Chapter 05 Estimating Project Times and Costs Short Answer

Short Answer Questions 81. Identify and briefly describe the two major classifications of estimating project time and costs. Feedback: 1. Top-down estimates are made for the project as a whole and typically made by top management 2. Bottom-up estimates are made at the work package level and by those responsible for completing the work packages. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Top-Down versus Bottom-Up Estimating Level: Medium 82. List and briefly describe four reasons why estimating time and cost is important to project management. Feedback: Estimating time and cost is important to project management because it is needed to support good decisions, to schedule work, to determine how long the project should take and its cost, to determine whether the project is worth doing, to develop cash flow needs, to determine how well the project is progressing and to develop a time-phased budget. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Factors Influencing the Quality of Estimates Level: Easy 83. Identify and briefly describe three out of the six factors that should be considered to improve the quality of estimates for project times and costs. Feedback: 1. Planning horizon; 2. Project duration; 3. People; 4. Project structure and organization; 5. Padding estimates; 6. Organization culture. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Factors Influencing the Quality of Estimates Level: DifÏcult 84. Under what conditions would the top-down approach to estimating project times and costs be the best choice? Feedback: In the early stages of a project to help develop the initial plan, in making strategic decisions, in projects of high uncertainty, in small internal projects, or in projects with an unstable scope. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Top-Down versus Bottom-Up Estimating Level: DifÏcult 85. Under what conditions would the bottom-up approach to estimating project times and costs be the best choice? Feedback: When low-cost, efÏcient estimates are needed, when time and cost are important, when working on a fixed price contract, or when the customer wants details. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Top-Down versus Bottom-Up Estimating Level: DifÏcult 86. Describe the ideal approach for a project manager to develop optimal estimates for a project's time and costs. Feedback: Allow enough time for both the top-down and bottom-up estimates to be worked out and included in the final plan. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Top-Down versus Bottom-Up Estimating Level: DifÏcult 87. Estimates should be based on normal conditions, efÏcient methods, and a normal level of resources. Explain. Feedback: Normal conditions are sometimes difÏcult to discern, but it is necessary to have a consensus in the organization as to what normal conditions mean in this project. This establishes a certain level of accuracy. AACSB: Analytic Bloom's: Analyze Learning Objective: Estimating Guidelines for Times, Costs, and Resources Level: DifÏcult 88. Describe phase estimating. When should it be used and how is it different from all other topdown and bottom-up methods of estimating? Feedback: This approach starts with a top-down estimate and then estimates are refined after each phase of the project. Some projects cannot be clearly defined because of their uncertainty. Phase estimating uses a two-estimate system over the life of the project. A detailed estimate is developed for the immediate phase and a macro estimate is made for the remaining phases of the project. AACSB: Analytic Bloom's: Analyze Learning Objective: Methods for Estimating Project Times and Costs Level: DifÏcult 89. Identify the drawbacks to an excessive level of detail in project times and costs. Feedback: If the estimate reflects excessive detail, there is a tendency to break the work effort into department assignments. This tendency can become a barrier to success, since the emphasis will be on departmental outcomes rather than on deliverable outcomes. Excessive detail also means more unproductive paperwork. AACSB: Analytic Bloom's: Analyze Learning Objective: Level of Detail Level: DifÏcult 90. Identify the three major categories of project costs and give an example of each. Feedback: 1. Direct costs (labor, materials, equipment, other); 2. Project overhead costs (salaries of project managers, rent on space to house the project, etc.); 3. General and administrative overhead costs (advertising, accounting, and senior management of the organization). AACSB: Reflective Thinking Bloom's: Remember Learning Objective: Types of Costs Level: Medium 91. List and describe two reasons why estimates may need to be refined. Feedback: (1) Interaction costs are hidden in estimates; (2) Normal conditions do not apply; (3) Things go wrong on projects; (4) Changes occur in project scope and plans. AACSB: Analytic Bloom's: Analyze Learning Objective: Refining Estimates Level: DifÏcult