1. Explain some of the basic principles of cost management, such as profits, life cycle costs, tangible and intangible costs and benefits, direct and indirect costs, and reserves.

2. What is meant by a sunk cost? Give examples of typical sunk costs for an IT project as well as examples from your personal life. Why is it difficult for people to ignore them when they should?

3. Give examples of when you would prepare rough order of magnitude (ROM), budgetary, and definitive cost estimates for an IT project. Give an example of how you would use each of the following techniques for creating a cost estimate: analogous, parametric, and bottom-up.

4. Explain what happens during the process to determine the project budget.

5. Explain how earned value management (EVM) can be used to control costs and measure project performance, and explain why you think it is not used more often. What are some general rules of thumb for deciding if numbers for cost variance, schedule variance, cost per-formance index, and schedule performance index are good or bad?