Cost Aggregation

Correct Answer: A summary level account used to monitor project costs against budgets

A 'control account' is a summary level account used to monitor project costs against budgets. It provides a higher-level view of project costs, allowing project managers to track and manage expenses effectively. The other options are incorrect because: - An account that captures all project expenditures for reporting purposes is too broad and does not specifically relate to monitoring costs against budgets. - An account that details costs for individual project activities is too granular and does not provide a summary-level view. - An account that provides a high-level view of project timelines is not related to monitoring costs against budgets.

Correct Answer: Bottom-up estimating

The correct answer is 'Bottom-up estimating'.

Bottom-up estimating is the technique that involves summing up cost estimates from lower levels of the Work Breakdown Structure (WBS) to higher levels. This approach starts with the smallest components of the project and aggregates their costs upwards to determine the total project cost.

Here's why this technique is correct and the others are not:

1. Bottom-up estimating: This method accurately describes the process of aggregating costs from lower WBS levels to higher ones. It provides a detailed and often more accurate estimate as it considers individual components.

2. Top-down estimating using historical data and expert judgment: This approach works in the opposite direction, starting with an overall project estimate and breaking it down into smaller components. It doesn't involve summing up from lower levels.

3. Parametric modeling based on project characteristics: This technique uses statistical relationships between historical data and other project variables to estimate costs. While useful, it doesn't specifically involve summing up from lower WBS levels.

4. Analogous estimating from similar past projects: This method uses the actual cost of a previous, similar project as the basis for estimating the current project. It doesn't involve the detailed process of summing up from lower WBS levels.

In cost aggregation for project management, bottom-up estimating is the most accurate method for summing up costs from lower to higher levels of the WBS, providing a comprehensive and detailed cost estimate for the entire project.

Correct Answer: Rolling up cost estimates from lower to higher WBS levels

The best answer is 'Rolling up cost estimates from lower to higher WBS levels.'

Cost aggregation in project management involves combining individual activity cost estimates to create a comprehensive project budget. This process is typically done by rolling up costs from the lowest level of the Work Breakdown Structure (WBS) to higher levels.

This method ensures that all costs are accounted for and provides a hierarchical view of project costs, allowing for better cost management and control.

The other options are incorrect:

'Calculating the average cost of all project activities' is not an accurate method for cost aggregation. Averaging costs would not provide a true representation of the total project cost and could lead to significant underestimation or overestimation.

'Applying contingency reserves to each individual work package' is related to risk management rather than cost aggregation. While contingency reserves are important, they are typically applied after the initial cost estimates have been aggregated.

'Summing up all project costs and dividing by the number of activities' is similar to averaging and would not provide an accurate total project cost. This method would distort the true cost distribution across different activities and work packages.