Unit 6 PM: Budget

Why is it important to align budget components with project objectives and goals?

To ensure that expenses contribute directly to project success. (Aligning budget components with project objectives and goals ensures that the allocated resources directly support the project's success.)

Which of the following is NOT a common budget category in project budgeting?

Client payments (Client payments are typically not categorized as a budget component in project budgeting. Common categories focus on project expenses, not incoming payments.)

Why is transparency important when categorizing budget components?

To simplify tracking and control. 100%! Transparency in categorizing budget components simplifies tracking and control, helping project managers effectively manage and allocate resources. 

Which cost estimation technique relies on historical data from similar projects to estimate the cost of the current project?

Top-down estimating (Top-down Estimating uses historical data from similar projects as a reference point to estimate the cost of the current project.)

While creating a project budget, the project manager sets aside funds specifically to address unforeseen events or risks. What is this budgeted amount called?

Contingency reserve (A contingency reserve is a budgeted amount set aside to address unforeseen events or risks during the project.)

The project team is tasked with estimating costs for individual project components before combining them. Which estimation approach is being employed?

Bottom-up estimation. (Bottom-up budgeting involves estimating costs for individual components and then aggregating them, providing a more accurate and detailed budget.)

During vendor negotiations, the vendor proposes a price that exceeds the project budget. What is a suitable negotiation strategy in this situation?

Exploring options for cost reduction or value addition

Correctly selected

Correct

Way to go! In negotiations, exploring options for cost reduction or value addition allows for a collaborative approach to finding a solution that aligns with both parties' interests.

A project is at risk of missing a critical deadline due to a shortage of personnel. What is a proactive measure for effective resource management in this situation?

Recruiting additional personnel (Proactively recruiting additional resources addresses the shortage and helps mitigate the risk of missing critical deadlines)

The project team is creating a budget for an IT project. What is a key consideration when estimating costs for hardware, software, and other technological resources?

Resource allocation.

Resource allocation is essential when estimating costs for hardware, software, and other technological resources in an IT project to ensure that the necessary resources are available.

As a project manager, when the budget and resources of a project are effectively managed, it leads to all of the following except:

Harming an organization’s reputation. (You are right! Project success, exceeding client expectations, and building strong relationships are all direct impacts of effectively managing budget and resources. )