a cost per s'!are foot is an example of the apportion method of estimating costs. F*SE Apportionment is !sed )hen projects closel( follo) past projects in feat!res and costs. #iven good historical data& estimates can be made '!ic3l( )ith little effort and reasonable acc!rac(. This method is ver( common in projects that are relativel( standard b!t have some small variation or c!stomiation.
AACSB: Reflective Thinking Bloom's: Comrehension Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
9$. Estimating the total cost of a project b( m!ltipl(ing each major f!nction b( a complexit( factor is an example of the apportion method of estimating costs. F*SE Apportionment is !sed )hen projects closel( follo) past projects in feat!res and costs. #iven good historical data& estimates can be made '!ic3l( )ith little effort and reasonable acc!rac(. This method is ver( common in projects that are relativel( standard b!t have some small variation or c!stomiation.
AACSB: Reflective Thinking Bloom's: Comrehension Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
9,. Phase estimating is !sed )hen a project cannot be rigoro!sl( defined beca!se of the !ncertaint( of design or the final prod!ct. T+,E Phase estimating is !sed )hen an !n!s!al amo!nt of !ncertaint( s!rro!nds a project and it is impractical to estimate times and costs for the entire project.
AACSB: Reflective Thinking Bloom's: Comrehension Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
5-/
Chapter 05 - Estimating Project Times and Costs
9. Phase estimating !ses both the bottom-!p and top-do)n methods for estimating project time and costs. T+,E This approach begins )ith a top-do)n estimate for the project and then refines estimates for phases of the project as it is implemented.
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: (ethods for &stimating ,roect Times and Costs Level: (edi#m
95. sing a 2; permits the !se of different levels of detail for different levels of management. T+,E #etting the level of detail in the 2; to match management needs for effective implementation is cr!cial& b!t the delicate balance is diffic!lt to find. The level of detail in the 2; varies )ith the complexit( of the projectF the need for controlF the project sie& cost& d!rationF and other factors.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: Level of *etail Level: &as%
96. The Consens!s method of estimating costs is a bottom-!p techni'!e. F*SE These first top-do)n estimates are onl( a ro!gh c!t and t(picall( occ!r in the concept!al stage of the project.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: (ethods for &stimating ,roect Times and Costs Level: &as%
5-50
Chapter 05 - Estimating Project Times and Costs
99. The salar( of the project manager and her administrative assistant is classified as direct labor costs. F*SE "irect project overhead costs can be tied to project deliverables or )or3 pac3ages. Examples incl!de the salar( of the project manager and temporar( rental space for the project team.
AACSB: Reflective Thinking Bloom's: Comrehension Learning Obective: T%es of Costs Level: (edi#m
9. #eneral and Administrative costs are !s!all( allocated as a percent of the total of a direct cost s!ch as labor& materials& or e'!ipment. T+,E #JA costs are !s!all( allocated as a percent of total direct cost& or a percent of the total of a specific direct cost s!ch as labor& materials& or e'!ipment.
AACSB: Reflective Thinking Bloom's: Comrehension Learning Obective: T%es of Costs Level: (edi#m
9/. The apportion method is a top-do)n approach that !ses the pooled experience of senior and*or middle managers to estimate the total project d!ration an d cost. F*SE Apportionment is !sed )hen projects closel( follo) past projects in feat!res and costs. #iven good historical data& estimates can be made '!ic3l( )ith little effort and reasonable acc!rac(. This method is ver( common in projects that are relativel( standard b!t have some small variation or c!stomiation.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: (ethods for &stimating ,roect Times and Costs Level: &as%
5-51
Chapter 05 - Estimating Project Times and Costs
0. The f!nction point method of time and cost estimating is best applied to projects that have large& complex ph(sical deliverables& s!ch as a bridge or b!ilding. F*SE %n the soft)are ind!str(& soft)are development projects are fre'!entl( estimated !sing )eighted macro variables called f!nction points or major parameters s!ch as n!mber of inp!ts& n!mber of o!tp!ts& n!mber of in'!iries& n!mber of data files& and n!mber of interfaces.
AACSB: Reflective Thinking Bloom's: Knowledge Learning Obective: (ethods for &stimating ,roect Times and Costs Level: &as%
Short ns!er Questions
1. %dentif( and briefl( describe the t)o major categories of estimating project time and costs. 1. Top-do)n estimates made b( top management& and $. bottom-!p estimates are made b( those responsible for completing the )or3 pac3ages
AACSB: Anal%tic Bloom's: Comrehension Learning Obective: To)*own vers#s Bottom)+ &stimating Level: (edi#m
$. 2h( are the estimates for a projectDs time and costs important for all phases of a project4 The estimates serve as the standard for comparison of act!al and plan thro!gho!t the life of a project.
AACSB: Reflective Thinking Bloom's: Comrehension Learning Obective: !actors "nfl#encing the $#alit% of &stimates Level: &as%
5-5$
Chapter 05 - Estimating Project Times and Costs
,. %dentif( the factors that sho!ld be considered to improve the '!alit( of estimates for project times and costs. 1. planning horion& $. project d!ration& ,. people& . project str!ct!re and organiation& 5. padding estimates& 6. organiation c!lt!re& and 9. non-project factors
AACSB: Anal%tic Bloom's: S%nthesis Learning Obective: !actors "nfl#encing the $#alit% of &stimates Level: *iffic#lt
. nder )hat conditions )o!ld the top-do)n approach to estimating project times and costs be the best choice4 %n the earl( stages of a project to help develop the initial plan& in ma3ing strategic decisions& in projects of high !ncertaint(& in small internal projects& or in projects )ith an !nstable scope.
AACSB: Anal%tic Bloom's: S%nthesis Learning Obective: To)*own vers#s Bottom)+ &stimating Level: *iffic#lt
5. nder )hat conditions )o!ld the bottom-!p approach to estimating project times and costs be the best choice4 2hen lo) cost& efficient estimates are needed& )hen time and cost are important& )hen )or3ing on a fixed price contract& or )hen the c!stomer )ants details.
AACSB: Anal%tic Bloom's: S%nthesis Learning Obective: To)*own vers#s Bottom)+ &stimating Level: *iffic#lt
5-5,
Chapter 05 - Estimating Project Times and Costs
6. "escribe the ideal approach for a project manager to develop optimal estimates for a projectDs time and costs. Allo) eno!gh time for both the top-do)n and bottom-!p estimates to be )or3ed o!t and incl!ded in the final plan.
AACSB: Anal%tic Bloom's: S%nthesis Learning Obective: To)*own vers#s Bottom)+ &stimating Level: *iffic#lt
9. %dentif( and briefl( describe the five major methods of top-do)n estimating. 1. consens!s& $. ratio method& ,. apportion method& . f!nction point& and 5. learning c!rves
AACSB: Anal%tic Bloom's: S%nthesis Learning Obective: (ethods for &stimating ,roect Times and Costs Level: *iffic#lt
. %dentif( and briefl( describe the fo!r major methods of bottom-!p estimating. 1. template method& $. parametric proced!re applied to specific tas3s& ,. detailed estimates from the 2; )or3 pac3ages& and . phase estimating
AACSB: Anal%tic Bloom's: S%nthesis Learning Obective: (ethods for &stimating ,roect Times and Costs Level: *iffic#lt
/. %dentif( the dra)bac3s to an excessive level of detail in project times and costs. 1. emphasis on departmental o!tcomes& and $. increased paper)or3
AACSB: Anal%tic Bloom's: S%nthesis Learning Obective: Level of *etail Level: *iffic#lt
5-5
