Question 1

You have been asked to estimate the costs for a project to build an industrial power plant.Based on historical data,the steam turbine accounts for 30 percent of the total costs for the plant.If the steam turbine costs $300,000,the expected top-down estimated cost for this project would be __________.

Accepted Answer

A)  $10,000
B)  $100,000
C)  $900,000
D)  $1,000,000 D

Question 2

Many lower-level managers often treat the entire budgeting process as if it were a __________,a situation in which any individual's gain is another individual's loss.This can make competition among junior managers quite intense.

Accepted Answer

A)  zero-sum game
B)  pie-chart dilemma
C)  Brooks' Law result
D)  Top-down approach A

Question 3

An easy method of evaluating risk in certain situations by modifying project parameters and evaluating the corresponding changes is __________.

Accepted Answer

A)  Monte Carlo simulations
B)  risk mitigation
C)  project budgeting
D)  risk analysis A

Question 4

Describe the top-down budgeting process.

Accepted Answer

The answer of Describe the top-down budgeting process....

Question 5

Kaplan et al.(2012)identified three types of risk that must be faced.List and describe each one.

Accepted Answer

The answer of Kaplan et al.(2012)identified three types of risk...

Question 6

__________ budgeting aggregates income and expenditures by project or program,often in addition to aggregation by organizational unit or activity.

Accepted Answer

A)  Activity based
B)  Capital
C)  Operational
D)  Project

Question 7

Briefly describe the seven processes for risk management.

Accepted Answer

The answer of Briefly describe the seven processes for risk...

Question 8

__________ budgeting allows income and expenditures to be aggregated across projects.

Accepted Answer

A)  Category-oriented
B)  Activity-oriented
C)  Project-oriented
D)  Expense-oriented

Question 9

Describe the bottom-up budgeting process.

Accepted Answer

The answer of Describe the bottom-up budgeting process....

Question 10

The budget process generally begins when the top management invites each division to submit a__________ for the upcoming year.

Accepted Answer

A)  budget request
B)  predictive budget
C)  budget estimate
D)  predictive request

Question 11

Suppose that a person requires 60 minutes to complete a work element on the first attempt.On the second attempt,the work element is completed in 48 minutes.The learning rate for this person is __________% for this work element.

Accepted Answer

A)  60
B)  70
C)  80
D)  120

Question 12

The __________ charge is composed of the costs of senior management,the various data functions,and any other expenses not included in overhead.Often,these charges are a fixed percentage of either the direct costs or the total of all direct and indirect costs.

Accepted Answer

A)  salary
B)  project management
C)  ethical
D)  G&A

Question 13

Which cost should the project manager completely ignore in managing a project?

Accepted Answer

A)  Labor
B)  Material
C)  Overhead and G&A
D)  Project manager should not ignore any costs

Question 14

The Pathfinder Mission was to go where?

Accepted Answer

A)  The moon
B)  Mars
C)  Saturn
D)  Venus

Question 15

If a project budget is underfunded,it will often __________.

Accepted Answer

A)  stimulate increased performance
B)  improve utilization of resources
C)  frustrate committed stakeholders
D)  reduce costs

Question 16

__________ relies on well-known statistical correlations between various factors such as the total cost of a house relative to the square feet of living area.

Accepted Answer

A)  Parametric estimating
B)  Statistical equivalence
C)  Bottom-up estimating
D)  Top-down estimating

Question 17

The advantage of the______ process is that it is generally associated with participative management.

Accepted Answer

A)  bottom-up
B)  top-down
C)  Murphy's
D)  Efficient

Question 18

Given a project salary cost of $400,000 per year and forecasted wage increases of 5 percent per year,calculate the non-discounted total salary cost over a three-year project lifecycle.

Accepted Answer

A)  $61,000
B)  $1,200,000
C)  $1,240,000
D)  $1,261,000

Question 19

When a firm has professional cost estimators,what is their main responsibility?

Accepted Answer

A)  Coordinate with the client to develop an acceptable cost estimate
B)  Work with senior management to keep costs in line
C)  Develop costs that maximize profits
D)  Reduce the level of uncertainty in cost estimates

Question 20

Which of the following is not one of the risk management subprocesses?

Accepted Answer

A)  risk identification
B)  qualitative risk analysis
C)  work breakdown schedule
D)  risk response planning

Exam 7: Budgeting and Risk Management