Chapter 05 Estimating Project Times and Costs Answer Key

Multiple Choice Questions

1. The process of forecasting or approximating the time and cost of completing project deliverables is
called

A. Budgeting.
B. Predicting.
C. Estimating.
D. Planning.
E. Guesstimating.
Estimating is the process of forecasting or approximating the time and cost of completing project
deliverables.

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Difficulty: 1 Easy
Learning Objective: 05-02 Describe guidelines for estimating time, costs, and resources.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

2. In practice, estimating processes are frequently classified as

A. Top down/bottom up.

B. Rough/polished.
C. Precise/order of magnitude.
D. Draft/final.
E. Broad/Specific.
Estimating processes are frequently classified as top-down and bottom-up. Top-down estimates are
usually done by senior management. Bottom-up estimates are typically done by the people doing the
work.

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Learning Objective: 05-02 Describe guidelines for estimating time, costs, and resources.
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Topic: Estimating Guidelines for Times, Costs, and Resources

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3. What is the relationship between organizational culture and estimating?

A. There is no relationship.
B. Cultural norms affect the accuracy of estimates.
C. Culture determines whether estimates are made.
D. Estimating alters cultural norms.
E. Estimating and culture are independent.
Organizational culture can significantly influence project estimates. Organizations vary in the
importance they attach to estimates.

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Learning Objective: 05-02 Describe guidelines for estimating time, costs, and resources.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

4. A good starting point for developing time and cost estimates is

A. Past experience.
B. Work packages.
C. Task analysis.
D. Time and motion studies.
E. Work breakdown structure.
Past experience is a good starting point for developing time and cost estimates. But past experiences
must almost always be refined to reach an acceptable level of accuracy.

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Learning Objective: 05-02 Describe guidelines for estimating time, costs, and resources.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

5. Which of the following is NOT one of the factors that need to be considered to improve quality of
estimates for project times and costs?

A. Planning horizon
B. People
C. Padding estimates
D. Profit
E. Project structure
Factors that need to be considered to improve the quality of estimates are the planning horizon, the
project duration, the people responsible for making the estimates, project management structure and
organization, padding estimates, and the organizational culture.

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Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

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6. Ed is looking over the actual results of projects and comparing them to what was estimated. He notices
that the projects that took six months or longer to complete were noticeably more off the estimates.
Which of the following factors is he recognizing?

A. Padding estimates
B. Project duration
C. Project structure
D. People
E. Organization culture
Long duration projects increase the uncertainty in estimates.

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Learning Objective: 05-02 Describe guidelines for estimating time, costs, and resources.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

7. Janet is forecasting how much money her department needs to support a new project. She estimates that
two people and $25,000 in expenses will cover her needs. Because management typically insists on
reducing forecasts by 20 percent, she increases her estimates to allow for that reduction. Which of the
following factors is illustrated in this situation?

A. Padding estimates
B. Planning horizon
C. Project structure
D. People
E. Organization culture
In work situations where we are asked for time and cost estimates, most of us are inclined to add a little
padding to increase the probability and reduce the risk of being late. If everyone at all levels of the
project adds a little padding to reduce risk, the project duration and cost are seriously overstated.

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Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

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8. Which of the following is a good condition for top-down estimating?

A. Cost and time important

B. Fixed price contract
C. Customer wants details
D. Internal, small project
E. Large scale project involving several subcontractors
Good conditions for top-down estimating are when there is high uncertainty involved in the project,
when the project is small and internal, when the scope is unstable and when it involves strategic
decision making.

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Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

9. Which of the following is a good condition for bottom-up estimating?

A. When the project involves strategic decision making

B. When the project is internal and small
C. When there is a fixed price contract
D. When there is high uncertainty involved in the project
E. When there is an unstable scope
Good conditions for bottom-up estimating are when cost and time are important to the project, when
there is a fixed-price contract and when the customer wants details.

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Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

10. Richard is collecting estimates for a house that he will have the funding to build in 12 months. Which of
the following factors does Richard need to consider in regard to the quality of these estimates?

A. Padding estimates
B. Planning horizon
C. Project structure
D. People
E. Project duration
If Richard will not have funding to start the project for 12 months, he needs to consider the planning
horizon. The accuracy of the time and cost estimates decrease as the planning horizon expands.

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Learning Objective: 05-02 Describe guidelines for estimating time, costs, and resources.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

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11. Which of the following does NOT help describe a bottom-up estimating approach?

A. They are made by someone who uses experience and/or information from someone else to
determine overall project cost and duration.
B. They establish low-cost, efficient methods for completing activities.
C. They typically comes from the people actually doing the work and who are most knowledgeable
about the task at hand.
D. Estimates are made at the work package level and then "rolled up" to determine estimates for major
deliverables and for the project itself.
E. They can take place after the project has been planned in detail.
Top-down estimates usually are derived from someone who uses experience and/or information to
determine the project duration and total cost.

