Question 1

What cost estimating technique uses actual costs from previous similar projects as the basis for estimating the current project?

Accepted Answer

Analogous estimating. It uses historical data from similar past projects and is considered a top-down approach. It is generally less accurate but faster and less costly to produce.

Question 2

What cost estimating technique calculates cost by multiplying the quantity of work by a unit rate derived from statistical relationships between historical data and variables?

Accepted Answer

Parametric estimating. It uses statistical relationships (e.g., cost per square foot, cost per line of code) to calculate estimates and can produce higher accuracy than analogous estimating when the model is reliable.

Question 3

What is the formula for the PERT (three-point) estimate using the Beta distribution?

Accepted Answer

E = (O + 4M + P) / 6, where O = optimistic, M = most likely, and P = pessimistic estimate. This weighted average gives more weight to the most likely estimate.

Question 4

What type of cost estimate, typically used in the early project phases, has an accuracy range of -25% to +75%?

Accepted Answer

A rough order of magnitude (ROM) estimate. It is used when very little project information is available and is meant to provide a ballpark figure for initial decision-making.

Question 5

What cost estimating technique involves aggregating individual work package cost estimates to arrive at a total project cost?

Accepted Answer

Bottom-up estimating. Each work package or activity is estimated individually, and those estimates are rolled up to determine the overall project cost. It is typically the most accurate but most time-consuming method.

PMP Exam: Cost & Budget

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