What is the primary risk when including reserves, or contingency allowances, in your cost estimate?

The cost estimates for a project are in the range of +/- 5 %. What phase is the project likely to be in?

A project manager is trying to plan for a contingency reserve as part of the cost estimates for the project. Which of these would be an incorrect way to plan for contingency reserves?

What is the BEST tool/technique that provides expected cost of a procurement by a third party and helps identify significant variations from cost estimates prepared in-house?

A project manager prepared quantitative assessments of the probable costs required to complete a project and produced activity cost estimates. He or she also prepared some supporting detail for these estimates. Which of the following would not be a supporting detail for cost estimates?

As part of the procurement process, the procuring organization elected to have an estimate of costs prepared by an outside professional estimator. The estimator came up with an estimate of $500,000. However, the cost estimates prepared by prospective sellers were in the range of $200,000. How can this be best interpreted?

You are a business development manager at a mid-sized automobile manufacturing company. Recently, you were given a project to assess the feasibility of manufacturing light-duty trucks in a Southeast Asian country. To develop a cost estimate, you visit the country with a team of experts to analyze local resources such as power, labor, and real estate. After the visit, you discuss the findings with an automobile manufacturing consultant. The consultant notes that the local laws and government bureaucracy typically make foreign investors spend more than a year obtaining all necessary permits. To avoid these delays, the consultant advises giving a small amount of company stock to the son of the country’s president. In return, the president’s son will personally expedite the issuing of all required permits. What should you do?

You were just hired by a waste management company to develop a solid waste management program in an underdeveloped country. The project will be on a build-operate-transfer basis and will have a two-year duration. At the close of the project, local authorities will run the program. The World Bank sponsors the project, and a large consortium has received the award. Your company is subcontracted to do this project along with two more contractor companies. After the project scope was finalized, you developed a cost estimate of US$5.5 million. The sponsor reviews your detailed costing sheets and is concerned about the total cost figure. He tells you that the maximum allowable budget he can allocate for this project is US$5 million. What should you do?

While managing a large project, the project manager decided to include indirect costs as part of his cost estimate. If indirect costs are included in an estimate, which of the following is true?

You have recently started working as a project manager for a public school construction project. Your analysis shows that the cost estimate for the project seems to be unreasonable, and it could take at least 25 percent more funding to complete the project. What should you do if your sponsor wants to undertake the project with another project manager in case you refuse to accept it?