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Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

12. Which of the following methods is NOT considered a top-down approach to estimating project time and
cost?

A. Ratio
B. Template
C. Apportion
D. Function point
E. Learning curve
Template methods are used in bottom-up approach to estimating.

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Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

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13. Jose is forecasting project time and cost for constructing a new building by multiplying the total square
footage by a given dollar amount. Which of the following methods is he using?

A. Ratio
B. Template
C. Apportion
D. Function point
E. Learning curve
Top-down methods (sometimes called parametric) usually use ratios, or surrogates, to estimate project
times or costs. Top-down approaches are often used in the concept or 'need' phase of a project to get an
initial duration and cost estimate for the project. For example, contractors frequently use the number of
square feet to estimate the cost and time to build a new house.

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Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

14. Sean is forecasting the time and cost of developing a customized software program by looking at the
number of inputs, outputs, inquiries, files, and interfaces. Which of the following methods is he using?

A. Ratio
B. Template
C. Apportion
D. Function point
E. Learning curve
In the software industry, software development projects are frequently estimated using weighted macro
variables called 'function points' or major parameters such as number of inputs, number of outputs,
number of inquiries, number of data files, and number of interfaces.

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Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

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15. Laura is forecasting the time and cost of developing an intranet for a new customer. Her department has
completed six such intranets for customers during the last two years. Although the proposed system is
about the same size as the others, she estimates that it will take about 10 percent less time and money.
Which of the following methods is she using?

A. Ratio
B. Template
C. Apportion
D. Function point
E. Learning curve
This is a phenomenon of tasks that are labor intensive. In these circumstances the pattern of
improvement phenomenon can be used to predict the reduction in time to perform the task. From
empirical evidence across all industries, the pattern of this improvement has been quantified in the
learning curve (also known as improvement curve, experience curve, and industrial progress curve).

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Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

16. Learning curves are more likely to be applied in situations where most of the costs are

A. Materials.
B. Labor.
C. Overhead.
D. Evenly spread over materials, labor, and overhead.
E. Labor and materials.
This is a phenomenon of tasks that are labor intensive. In these circumstances the pattern of
improvement phenomenon can be used to predict the reduction in time to perform the task. From
empirical evidence across all industries, the pattern of this improvement has been quantified in the
learning curve (also known as improvement curve, experience curve, and industrial progress curve).
This phenomenon is especially true of tasks that are labor intensive.

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Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

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17. Which of the following describes the consensus method?

A. Should be used only for projects that require the same task, group of tasks, or product to be repeated
several times
B. Uses several people with relevant experience regarding the task at hand to make time and cost
estimates
C. Uses pooled experience of senior and/or middle managers to estimate the total project duration and
cost
D. Uses the number of square feet to estimate the total cost and time of the project
E. Uses weighted macro variables or major parameters such as the number of inputs or outputs to
estimate the total cost and time of the project
The consensus method simply uses the pooled experience of senior and/or middle managers to estimate
the total project duration and cost. This typically involves a meeting where experts discuss, argue, and
ultimately reach a decision as to their best guess or estimate.

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Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

18. Which of the following is NOT one of the bottom-up approaches to estimating project time and cost?

A. Parametric procedures applied to specific tasks

B. Estimates for the WBS work packages
C. Learning curve
D. Template method
E. Range estimates
Learning curve is part of top-down approach to estimating.

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Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

19. Which of the following would be the best method for projects where the final product is not known and
the uncertainty is very large?

A. Function point
B. Template
C. Learning curve
D. Phase estimating
E. Apportion
Phase estimating is used when an unusual amount of uncertainty surrounds a project and it is
impractical to estimate times and costs for the entire project.

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 Difficulty: 2 Medium
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

20. Rob is responsible for estimating a work package that has a significant amount of uncertainty associated
with the time and cost to complete. Due to the uncertainty involved he will be making a low, an average
and a high estimate. Rob is using which estimating approach?

A. Parametric procedures applied to specific tasks

B. Template method
C. Apportion method
D. Range estimating
E. Learning curve
Range estimating works best when work packages have significant uncertainty associated with the time
or cost to complete. Under these circumstances it is a prudent policy to require three estimates: low,
average and high.

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Difficulty: 2 Medium
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

21. Which of the following is NOT true in regard to the level of detail estimates should contain?

A. It will vary with the complexity of the project.

B. Detailed estimates are crucial to project success; therefore, an effort should be made to make
estimates as detailed as possible for all projects.
C. The more detailed the estimate is the more the estimate will cost to create.
D. Inadequate detail might lead to estimates that fall short of their intended purpose.
E. Excessive detail means unproductive paperwork and unnecessary expenditures.
At any level of management, the detail of an estimate should be no more than necessary and sufficient.
Otherwise time and money are wasted.

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Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

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22. The salary of the project manager would be an example of what type of cost found in a project?

