Preparing your cost management plan

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Reference no: EM132306328

1. You are the project finance manager and you’re preparing your cost management plan. You know all the following are true regarding this plan except:

A. The WBS provides the framework for this plan.

B. Units of measure should be described in the plan usually as hours, days, weeks, or lump sum.

C. The plan is a subsidiary of the project management plan.

D. Control thresholds should be described in the plan as to how estimates will adhere to rounding ($100 or $1000, and so on).

2. What is the value chain?

a. The chain or sequence of events that financial people use to value a private company.

b. A set of options that a manager will create that could bring more value to a business unit.

c. A sequence of activities where each activity adds value to the prior activity turning raw material into a finished product.

d. Both the chain or sequence of events that financial people use to value a private company and a sequence of activities where each activity adds value to the prior activity turning raw material into a finished product.

3. Which one of the following is NOT an important danger to consider when vertically integrating?

a. A loss of flexibility

b. A loss of focus

c. A loss of control

d. Both a loss of flexibility and a loss of control

4. Why should a company make instead of buy?

a. Because the company could be one of the best in the world at that activity.

b. Because the company could better coordinate activities by making.

c. Because the company could maintain control over that step in the value chain.

d. All of these choices are correct.

5. You are the project finance manager on a project that is coming in over budget and requires a cost change through the cost change control system. You know all of the following statements are true regarding the Control Costs process except

A description of how cost changes should be managed and controlled is found in the cost management plan.

Approved cost changes are reflected in the cost baseline.

The equation, (BAC-AC)/(BAC-EV) is used to determine the cost performance that must be realized for the remaining work of the project to meet the BAC goal.

The equation, EAC = BAC/cumulative CPI, is used to forecast an estimate at completion assuming future project performance will be the same as past performance.

Reference no: EM132306328

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