CCEA Prep > Module 1 - Cost Estimating Basics > Flashcards

Module 1 - Cost Estimating Basics Flashcards

(63 cards)

Study These Flashcards
1
Q

What is the purpose of cost estimating?

A
  • Predict future dollar amounts
  • Facilitate successful completion of programs
  • Adjust for new materials, technology, or resources

Cost estimating involves collecting and analyzing historical data and applying quantitative models.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Cost estimating translates system/functional requirements into _______.

A

budget requirements

This process helps determine a realistic view of likely cost outcomes.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Name the three primary reasons for cost estimating.

A
  • Budgeting
  • Planning
  • Trade-offs

Each reason plays a crucial role in ensuring effective resource utilization and project success.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

True or false: Cost estimating is only required for government projects.

A

FALSE

Cost estimating contributes to sound management approaches in both public and private sectors.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What does ICE stand for in cost estimating?

A

Independent Cost Estimate

ICEs serve as the basis for a program’s budget.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Cost estimating helps decision makers make decisions on program viability, structure, and _______.

A

resource requirements

This is part of a total systems analysis.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are the characteristics of high-quality cost estimates?

A
  • Accuracy
  • Comprehensiveness
  • Replicability
  • Auditability
  • Credibility
  • Timeliness

Each characteristic ensures the estimate is reliable and useful for decision-making.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Cost estimating requires an interdisciplinary mix of skills, including _______.

A
  • Mathematics
  • Economics
  • Business
  • Accounting
  • Operations Research

Familiarity with these areas helps in developing accurate cost estimates.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is the context of cost estimating in the acquisition process?

A
  • Supports efficient execution
  • Determines resource allocation
  • Requires validated cost estimates for milestone reviews

Accurate estimates are critical for successful project management.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Cost estimating contributes to evaluating competing systems or initiatives via _______.

A

cost/benefit analysis

This analysis helps in making informed decisions before committing to a particular solution.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Fill in the blank: Cost estimating should capture the cost impacts of both _______ decisions and business decisions.

A

design

This includes trade studies conducted throughout system development.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the role of risk assessment in cost estimating?

A
  • Supports budgeting
  • Aids in planning
  • Informs trade-offs

Without risk assessment, programs may develop unrealistic budgets.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is the Work Breakdown Structure (WBS) used for in cost estimating?

A

Ensures cost elements are neither omitted nor double-counted

A comprehensive WBS is essential for accurate cost estimates.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is the significance of timeliness in cost estimating?

A

Estimates must be delivered on time to be valuable

Even high-quality estimates lose value if not timely.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Name one challenge faced in cost estimating.

A

Imperfect understanding of technical merits and limitations

This can lead to difficulties in applying historical data accurately.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What does EVM stand for in the context of cost estimating?

A

Earned Value Management

EVM tracks cost and performance against the established baseline.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is the most important quality of a good cost estimate?

A

Credibility

The estimate must be accurate, replicable, and auditable.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

True or false: Timeliness is not important for the value of a cost estimate.

A

FALSE

A high-quality estimate must be delivered to decision makers on time.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

List the challenges to cost estimating.

A
  • Imperfect understanding of technical merits
  • Interpretation of historical data
  • Limitations due to future uncertainties
  • Need for sound judgment and management

These challenges affect the accuracy and reliability of cost estimates.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What are the four basic cost products involved in the cost estimating process?

A
  • Technical and schedule baseline description
  • Cost estimate
  • Cost model
  • Accompanying estimate documentation

These products help develop a complete cost estimating product.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

The technical and schedule baseline description is used to facilitate what in cost estimating?

A

Identification of significant cost impacts

It collects and integrates all necessary technical, programmatic, and schedule information.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What does a Cost Analysis Requirements Description (CARD) provide?

A

A detailed technical and schedule description required by major DoD programs

It helps ensure that cost projections are based on a common definition of the system.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What is a Life Cycle Cost Estimate (LCCE)?

A

A cost estimate that includes R&D, production, O&S, and disposal costs

It covers all costs associated with the program for its complete duration.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What is the purpose of an Independent Cost Estimate (ICE)?

