7 - Cost Management Flashcards
Actual cost
Amount monies spent on the project to date
Analogous estimating
Based on historical.
aka top down
Least reliable
Bottom-up estimating
Starts from zero; accounts for each component of hte WBS, arrives at a sum.,
Uses project team and is most accurate.
Budget estimate
Broad estimate, used early in planning processes (and also top-down estimating).
Range: -10% to +25%.
Commercial database
Uses database to create cost estimate.
Contingency reserve
Contingency allowance to account for overruns in cost.
For known risk events.
Cost aggregation
Costs for WBS work package aggregated to control account. Control accounts aggregated to top (project cost)
Cost baseline
Time-lapse exposure of when project monies are to be spent in relation to cumulative values of the work completed in the project.
Cost budgeting
The cost aggregation of each activity/work packages i nWBS. Applies costs over time.
Cost change control system
Examines changes associated with scope changes, cost of materials, and cost of other resources and the impacted change on pverall project cost
Cost management plan
Subsidiary PM plan - dictates how cost variances will be managed.
Cost of poor quality
Money spent to recover from not adhering to the expected level of quality.
e.g. defect work.
aka cost of nonconfoirmance to quality
Cost of quality
Money spent to attain expected level of quality within project.
e.g. safety precautions
Cost performance index (CPI)
Part of earned value management suite
Shows overall cost efficiency on the project.
CPI = EV/AC
Cost Variance (CV)
Earned value management
Difference between earned value and actual cost
CV = EV-AC
Definitive Estimate
Most accurate type of estimate.
Used in late planning and associated with bottom up.
Need a WBS.
-5% to +10%
Direct costs
Costs applied directly to the project and not shared.
Earned Value (EV)
Earned value management
What the project is worth
EV = %complete x BAC
Estimate at Completion (EAC)
EVM
Forecasted project costs based on current performance
Standard:
EAC = BAC/CPI
Others as well, but not as common.
Estimate to completion (ETC)
EVM
Predict how much more the project will cost.
ETC = EAC-AC
Fixed costs
Costs remain constant through life of project
Funding limit reconciliation
Organizaitons approach to managing cash flow against project deliverables based on a schedule, milestone accomplished, or data constraints.
Indirect costs
Costs representative of more that one project (e.g. PMIS software licence)
Known unknown
Event that will likely happen within the project, but when/to what degree is unknown.
Usually risk-related (e..g a delay).