13. Cost Management (Knowledge Area 4)

Question 1

three-point estimating

Answer 1

uses the PERT formula and may or may not be accurate

Question 2

analogous estimating

Answer 2

a quick estimate that is based on previous projects

Question 3

management reserves

Answer 3

cost baseline, plus the management reserves.

Question 4

CPI

Answer 4

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

1 = project on budget
<1= project over budget

Question 5

contingency reserves

Answer 5

part of the cost baseline

Question 6

basis of the estimates

Answer 6

will document the confidence level of an estimate

Question 7

cost aggregation

Answer 7

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

Question 8

bottom-up estimating

Answer 8

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.

Question 9

management reserves

Answer 9

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

Question 10

cost baseline

Question 11

cost estimates

Answer 11

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

Question 12

PV

Answer 12

Planned Value

Question 13

EV

Answer 13

Earned Value

Question 14

BAC

Answer 14

Budget at Completion

Question 15

AC

Answer 15

Actual Cost

Question 16

CPI

Answer 16

Cost Performance Index

Question 17

CV

Answer 17

Cost Variance

Question 18

SV

Answer 18

Shedule Variance

Question 19

ETC

Answer 19

Estimate to Completion

Question 20

EAC

Answer 20

Estimate at Completion

Question 21

Estimate To Completion

Answer 21

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

Question 22

SPI

Answer 22

Schedule Performance Index

Question 23

VAC

Answer 23

Variance at Completion

Question 24

Planned Value

Answer 24

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

Question 25

TCPI

Answer 25

To-Complete Performance Index

Question 26

Planned Value Formula

Answer 26

PV=Planned % Complete x Budget at Completion

Question 27

Earned Value

Answer 27

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

Question 28

Earned Value Formula

Answer 28

EV=Actual % Complete x Budget at Completion

Question 29

Schedule Variance Formula

Answer 29

SV = Earned Value - Planned Value

Question 30

Estimate At Completion

Answer 30

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

Question 31

Schedule Variance

Answer 31

(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

Question 32

Cost Performance Index Formula

Answer 32

CPI = Earned Value / Actual Cost

Question 33

Cost Performance Index

Answer 33

The rage of how we are spending to acually earning on the project. 1+ for underbudget

Question 34

Schedule Performance Index

Answer 34

(SPI) The rate of how we are meeting the project schedule. 1+ for ahead of schedule

Question 35

Variance At Completion

Answer 35

The difference between the original budget and new forecasted budget. + for budgets that may end at or under budget

Question 36

Cost Variance

Answer 36

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

Question 37

Cost Variance Formula

Answer 37

CV=Earned Value - Actual Cost

Question 38

Actual Cost

Answer 38

Amount of money you already spent on the project.

Question 39

To-Complete Performance Index Formula

Answer 39

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

Question 40

S-curve graph

Answer 40

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

Question 41

Schedule Performance Index Formula

Answer 41

SPI = Expected Value / Planned Value

Question 42

ES, EF, LS, LF

Answer 42

early start, early finish, late start, late finish

Question 43

Estimate To Completion Formula

Answer 43

ETC = Estimate At Completion - Actual Cost

Question 44

Estimate At Completion Formula

Answer 44

EAC = Budget at Completeion / Cost Performance Index

Question 45

To-Complete Performance Index

Answer 45

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

Question 46

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

Answer 46

work performance data

Question 47

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

Answer 47

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

Question 48

What is the general range of a definitive estimate?

Answer 48

-5% to +10%

Question 49

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?

Answer 49

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

Question 50

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?

Answer 50

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.

Question 51

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?

Answer 51

rough order of magnitude estimate = has a range of -25% to +75%

Question 52

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?

Answer 52

management reserves

Question 53

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?

Answer 53

basis of the estimates

Question 54

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?

Answer 54

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

Question 55

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?

Answer 55

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.

Question 56

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?

Answer 56

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

Question 57

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?

Answer 57

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.