A. Labor
B. Direct
C. Direct project overhead
D. General and administrative overhead
E. Salary
The salary of the project manager would be an example of the direct project overhead cost. The cost is
linked to the project, but cannot be directly linked to a work package.

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Learning Objective: 05-04 Distinguish different kinds of costs associated with a project.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Types of Costs

23. Typical kinds of costs found in a project include all of the following EXCEPT

A. Direct costs.
B. Project overhead costs.
C. General and administrative overhead costs.
D. Labor.
E. All of these choices are examples of costs found in a project.
Typical costs found in a project include direct costs, which consist of labor, materials and equipment,
direct project overhead costs and general and administrative overhead costs.

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Learning Objective: 05-04 Distinguish different kinds of costs associated with a project.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Types of Costs

24. Accounting would be an example of which of the following costs typically found in a project?

A. Labor
B. Direct
C. Direct project overhead
D. General and administrative overhead
E. Salary
Accounting is an example of a cost that is carried out for the duration of the project and cannot be
linked to a specific work package or even the project itself. These costs are called general and
administrative overhead.

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Learning Objective: 05-04 Distinguish different kinds of costs associated with a project.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Types of Costs

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25. Which of the following would best represent direct project costs?

A. Only labor
B. Only materials
C. Only equipment
D. Both labor and materials
E. Labor, materials and equipment
Direct project costs can be clearly chargeable to a specific work package. These costs represent real
cash outflows as the project progresses; therefore they are usually separated from overhead costs. They
include labor, materials and equipment costs.

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Learning Objective: 05-04 Distinguish different kinds of costs associated with a project.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Types of Costs

26. Which of the following is NOT one of the recommended guidelines for developing useful work package
estimates?

A. Estimates should be made by those responsible for the work.

B. Use several people to estimate the same work.
C. Estimates should be based on normal conditions.
D. Estimates should include a normal level of contingency.
E. Estimates should be independent of other projects.
Estimates should be made by the individuals responsible for the work, should involve several people
with relevant experience and knowledge of the tasks, should be made based on normal conditions and
should not include any allowances for contingencies, should be created with consistent time units, and
should be independent of other projects.

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Learning Objective: 05-05 Suggest a scheme for developing an estimating database for future projects.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Mega Projects: A Special Case

27. Companies are using which of the following for improving the estimating process for future projects?

A. Adjusting estimates based on individual forecasting abilities

B. Benchmarking and using the experience of other companies
C. Using time and motion studies
D. Creating historical databases of previous projects
E. Establishing an estimating training course for all employees
Some organizations have large estimating departments of professional estimators-e.g., Boeing, Kodak,
IBM-that have developed large time and cost databases.

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 Learning Objective: 05-05 Suggest a scheme for developing an estimating database for future projects.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Mega Projects: A Special Case

28. Reasons why estimating time and cost are important include all of the following EXCEPT

A. To schedule work.
B. To determine how long the project should take and cost.
C. To develop cash flow needs.
D. To determine how well the project is progressing.
E. To help establish a project selection process.
Estimates are not important to help establish a project selection process. This process should be
established before the project was selected.

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Difficulty: 1 Easy
Learning Objective: 05-02 Describe guidelines for estimating time, costs, and resources.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

29. The bottom-up approach for estimating times and costs that uses costs from past projects that were
similar to the current project is known as

A. Detailed WBS work package estimates.

B. Template method.
C. Function point method.
D. Time-phased cost estimates.
E. Phase estimating.
If the project is similar to past projects, the costs from past projects can be used as a starting point for
the new project. Differences in the new project can be noted and past times and costs adjusted to reflect
these differences.

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Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

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30. Which of the following top-down methods is used when projects closely follow past projects in regard
to features and costs of those features, and result in costs being assigned by percentages to major
segments of the project?

A. Apportion
B. Function point
C. Phase estimating
D. Learning curve
E. Consensus
Apportionment is used when projects closely follow past projects in features and costs. Given good
historical data, estimates can be made quickly with little effort and reasonable accuracy. This method is
very common in projects that are relatively standard but have some small variation or customization.

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Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

31. Refining estimates may be necessary for a number of reasons. For example, resource shortages, in the
form of people, equipment, or materials, can extend original estimates. This is a good example of

A. Hidden interaction costs.

B. Things going wrong on a project.
C. Normal conditions not applying.
D. Changes in project scope.
E. The customer not being clear about their expectations.
Estimates are supposed to be based on normal conditions. While this is a good starting point, it rarely
holds true in real life. This is especially true when it comes to the availability of resources. Resource
shortages, whether in the form of people, equipment, or materials, can extend original estimates.