A

To test the reasonableness of the program or project estimate

It provides an unbiased assessment of the program’s most likely cost.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
What is a **Budget Estimate** primarily developed for?
To obtain authorization for funding ## Footnote It ensures project feasibility and establishes baseline project definitions.
26
Fill in the blank: A **Rough Order of Magnitude (ROM)** estimate is used when very little specific information is known about the project.
ROM ## Footnote It is often based on ratios or factored historical information.
27
What does an **Estimate At Completion (EAC)** rely on?
Techniques of Earned Value Management (EVM) ## Footnote EACs are important for certifying programs under specific acts.
28
What is the purpose of an **Economic Analysis (EA)**?
To systematically investigate problems of choice ## Footnote It examines and compares the costs and benefits of alternative courses of action.
29
What does the **Analysis of Alternatives (AoA)** evaluate?
Costs and benefits of different courses of action ## Footnote It aids decision-making by showing advantages and disadvantages of alternatives.
30
What is the significance of **consistency** in cost estimating?
An estimate must be internally consistent throughout a program’s lifespan ## Footnote It should track well to previous estimates and use consistent content and assumptions.
31
What are **resource and schedule constraints** in cost estimating?
Timely delivery of cost estimates to decision makers ## Footnote Analysts must consider the availability and quality of data to avoid lower quality estimates.
32
What is the role of **coordination** in the cost estimating process?
Involves data collection and estimate validation across organizational boundaries ## Footnote This process may require considerable time and resources.
33
What does the **technical/performance, schedule, and cost risk** assessment include?
An assessment of risk by the program manager ## Footnote It is crucial for understanding potential challenges in the program.
34
What is an **EAC** useful for in jet design?
Identifying serious problems in spend rates and progress ## Footnote An EAC is beneficial when the jet design is already being built.
35
What does an **EA** provide in the context of problem-solving?
A business analysis of different solutions ## Footnote It assesses market viability for building a high-altitude near-supersonic plane.
36
Define **Cost Model**.
Collection of cost estimating methodologies reflecting future system costs ## Footnote It considers technical/programmatic definition, existing methodologies, and historical data.
37
What are the **inputs** needed for a cost model?
* Rates for labor * Materials * Tooling * Scrap ## Footnote Audited or negotiated direct and indirect rates are usually applied.
38
What are the **outputs** of a cost estimate?
* Time-phased costs * Escalated costs * Risk analysis ## Footnote Outputs assist management in decision-making.
39
What does the **estimate documentation** include?
* Purpose of the cost estimate * Scope of the cost estimate * Ground rules and assumptions * Program background and system description ## Footnote It helps management understand the basis for the estimate.
40
What are the **seven basic steps** of a cost estimating process?
* Develop a Work Breakdown Structure (WBS) * Develop a program/system baseline * Collect data * Analyze data * Develop cost estimating methodology * Build and validate the cost model * Generate results and reports ## Footnote Specific steps may vary between organizations.
41
What is the purpose of a **Work Breakdown Structure (WBS)**?
Establish a common frame of reference for relating job tasks and project costs ## Footnote It provides a consistent framework for specifying objectives, labor, materials, and contracts.
42
What are the key functions of a **WBS**?
* Display and define the program/system * Describe program components for cost capture * Relate elements of work to each other and the end product ## Footnote A WBS is crucial for tracking resource allocations and cost estimates.
43
What does the **WBS dictionary** include?
* Lists and defines WBS elements * Shows hierarchical relationships * Describes resources and processes required ## Footnote It should be revised often to reflect the current status of the program.
44
What is included in the **program/system baseline**?
* Ground rules and assumptions * Required resources * Program quantities * Operational concepts ## Footnote It translates program requirements into a reliable cost estimate.
45
What is the significance of **data** in cost estimating?
Provides credibility and defensibility to estimates ## Footnote Data trends inform analysts and enhance the reliability of cost projections.
46
What is the **critical raw material** for cost estimating?
Data ## Footnote Data provides credibility and defensibility to all estimates, allowing for insights into cost trends and structures.
47
List the **four steps** in the data collection process.
* Develop an understanding of the estimating task * Establish a cost element/work breakdown structure * Understand estimating techniques and data needs * Develop a data collection plan ## Footnote Successful execution of this plan supports efficient data collection.
48
True or false: The cost analyst must understand the **intended use** of the estimate.
TRUE ## Footnote Understanding the intended use and scope of the estimate is crucial for accurate cost estimation.
49
What is **normalization** in the context of data?
The process of making data consistent and comparable ## Footnote Normalization should be objective and reasonable, not skewed to fit a desirable outcome.
50
What are the **types of data normalization** mentioned?
* By cost units * By sizing units * By special groupings * By platform operating environment * By recurring/non-recurring costs * By development state * Of end terms for homogeneity ## Footnote Normalization ensures that data is comparable across different estimates.
51
What are the **three basic costing techniques** for developing a cost estimate?
* Analogy * Parametric * Build-up ## Footnote Each technique has strengths and weaknesses and can be used at any level of detail.
52
Fill in the blank: The **analogy costing technique** compares the cost of an item to a __________.
similar item ## Footnote This technique is useful when historical data exists for comparable items.
53
What is the purpose of **sensitivity analysis**?
To assess the cost of changing significant input parameters ## Footnote Sensitivity analysis helps identify key assumptions and their impact on costs.
54
What does **CAIV** stand for?
Cost as an Independent Variable ## Footnote CAIV involves setting cost objectives that influence performance and schedule.
55
What is the importance of **documenting** the cost estimate during development?
Provides written justification and lends efficiency to preparation ## Footnote Well-documented estimates withstand scrutiny and increase credibility.
56
What should the cost estimate report be like?
* Crisp and complete * Easily comprehended * Thorough enough to address important details * Demonstrative of competence ## Footnote The report should cater to the audience's understanding of the estimate.
57
What is the role of **descriptive statistics** in data analysis?
Characterize and describe the data ## Footnote Descriptive statistics help in understanding central tendency and dispersion of cost data.
58
What is a **legitimate outlier** in data analysis?
A data point that falls far from the center of the data ## Footnote Outliers can distort statistics and may need to be removed if justified.
59
What is the purpose of **crosschecking** results in cost estimation?
To ensure reasonableness and completeness of the estimate ## Footnote Crosschecking can involve comparing with historical data or using different estimating methodologies.
60
What is the **WBS** in cost estimating?
Work Breakdown Structure ## Footnote The WBS ensures that all components are included in the estimate.
61
Fill in the blank: The **build-up costing technique** involves estimating costs at the __________ level.
lowest definable ## Footnote This technique accounts for all costs, from components to top-level systems.
62
What is the significance of **expert opinion** in cost estimating?
Utilizes subjective opinions of Subject Matter Experts (SMEs) ## Footnote Expert opinion can corroborate or adjust cost estimates based on experience.
63
What is the **final goal** of the cost estimating process?
To produce a defensible cost estimate for management decision making ## Footnote A high-quality estimate aids in resource allocation and understanding program complexities.
CCEA Prep
flashcards
Decks in class (16)
# Cards
Brainscape helps you reach your goals faster, through stronger study habits.
© 2026 Bold Learning Solutions. Terms and Conditions