7 - Cost Management Flashcards

1
Q

Actual cost

A

Amount monies spent on the project to date

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2
Q

Analogous estimating

A

Based on historical.

aka top down

Least reliable

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3
Q

Bottom-up estimating

A

Starts from zero; accounts for each component of hte WBS, arrives at a sum.,

Uses project team and is most accurate.

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4
Q

Budget estimate

A

Broad estimate, used early in planning processes (and also top-down estimating).

Range: -10% to +25%.

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5
Q

Commercial database

A

Uses database to create cost estimate.

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6
Q

Contingency reserve

A

Contingency allowance to account for overruns in cost.

For known risk events.

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7
Q

Cost aggregation

A

Costs for WBS work package aggregated to control account. Control accounts aggregated to top (project cost)

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8
Q

Cost baseline

A

Time-lapse exposure of when project monies are to be spent in relation to cumulative values of the work completed in the project.

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9
Q

Cost budgeting

A

The cost aggregation of each activity/work packages i nWBS. Applies costs over time.

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10
Q

Cost change control system

A

Examines changes associated with scope changes, cost of materials, and cost of other resources and the impacted change on pverall project cost

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11
Q

Cost management plan

A

Subsidiary PM plan - dictates how cost variances will be managed.

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12
Q

Cost of poor quality

A

Money spent to recover from not adhering to the expected level of quality.

e.g. defect work.

aka cost of nonconfoirmance to quality

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13
Q

Cost of quality

A

Money spent to attain expected level of quality within project.

e.g. safety precautions

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14
Q

Cost performance index (CPI)

A

Part of earned value management suite

Shows overall cost efficiency on the project.

CPI = EV/AC

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15
Q

Cost Variance (CV)

A

Earned value management

Difference between earned value and actual cost

CV = EV-AC

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16
Q

Definitive Estimate

A

Most accurate type of estimate.

Used in late planning and associated with bottom up.

Need a WBS.

-5% to +10%

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17
Q

Direct costs

A

Costs applied directly to the project and not shared.

18
Q

Earned Value (EV)

A

Earned value management

What the project is worth

EV = %complete x BAC

19
Q

Estimate at Completion (EAC)

A

EVM

Forecasted project costs based on current performance

Standard:
EAC = BAC/CPI

Others as well, but not as common.

20
Q

Estimate to completion (ETC)

A

EVM

Predict how much more the project will cost.

ETC = EAC-AC

21
Q

Fixed costs

A

Costs remain constant through life of project

22
Q

Funding limit reconciliation

A

Organizaitons approach to managing cash flow against project deliverables based on a schedule, milestone accomplished, or data constraints.

23
Q

Indirect costs

A

Costs representative of more that one project (e.g. PMIS software licence)

24
Q

Known unknown

A

Event that will likely happen within the project, but when/to what degree is unknown.

Usually risk-related (e..g a delay).

25
Learning curve
cost per unit decreases as more units are completed. Workers learn how to be more efficient.
26
Oligopoly
Market condition where market is so tight that the actions of one vendor affects the actions of all others. (e..g gas pricing)
27
Opportunity cost
Total cost of an opportunity that is refused to realize an opposing opportunity.
28
Parametric estimating
Using a paramater and extrapolated
29
Planned Value (PV)
What the project should be worth. PV = percent of BAC where project should be at.
30
Project Variance
The final variance, discovered at the end. VAR = BAC-AC
31
Regression analysis
Statistical approach to prediicting what future values may be, based on historical values. aka analytical technique where a series of input variables are examined in relation to their corresponding output results in order to develop a mathematical or statistical relationship. Creates quantitative predictions based on variables within one value to predict variables in another.
32
Reserve analysis
Cost reserves are for unknown unknowns. The management reserve ids not part of the project cost baseline, but is included as part of the project budget.
33
Rough order of magnitude (ROM)
Used during initiating processes and in top-down. -25% to +75%
34
Schedule performance index (SPI)
EVM Shows overall schedule adherence SPI = EV/PV Greater than 1 = ahead of schedule. Less = behind.
35
Schedule variance (SV)
EVM Difference between earned value and planned value SV = EV-PV ``` + = ahead of schedule - = behind ```
36
Single source
Though many vendors can provide what your project needs, you prefer to work with a single one.
37
Sole source
One vendor can provide what your project needs to purchase.
38
Sunk cost
Monies spent to date.
39
To complete Performance Index (TCPI)
Used to predict likelihood of reaching goals (BAC or EAC) based on current performance. Using BAC TCPI = (BAC-EV)/(BAC-AC) using EAC TCPI = (BAC-EV)/(EAC-AC)
40
Variable costs
Changes as prokject goes on
41
Variance
Difference between expected and actual
42
Variance at Completion (VAC)
EVM Projection of being over or under budget based on current performance VAC = BAC-EAC ``` + = under budget - = over budget ```