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Learning Objective: 05-04 Distinguish different kinds of costs associated with a project.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Types of Costs

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32. Refining estimates may be necessary for a number of reasons. For example, people working on
prototype development needing time to interact with the design engineers after the design is completed
is a good example of

A. Hidden interaction costs.

B. Things going wrong on a project.
C. Normal conditions not applying.
D. Changes in project scope.
E. The customer not being clear about their expectations.
Interaction costs are hidden in estimates. According to the guidelines, each task estimate is supposed to
be done independently. However, tasks are rarely completed in a vacuum. Work on one task is
dependent upon prior tasks, and the hand-offs between tasks require time and attention. For example,
people working on prototype development need to interact with design engineers after the design is
completed, whether to simply ask clarifying questions or to make adjustments in the original design.

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Learning Objective: 05-04 Distinguish different kinds of costs associated with a project.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Types of Costs

33. Refining Estimates may be necessary for a number of reasons. For example, a manager getting further
into a project and obtaining a better understanding of what needs to be done to accomplish a project and
meet the needs of the customer is an example of

A. Hidden interaction costs.

B. Things going wrong on a project.
C. Normal conditions not applying.
D. Changes in project scope.
E. There is never a good reason to refine estimates.
As he or she gets further and further into the project, the manager obtains a better understanding of what
needs to be done to accomplish the project. This may lead to major changes in project plans and costs.
Likewise, if the project is a commercial project, changes often have to be made midstream to respond to
new demands by the customer and/or competition.

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Topic: Types of Costs

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34. Refining estimates may be necessary for a number of reasons. For example, design flaws being revealed
after the fact, extreme weather conditions, and accidents occurring are good examples of

A. Hidden interaction costs.

B. Things going wrong on a project.
C. Normal conditions not applying.
D. Changes in project scope.
E. None of these are correct.
Design flaws are revealed after the fact, extreme weather conditions occur, accidents happen, and so
forth. Although you shouldn't plan for these risks to happen when estimating a particular task, the
likelihood and impact of such events need to be considered.

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Learning Objective: 05-04 Distinguish different kinds of costs associated with a project.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Types of Costs

35. Large projects that have long time horizons and a very high complexity can be referred to as

A. Mega Projects.
B. High Risk.
C. White Elephants.
D. Both Mega Projects and White Elephants.
Both terms can be used; the question is to whether or not there is value realized from the project. If no
real value, it is definitely a white elephant.

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Learning Objective: 05-06 Understand the challenge of estimating mega projects and describe steps that lead to better informed decisions.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Mega Projects: A Special Case

36. While it may be true that Mega Projects are by nature extremely difficult to estimate, another factor
identified in the consistent pattern of estimating difficulties is:

A. Unidentified risks.
B. Deception.
C. Economic downturn.
D. Both unidentified risks and economic downturn.
The deception may be intentional or unintentional.

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Learning Objective: 05-06 Understand the challenge of estimating mega projects and describe steps that lead to better informed decisions.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Mega Projects: A Special Case

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37. An external view of a Mega Project based upon the outcome of similar projects undertaken in the past is
known as:

A. Pareto Charting.
B. The Monte Carlo Method.
C. Reference Class Forecasting.
D. Big Data Analysis.
This method is put forward by Flyvbjerg as a leading way to mitigate overall project risk for this class
of project.

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Learning Objective: 05-06 Understand the challenge of estimating mega projects and describe steps that lead to better informed decisions.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Mega Projects: A Special Case

38. Benefits of Reference Class Forecasting include

A. Acting as a reality check.

B. Helps to avoid unsound optimism.
C. Provides a basis for contingency funds.
D. All of these choices.
There are other benefits as well which include reduction of human bias, forcing executives to focus on
empirical information, and improved accountability.

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Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-06 Understand the challenge of estimating mega projects and describe steps that lead to better informed decisions.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Mega Projects: A Special Case

39. The pattern of improvement identified from a worker having performed a task multiple time is known as
a

A. Reduced Failure Rate.

B. Optimistic Estimate.
C. Learning Curve.
D. Both Reduced Failure Rate and Learning Curve.
Learning curves can be calculated over time, thus giving a project manager (or any management team
for that matter) insight into how long it will take new team members to become productive.

Accessibility: Keyboard Navigation

Blooms: Remember
Difficulty: 1 Easy
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Appendix 5.1: Learning Curves for Estimating

5-16
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McGraw-Hill Education.
40. Estimating can be challenged by

A. Human Nature.
B. Political dynamics.
C. Difficulty in predicting the future.
D. All of these choices.
The challenge that every project manager faces is that without solid estimates, the credibility of the
project plan is eroded – and solid estimates can be very difficult to obtain in a number of cases.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-06 Understand the challenge of estimating mega projects and describe steps that lead to better informed decisions.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Mega Projects: A Special Case

Fill in the Blank Questions

41. When work package estimates are made by individuals most knowledgeable about the work being
performed and these estimates are then "rolled up" to find estimated costs for major deliverables and the
project itself, ____________ estimating is being used.

bottom-up

The bottom-up approach at the work package level can serve as a check on cost elements in the WBS by
rolling up the work packages and associated cost accounts to major deliverables.

Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

42. When someone uses experience and/or information from others to determine the project duration and
total cost, ____________ estimating is being used.

top-down

Top-down estimates are usually done by senior management. Management will often derive estimates
from analogy, group consensus, or mathematical relationships.

Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

5-17
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McGraw-Hill Education.
43. The estimating factor that considers the decreasing accuracy of estimates as one forecasts activities that
are further into the future is known as ____________.

planning horizon

The quality of the estimate depends on the planning horizon; estimates of current events are close to 100
percent accurate but are reduced for more distant events. The accuracy of time and cost estimates should
improve as you move from the conceptual phase to the point where individual work packages are
defined.

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-02 Describe guidelines for estimating time, costs, and resources.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

44. The estimating factor that considers the skill level of participants doing the estimating is known as the
___________ factor.

people

The people factor can introduce errors in estimating times and cost. For example, accuracy of estimates
depends on the skills of the people making the estimates. A close match of people skills to the task will
influence productivity and learning time.

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-02 Describe guidelines for estimating time, costs, and resources.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

45. The estimating factor that considers the tendency to overestimate project time and cost in order to
improve the likelihood of meeting the estimates is known as the ___________ factor.

padding estimates

In work situations where we are asked for time and cost estimates, most of us are inclined to add a little
padding to increase the probability and reduce the risk of being late. If everyone at all levels of the
project adds a little padding to reduce risk, the project duration and cost are seriously overstated.

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-02 Describe guidelines for estimating time, costs, and resources.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

5-18
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McGraw-Hill Education.
46. The estimating factor that considers the prevailing belief in some firms that detailed estimating takes too
much time and is not worth the effort is an example of the ___________ factor.

organizational culture

Organizations vary in the importance they attach to estimates. The prevailing belief in some
organizations is that detailed estimating takes too much time and is not worth the effort or that it"s
impossible to predict the future. Other organizations subscribe to the belief that accurate estimates are
the bedrock of effective project management. Organization culture shapes every dimension of project
management; estimating is not immune to this influence.

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-02 Describe guidelines for estimating time, costs, and resources.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

47. The preferred method for situations involving strategic decision making, projects with a high degree of
uncertainty, and projects with an unstable scope is the ___________ approach to estimating project time
and costs.

top-down

Good conditions for top-down estimating are when there is high uncertainty involved in the project,
when the project is small and internal, when the scope is unstable and when it involves strategic
decision making.

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

48. The preferred method for situations where the cost and time estimates are important, in a fixed contract
situation, and when the customer wants a lot of detail is the ___________ approach to estimating
project time and costs.

bottom-up

Good conditions for bottom-up estimating are when cost and time are important to the project, when
there is a fixed-price contract and when the customer wants details.

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

5-19
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McGraw-Hill Education.
49. The information necessary to conduct a bottom-up estimate of project time and costs starts with the
___________.

work-package

If possible and practical, you want to push the estimating process down to the work package level for
bottom-up estimates that establish low-cost, efficient methods. This process can take place after the
project has been defined in detail. Good sense suggests project estimates should come from the people
most knowledgeable about the estimate needed.

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

50. Jose is forecasting project time and cost for constructing a new building by multiplying the total square
footage by a given dollar amount. He is using the ___________ method of top-down estimating.

ratio

Top-down methods (sometimes called parametric) usually use ratios, or surrogates, to estimate project
times or costs. Top-down approaches are often used in the concept or "need" phase of a project to get an
initial duration and cost estimate for the project. For example, contractors frequently use the number of
square feet to estimate the cost and time to build a new house.

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

51. Rose is working on estimates for a project that is very similar to a previous project, in that it has many
of the same features and those features have similar costs. Each feature or deliverable will represent the
same percentage of the total cost as it did for the previous project. Rose is using the _________ method
of top-down estimating.

apportion

This method is an extension to the ratio method. Apportionment is used when projects closely follow
past projects in features and costs. Given good historical data, estimates can be made quickly with little
effort and reasonable accuracy. This method is very common in projects that are relatively standard but
have some small variation or customization.

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

5-20
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
52. The top-down method for estimating project time and cost that uses weighted variables based on major
parameters and is frequently used in the development of software is known as the ____________
method.

function point

In the software industry, software development projects are frequently estimated using weighted macro
variables called "function points" or major parameters such as number of inputs, number of outputs,
number of inquiries, number of data files, and number of interfaces.

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

53. The top-down method of estimating project time and costs that is useful for projects requiring the same
task, group of tasks, or product repeated several times, especially if it is labor intensive, is the
______________.

learning curve

This is a phenomenon of tasks that are labor intensive. In these circumstances the pattern of
improvement phenomenon can be used to predict the reduction in time to perform the task. From
empirical evidence across all industries, the pattern of this improvement has been quantified in the
learning curve (also known as improvement curve, experience curve, and industrial progress curve).

