06) Cost Management Flashcards
What is the process of cost management?
- Plan Cost Management
- Estimate Costs
- Determine Budget
- Control Costs
What is the key output of the Plan Cost Management process?
Cost management plan
What are the key inputs to the Estimate Costs process?
- Cost management plan
- Scope baseline
- Project schedule
- Human resource management plan
- Risk register
- Enterprise environmental factors
- Organizational process assets
What are the key outputs of the Estimate Costs process?
- Activity cost estimates
- Basis of estimates
- Updates to project documents
What are the key outputs of the Determine Budget process?
- Cost baseline
- Project funding requirements
- Updates to project documents
What are the key outputs of the Control Costs process?
- Work performance information
- Cost forecasts
- Change requests
- Updates to project management plan and project documents
What are the main approaches to cost or schedule estimating?
- One-point estimating
- Analogous estimating
- Bottom-up estimating
- Parametric estimating
- Three-point estimating
What is analogous estimating?
Top-down estimating that uses expert judgment and historical information to predict the future (for example, “The last three projects cost $25,000, or took six months, and so should this “one”)
What is bottom-up estimating?
Creating estimates based on the details of the project (e.g., from the bottom of the work breakdown structure), which are then rolled up into project estimates
What is parametric estimating?
Calculating estimates by looking at the relationships between variables on an activity (e.g., cost per line of code, hours per installation), based on historical information, industry requirements, standard metrics, or other sources
What is earned value measurement, and how is it used?
- A method of measuring project performance that looks at the value earned for work accomplished, by reviewing project performance against the scope, schedule, and cost baselines
- It can be used to predict future cost performance and project completion dates
What is the typical range for a rough order of magnitude (ROM) estimate?
-25 to +75 percent from actual
What is the typical range for a budget estimate?
-10 percent to +25 percent from actual
What is the typical range for a definitive estimate?
+/- 10 percent from actual
What is the difference between a cost budget and a cost baseline?
The cost budget adds management reserves to the cost baseline
What is the formula for cost variance?
EV - AC = CV
What is the formula for schedule variance?
EV - PV = SV
What is the formula for cost performance index?
EV / AC = CPI
What is the formula for schedule performance index?
EV / PV = SPI
What are the formulas for estimate at completion?
See page 290 of the Flash Cards
(also look into getting an image of this)
What is the formula for estimate to complete?
EAC - AC = ETC
What is the formula for variance at completion?
BAC - EAC = VAC
What is the formula for to-complete performance index?
See page 296 of flash cards
(Find image and include here later)
How do variable costs differ from fixed costs?
- Variable costs vary with the amount of production or work done on the project
- Fixed costs do not vary with the amount of production or work done on the project
What is a direct cost?
Direct cost: A cost that is directly attributable to the project
What is an indirect cost?
Indirect cost: Overhead costs or costs incurrect for more than one project
What does life cycle costing mean?
Considering costs over the entire life of the product, not just the cost of the project to create the product
What is value analysis?
Finding a less costly way of doing essentially the same work (also known as value engineering)
