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PMP > 13. Cost Management (Knowledge Area 4) > Flashcards

13. Cost Management (Knowledge Area 4) Flashcards

1
Q

three-point estimating

A

uses the PERT formula and may or may not be accurate

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2
Q

analogous estimating

A

a quick estimate that is based on previous projects

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3
Q

management reserves

A

cost baseline, plus the management reserves.

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4
Q

CPI

A

cost performance index = measurement of the cost efficiency of the budgeted resources

1 = project on budget
<1= project over budget

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5
Q

contingency reserves

A

part of the cost baseline

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6
Q

basis of the estimates

A

will document the confidence level of an estimate

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7
Q

cost aggregation

A

take the work packages and aggregate their individual cost to find the entire project budget

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8
Q

bottom-up estimating

A

when work packages are broken down and then rolled back up to form an overall cost estimate

can lead to a very precise estimate, although it requires the most amount of work.

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9
Q

management reserves

A

added to the cost baseline in case the project exceeds its budget

usually added by the company’s management and is not under the manager’s control

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10
Q

cost baseline

A
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11
Q

cost estimates

A

include the cost for labor, materials, equipment, services, and facilities

DO NOT include the operational costs of the product, since those costs cover operations and not a project

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12
Q

PV

A

Planned Value

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13
Q

EV

A

Earned Value

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14
Q

BAC

A

Budget at Completion

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15
Q

AC

A

Actual Cost

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16
Q

CPI

A

Cost Performance Index

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17
Q

CV

A

Cost Variance

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18
Q

SV

A

Shedule Variance

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19
Q

ETC

A

Estimate to Completion

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20
Q

EAC

A

Estimate at Completion

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21
Q

Estimate To Completion

A

(ETC) Forecasting the amount that will be needed to complete the current project based on the current performance

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22
Q

SPI

A

Schedule Performance Index

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23
Q

VAC

A

Variance at Completion

24
Q

Planned Value

A

(PV) Amount of money worth of work that should have been done on the project

25
Q

TCPI

A

To-Complete Performance Index

26
Q

Planned Value Formula

A

PV=Planned % Complete x Budget at Completion

27
Q

Earned Value

A

Amount of money worth or work you actually did on the project

28
Q

Earned Value Formula

A

EV=Actual % Complete x Budget at Completion

29
Q

Schedule Variance Formula

A

SV = Earned Value - Planned Value

30
Q

Estimate At Completion

A

(EAC) Forecasting the total cost of the project at the end based on the current spending rate of the project.

31
Q

Schedule Variance

A

(SV) The difference bn the amount of work we should have done vs. the amount actually done.

positive value = ahead of schedule
negative value = behind schedule

32
Q

Cost Performance Index Formula

A

CPI = Earned Value / Actual Cost

33
Q

Cost Performance Index

A

The rage of how we are spending to acually earning on the project.

1+ for underbudget

34
Q

Schedule Performance Index

A

(SPI) The rate of how we are meeting the project schedule.

1+ for ahead of schedule

35
Q

Variance At Completion

A

The difference between the original budget and new forecasted budget.

+ for budgets that may end at or under budget

36
Q

Cost Variance

A

The difference between the work done and money spent.
positive value = under budget
negative value = over budget

37
Q

Cost Variance Formula

A

CV=Earned Value - Actual Cost

38
Q

Actual Cost

A

Amount of money you already spent on the project.

39
Q

To-Complete Performance Index Formula

A

TCPI = (Budget At Completion - Earned Value) / (Budget At Completion - Actual Cost)

40
Q

S-curve graph

A

a time phase view of the cost baseline; typically shows the budget versus the actual spend on the project

41
Q

Schedule Performance Index Formula

A

SPI = Expected Value / Planned Value

42
Q

ES, EF, LS, LF

A

early start, early finish, late start, late finish

43
Q

Estimate To Completion Formula

A

ETC = Estimate At Completion - Actual Cost

44
Q

Estimate At Completion Formula

A

EAC = Budget at Completeion / Cost Performance Index

45
Q

To-Complete Performance Index

A

(TCPI) The performance that needs to be met to finish the project within the budget

46
Q

In the process of control costs, the project manager compares the project management plan with what other information?

A

work performance data

47
Q

When developing the cost management plan, what tool or technique includes reviewing the different funding options that can be used to fund the project?

A

data analysis > includes alternative analysis > includes reviewing strategic funding options

48
Q

What is the general range of a definitive estimate?

A

-5% to +10%

49
Q

While working on a multinational project, the project manager has decided to represent the project budget in American dollars, even though the project will span nine different countries. This will make the budget uniform and easier for the stakeholders to understand.

Where will the project manager document the units of measurement for the budget?

A

cost management plan

=can establish the units of measurement which would include the currency format

50
Q

The budget manager has completed the earned value analysis for the project. He has concluded that the CPI of the project is .9.

What is the budget status?

A

Over budgete by 10%

The cost performance index (CPI) is a measurement of the cost efficiency of the budgeted resources.

1 = project on budget. A number below one illustrates the project being over budget. At .9, the project is 10% over budget.

51
Q

Early in the project’s planning phase, the project team determined that the cost to install the server would be $15,000. This is a high-level estimate, and the team thinks it may cost up to $10,000 more.

What kind of estimate is this?

A

rough order of magnitude estimate

= has a range of -25% to +75%

52
Q

The project manager and the project team determined that the budget for the project will be $60,000. That includes the cost for all the activities and all uncertainties that may have taken place during the project. The project cost baseline is $60,000. The sponsor has determined that if there is a need for additional funds, he will add an additional $5,000.

What do the additional $5,000 represents?

A

management reserves

53
Q

The project manager has worked with an expert project team to estimate the project’s cost. The project manager is very confident that the project will end at that budget.

Where should the project manager document his or her confidence level of the cost estimate?

A

basis of the estimates

54
Q

The project manager has completed the process of determining budget. He has created the cost baseline, which will be added to the project management plan. The project manager is also aware of the project budget.

What is the difference between the project budget and cost baseline?

A

cost baseline = cost of all activities, plus the contingency reserves

management reserves = cost baseline, plus the management reserves.

55
Q

The project manager is currently evaluating how well the project is meeting the project budget.

What earned value formula will be needed to determine if a project is on or over budget?

A

AC

To determine if a project is on or over budget, you will need to calculate the CV or CPI, both of which use the AC value.

56
Q

While developing complex software, the project manager decided to bill the company by how many lines of codes it will take to write the software.

What type of estimate best describes this scenario?

A

parametric estimating = uses mathematical models based on historical records from other projects

utilizes the statistical relationship that exists between a series of historical data and a particular delineated list of other variables

57
Q

The project manager has calculated the EV of the project to be $14,000 and the PV to be $16,000. The BAC is currently at $22,000.

Describe this project?

A

Project is behind schedule.

If you are to calculate this project’s SV, you would have gotten a negative number. To calculate the SV, subtract PV from EV, which is $14,000-$16,000 = -$2,000. This project is behind schedule by $2,000 worth of work.

PMP (13 decks)

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