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

54. The bottom-up method of estimating where work package time and costs for past projects are used as a
starting point for a new project and adjustments are made based on differences in the new project is
known as the ___________ method.

template

If the project is similar to past projects, the costs from past projects can be used as a starting point for
the new project. Differences in the new project can be noted and past times and costs adjusted to reflect
these differences.

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

5-21
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McGraw-Hill Education.
55. The top-down method of estimating when the pooled experience of senior and/or middle managers are
used to estimate the total project duration and cost is the _________ method.

consensus

The consensus method simply uses the pooled experience of senior and/or middle managers to estimate
the total project duration and cost. This typically involves a meeting where experts discuss, argue, and
ultimately reach a decision as to their best guess or estimate.

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

56. The approach to estimating project time and cost that begins with an overall estimate for the project and
then refines estimates for various stages of the project as it is implemented is known as ____________.

phase estimating

This approach begins with a top-down estimate for the project and then refines estimates for phases of
the project as it is implemented. Some projects by their nature cannot be rigorously defined because of
the uncertainty of design or the final product. Phase estimating is used when an unusual amount of
uncertainty surrounds a project and it is impractical to estimate times and costs for the entire project.

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

57. The estimating approach that is best to use on projects where there is an unusual amount of uncertainty
surrounding the project and when it is impractical to estimate times and costs for the entire project is
known as ___________.

phase estimating

Some projects by their nature cannot be rigorously defined because of the uncertainty of design or the
final product. Phase estimating is used when an unusual amount of uncertainty surrounds a project and
it is impractical to estimate times and costs for the entire project.

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

5-22
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McGraw-Hill Education.
58. A way to improve estimates on future projects is to collect and archive data on past project estimates
and actuals. Creating a ___________ for estimating is a way to achieve this goal.

database

The best way to improve estimates is to collect and archive data on past project estimates and actuals.
Saving historical data provides a knowledge base for improving project time and cost estimating.

Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-05 Suggest a scheme for developing an estimating database for future projects.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Mega Projects: A Special Case

59. Project costs such as labor and materials are typically classified as ___________ costs.

direct

Direct project costs can be clearly chargeable to specific work packages. They include labor costs,
equipment costs and material costs.

Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-04 Distinguish different kinds of costs associated with a project.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Types of Costs

60. The salary of the project manager and temporary rental space for the project team would be classified as
__________ costs.

direct overhead

Direct overhead rates more closely pinpoint which resources of the organization are being used in the
project. Direct project overhead costs can be tied to project deliverables or work packages. Examples
include the salary of the project manager and temporary rental space for the project team.

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-04 Distinguish different kinds of costs associated with a project.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Types of Costs

61. Estimates should be made based on ___________ conditions, efficient methods, and a normal level of
resources.

normal

Estimates should be based on normal conditions, efficient methods, and a normal level of resources.

Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-05 Suggest a scheme for developing an estimating database for future projects.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Mega Projects: A Special Case

5-23
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McGraw-Hill Education.
62. Costs that are associated with time devoted to the coordination in meetings and briefings as well as time
necessary to resolve disconnects between tasks are known as ____________ costs.

interaction

Time, and therefore cost, devoted to managing interactions rises exponentially as the number of people
and different disciplines involved increases on a project.

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-04 Distinguish different kinds of costs associated with a project.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Types of Costs

63. Costs that are not directly related to a specific project, such as advertising, accounting, and senior
management's salary, are classified as _____________ costs.

general and administrative overhead

General and administrative costs represent organization costs that are not directly linked to a specific
project. These costs are carried for the duration of the project.

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-04 Distinguish different kinds of costs associated with a project.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Types of Costs

64. A(n) __________ is something that is a valuable but burdensome possession.

white elephant

The definition of a white elephant.

Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-07 Define a white elephant in project management and provide examples.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Mega Projects: A Special Case

65. The best way to __________________ is to collect and archive data on past projects.

improve estimates

Looking back at previous efforts attempted or completed within the organization will give the project
manager and the team an idea of what to expect, thus improving their estimating. Of course one needs to
be wary of external factors such as changes in technology or market conditions.

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-06 Understand the challenge of estimating mega projects and describe steps that lead to better informed decisions.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Mega Projects: A Special Case

5-24
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McGraw-Hill Education.
True / False Questions

66. Project estimates should be broken down into as much detail, and with as much accuracy, as possible.

FALSE
Detailed data gathering is not always possible, practical or necessary when developing cost and time
estimates.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-02 Describe guidelines for estimating time, costs, and resources.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

67. Cost, time, and budget estimates are the lifeline for control; they serve as the standard for comparison of
the actual and the planned throughout the life of the project.

TRUE
Project status reports depend on reliable estimates as the major input for measuring variances and taking
corrective action.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-02 Describe guidelines for estimating time, costs, and resources.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

68. Past experience is almost always used primarily in the initial phases of estimating.

TRUE
Past experience is a good starting point for developing time and cost estimates.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-02 Describe guidelines for estimating time, costs, and resources.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

69. After averaging out the underestimates and overestimates, a long-duration project is more likely to be
on target than a short-term, small project.

FALSE
Long-duration projects increase the uncertainty in estimates.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-02 Describe guidelines for estimating time, costs, and resources.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

5-25
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
70. The process of forecasting or approximating the time and cost of completing project deliverables is
called planning.

FALSE
The process of forecasting the time and cost of completing project deliverables is called estimating.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-02 Describe guidelines for estimating time, costs, and resources.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

71. The project management structure chosen to manage the project will have little impact on the quality of
estimates.

FALSE
Which project structure is chosen to manage the project will influence time and cost estimates.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-02 Describe guidelines for estimating time, costs, and resources.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

72. As long as everyone in a project adds a little padding to reduce risk, the project duration and cost
estimates will be more accurate.

FALSE
If everyone at all levels of the project adds a little padding to reduce risk, the project estimates will be
seriously overestimated. This phenomenon causes some managers or owners to call for a 10-15 percent
cut in time and/or cost for the project. Of course the next time the game is played, the person estimating
cost and/or time will pad the estimate to 20 percent or more.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-02 Describe guidelines for estimating time, costs, and resources.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

73. Organization culture can significantly influence project time and cost estimates.

TRUE
Organization culture can significantly influence project estimates. For example, in some organizations
padding estimates is tolerated and even privately encouraged. Other organizations place a premium on
accuracy and strongly discourage estimating gamesmanship.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-02 Describe guidelines for estimating time, costs, and resources.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

5-26
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McGraw-Hill Education.
74. If a project is internal to the company and relatively small, the bottom-up approach to estimating time
and costs for the project is the best choice.

FALSE
Good conditions for top-down estimating are when there is high uncertainty involved in the project,
when the project is small and internal, when the scope is unstable and when it involves strategic
decision making.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

75. If time and costs are important to a project the top-down approach to estimating time and costs for the
project is the best choice.

FALSE
Good conditions for bottom-up estimating are when cost and time are important to the project, when
there is a fixed-price contract and when the customer wants details.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

76. The ideal approach to estimating project time and costs is to use both the top-down and the bottom-up
approach.

TRUE
The ideal approach is for the project manager to allow enough time for both the top-down and bottom-
up estimates to be worked out so a complete plan based on reliable estimates can be offered to the
customer. In this way false expectations are minimized for all stakeholders and negotiation is reduced.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

77. Estimates that are typically based on estimates of elements found in the work breakdown structure are
called bottom-up estimates.

TRUE
Bottom-up estimates start with estimates for work packages. These then can be 'rolled up' to estimate
the cost and duration of major deliverables and the project itself.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

5-27
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McGraw-Hill Education.
78. Top-down estimates usually are derived from someone who uses experience and/or information to
determine the project duration and total cost.

TRUE
Top-down estimates usually are derived from someone who uses experience and/or information to
determine the project duration and total cost.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

79. Estimating the total cost of a house by multiplying the total square feet by cost per square foot is an
example of the apportion method of estimating costs.

FALSE
Apportionment is used when projects closely follow past projects in features and costs. Given good
historical data, estimates can be made quickly with little effort and reasonable accuracy. This method is
very common in projects that are relatively standard but have some small variation or customization.
Estimating the total cost of a house by multiplying the total square feet by cost per square foot is an
example of the ratio method of estimating costs.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

80. Estimating the total cost of a project by multiplying each major function by a complexity factor is an
example of the apportion method of estimating costs.

FALSE
Apportionment is used when projects closely follow past projects in features and costs. Given good
historical data, estimates can be made quickly with little effort and reasonable accuracy. This method is
very common in projects that are relatively standard but have some small variation or customization.
Estimating the total cost of a project by multiplying each major function by a complexity factor is an
example of the function point method of estimating costs.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

5-28
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McGraw-Hill Education.
81. Phase estimating is used when a project cannot be rigorously defined because of the uncertainty of
design or the final product.

TRUE
Phase estimating is used when an unusual amount of uncertainty surrounds a project and it is
impractical to estimate times and costs for the entire project.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

82. All task time estimates need consistent time units.

TRUE
Estimates of time must consider whether normal time is represented by calendar days, workdays,
workweeks, hours, minutes, etc. Network analysis requires a standard unit of time.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-05 Suggest a scheme for developing an estimating database for future projects.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Mega Projects: A Special Case

83. One guideline to follow when estimating time, cost and resources is to use several people to make the
estimate for a task.

TRUE
It is well known that cost or time estimates usually have a better chance of being reasonable and
realistic when several people with relevant experience and/or knowledge of the task are used.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-05 Suggest a scheme for developing an estimating database for future projects.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Mega Projects: A Special Case

84. The consensus method of estimating costs is a bottom-up technique.

FALSE
The consensus method simply uses the pooled experience of senior and/or middle managers to estimate
the total project duration and cost. This typically involves a meeting where experts discuss, argue, and
ultimately reach a decision as to their best guess or estimate.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

5-29
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McGraw-Hill Education.
85. The salary of the project manager and her administrative assistant is classified as direct labor costs.

FALSE
Direct project overhead costs can be tied to project deliverables or work packages. Examples include the
salary of the project manager and temporary rental space for the project team.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-04 Distinguish different kinds of costs associated with a project.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Types of Costs

86. General and administrative costs are usually allocated as a percent of the total of a direct cost which
includes labor, materials, or equipment.

TRUE
General and administrative (G&A) costs are usually allocated as a percent of total direct cost, or a
percent of the total of a specific direct cost such as labor, materials, or equipment.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-04 Distinguish different kinds of costs associated with a project.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Types of Costs

87. Work package estimates should include allowances for contingencies.

FALSE
Work package estimates should not include allowances for contingencies. The estimate should assume
normal or average conditions even though every work package will not materialize as planned.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-05 Suggest a scheme for developing an estimating database for future projects.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Mega Projects: A Special Case

88. Estimates are supposed to be based on normal conditions. While this is a good starting point, it rarely
holds true in real life.

TRUE
Estimates are supposed to be based on normal conditions. While this is a good starting point, it rarely
holds true in real life. This is especially true when it comes to the availability of resources.

Accessibility: Keyboard Navigation

Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

5-30
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McGraw-Hill Education.
89. Mega Projects often under deliver on expected benefits and cost more than expected.

TRUE
Larger projects usually involve more risk, and thus will need additional monies to complete the projects
either to mitigate risks or to address them once they have become realized.

Accessibility: Keyboard Navigation

Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-07 Define a white elephant in project management and provide examples.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Mega Projects: A Special Case

90. Repetition of a task generally results in a reduction of labor hours each successive time a worker
performs that task.

TRUE
The Project Manager and Project Planner also have to recognize that the ability to reduce time and cost
from repetition will eventually plateau.

Accessibility: Keyboard Navigation

Blooms: Remember
Difficulty: 1 Easy
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Appendix 5.1: Learning Curves for Estimating

Short Answer Questions

91. Identify and briefly describe the two major classifications of estimating project time and costs.

(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.

Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Top-Down versus Bottom-Up Estimating

5-31
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McGraw-Hill Education.
92. List and briefly describe four reasons why estimating time and cost are important to project
management.

Estimating time and cost are important to project management because they are 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.

Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-02 Describe guidelines for estimating time, costs, and resources.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

93. 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.

(1) Planning horizon; (2) Project duration; (3) People; (4) Project structure and organization; (5)
Padding estimates; (6) Organization culture.

Blooms: Understand
Difficulty: 3 Hard
Learning Objective: 05-02 Describe guidelines for estimating time, costs, and resources.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

94. Under what conditions would the top-down approach to estimating project times and costs be the best
choice?

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.

Blooms: Understand
Difficulty: 3 Hard
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

95. Under what conditions would the bottom-up approach to estimating project times and costs be the best
choice?

When low-cost, efficient estimates are needed, when time and cost are important, when working on a
fixed price contract, or when the customer wants details.

Blooms: Understand
Difficulty: 3 Hard

5-32
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McGraw-Hill Education.
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

96. Describe the ideal approach for a project manager to develop optimal estimates for a project's time and
costs.

The ideal approach is to allow enough time for both the top-down and bottom-up estimates to be
worked out and included in the final plan.

Blooms: Understand
Difficulty: 3 Hard
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Estimating Guidelines for Times, Costs, and Resources

97. Estimates should be based on normal conditions, efficient methods, and a normal level of resources.
Explain.

Normal conditions are sometimes difficult 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: Analytical Thinking

Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 05-05 Suggest a scheme for developing an estimating database for future projects.
Topic: Mega Projects: A Special Case

98. Describe phase estimating. When should it be used and how is it different from all other top-down and
bottom-up methods of estimating?

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: Analytical Thinking

Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Topic: Estimating Guidelines for Times, Costs, and Resources

5-33
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McGraw-Hill Education.
99. Identify the drawbacks to an excessive LO 5-3 Describe the methods, uses, and advantages and
disadvantages of top-down and bottom-up estimating methods. in estimating project times and costs.

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: Analytical Thinking

Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 05-03 Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods.
Topic: Estimating Guidelines for Times, Costs, and Resources

100. Identify the three major categories of project costs and give an example of each.

(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).

Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-04 Distinguish different kinds of costs associated with a project.
Learning Objective: A05-01 Use learning curves to improve task estimates.
Topic: Types of Costs

101. List and describe two reasons why estimates may need to be refined.

(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: Analytical Thinking

Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 05-04 Distinguish different kinds of costs associated with a project.
Topic: Types of Costs

5-34
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McGraw-Hill Education.