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PMP Exam 2 > 7 - Project Cost Management > Flashcards

7 - Project Cost Management Flashcards

1
Q

When is the greatest ability to influence cost in a project?

A

The ability to influence cost is greatest at the early stages of the project, making early scope definition critical.

07.0 Project Cost Management

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2
Q

What are the four processes contained by the Cost Management Knowledge Area used to plan the costs and budget of the project, as well as guarantee that the project completes on the approved budget?

A
  1. Plan Cost Management
  2. Estimate Costs
  3. Determine Budget
  4. Control Costs

07.0 Project Cost Management

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3
Q

What is the process of establishing the policies, procedures, and documentation for planning, managing, expending, and controlling the project costs?

A

Plan Cost Management

07.1 Plan Cost Management

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4
Q

What three types of information in the Project Management Plan inform the Cost management plan?

A
  1. Scope Baseline
  2. Schedule Baseline
  3. Other information (cost related info from the project management plan)

07.1.1.1 Project Management Plan

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5
Q

Which tool and technique is common to the six project integration management processes?

A

Expert Judgement

07.1.2.1 Expert Judgment

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6
Q

What is expertise provided by any group or individual, applied to technical and management details associated with creating the output(s)?

A

Expert Judgement

07.1.2.1 Expert Judgment

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7
Q

What does NPV stand for?

A

Net Present Value

07.1.2.2 Analytical Techniques

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8
Q

What five considerations should be made for making, purchasing, renting or leasing?

A
  1. Payback period
  2. Return on investment (ROI)
  3. Internal rate of return (IRR)
  4. Discounted cash flow
  5. Net present value (NPV)

07.1.2.2 Analytical Techniques

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9
Q

What describes how the project costs will be planned, structured, and controlled?

A

The Cost Management Plan

07.1.3.1 Cost Management Plan

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10
Q

What defines how risk budgets, contingencies and management reserves will be reported and accessed?

A

The Cost Management Plan

07.1.3.1 Cost Management Plan

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11
Q

At initiation, a ROM can be expressed in what range?

A

The accuracy of a project estimate will increase as the project progresses through the project life cycle. A project in the initiation phase may have a rough order of magnitude (ROM) estimate in the range of −25% to +75%

07.2 Estimate Costs

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12
Q

How are cost estimates expressed?

A

In units of currency and in some instances, other units of measure such as staff hours or days.

07.2 Estimate Costs

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13
Q

How are cost estimates refined?

A

Over the course of the project. Accuracy increases as the project progresses through the project life cycle.

07.2 Estimate Costs

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14
Q

At initiation, a ROM can be expressed in what range?

A

A project in the initiation phase may have a rough order of magnitude (ROM) estimate in the range of −25% to +75%.This will narrow as the project progresses and more is known.

07.2 Estimate Costs

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15
Q

How low can ROM estimates eventually narrow over the course of a project?

A

As more information is known, definitive estimates could narrow the range of accuracy to -5% to +10%.

07.2 Estimate Costs

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16
Q

How are cost estimates refined?

A

Over the course of the project. Accuracy increases as the project progresses through the project life cycle.

07.2 Estimate Costs

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17
Q

What is the process of developing an approximation of the monetary resources needed to complete the project activities?

A

Estimate Costs

07.2 Estimate Costs

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18
Q

What plan includes project staffing attributes, personnel rates and related rewards/ recognition for developing the project cost estimate?

A

The Human Resource Management Plan

07.2.1.2 Human Resource Management Plan

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19
Q

What gives guidance on how the HR of the project should be defined, staffed, managed and released?

A

The Human Resource Management Plan

07.2.1.2 Human Resource Management Plan

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20
Q

What contains a planned start and finish date for every project activity?

A

Project schedule

07.2.1.4 Project Schedule

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21
Q

What are the three enterprise environmental factors influencing how we estimate costs?

A

Market Conditions
Published Commercial Information
Input provided by the Enterprise/ Organization

07.2.1.6 Enterprise Environmental Factors

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22
Q

What can provide the recommended maximum activity costs from prior, similar projects?

A

Expert Judgement

07.2.2.1 Expert Judgment

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23
Q

When is analogous estimating often used?

A

Whenever there is a limited amount of detailed information.Analogous cost estimating is generally less costly and less time consuming than other techniques, but it is also generally less accurate.

07.2.2.2 Analogous Estimating

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24
Q

What kind of estimating uses a statistical relationship between historical data and other variables to calculate (either or both) duration and cost?

A

Parametric Estimating

07.2.2.3 Parametric Estimating

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25
Q

Which kind of cost estimating is fast and not as costly as other techniques, but more exact than analogous?

A

Parametric Estimating

07.2.2.3 Parametric Estimating

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26
Q

What estimating technique creates three estimate to improve the quality of the estimating process to define an approximate range for an activity’s costs?

A

Three-point Estimating

07.2.2.5 Three-Point Estimating

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27
Q

What is COQ?

A

Cost of Quality

07.2.2.7 Cost of Quality (COQ)

28
Q

What “Identify Risks” input contains the likely scheduled activity cost estimates as they relate to risk?

A

Activity cost estimates

07.2.3.1 Activity Cost Estimates

29
Q

What offers a clear and complete understanding of how the cost estimates were derived and is an input to the Determine Budget process?

A

Basis of estimates

07.2.3.2 Basis of Estimates

30
Q

What is the process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline?

A

Determine Budget

07.3 Determine Budget

31
Q

What contains applicable contract information and cost related to purchases?

A

Agreements

07.3.1.8 Agreements

32
Q

What is it called when the project team takes the cost estimates that were created for each activity and adds them together by WBS work packages?

A

Cost aggregation

07.3.2.1 Cost Aggregation

33
Q

What are the results of parametric or analogous estimates involving the use of project characteristic (parameters) to develop mathematical models to predict total project costs?

A

Historical relationships

07.3.2.4 Historical Relationships

34
Q

How is the cost baseline typically depicted?

A

An S-curve

07.3.3.1 Cost Baseline

35
Q

What is the approved amount of money or “time phased BAC” by work package, used for comparison to measure, monitor and control overall cost performance through the project?Often depicted in the form of an S-curve….

A

Cost baseline

07.3.3.1 Cost Baseline

36
Q

What is derived from the cost baseline and set up to exceed the cost baseline for early progress or cost overruns?

A

Project Funding Requirements

07.3.3.2 Project Funding Requirements

37
Q

What includes projected expenditures plus anticipated liabilities?

A

Project Funding Requirements

07.3.3.2 Project Funding Requirements

38
Q

What monitor + controlling process is used to monitor the project status to update the the project budget and managing changes to the cost baseline?

A

Control Costs

07.4 Control Costs

39
Q

What process provides the means to recognize variances from the original plan to take corrective action or to minimize risks?

A

Control Costs

07.4 Control Costs

40
Q

What is the process for updating the budget where it involves recording actual cost spent to date?

A

Control Costs

07.4 Control Costs

41
Q

What is the relationship between these things?Authorized cost baselineCost performance baselineTotal cost baselineCost Baseline

A

They are the time-phased budget at completion [BAC]. This equals the Total Planned Value [TPV] at project completion

07.4.2.1 Earned Value Management

42
Q

What are the elements that are developed and monitored for each work package in EVM ?

A
  1. PV = Planned value
  2. EV = Earned value
  3. AC = Actual cost

07.4.2.1 Earned Value Management

43
Q

What are total costs actually incurred and recorded in accomplishing work performed during a given time period for a schedule activity or work breakdown structure component?

A

Actual Cost (AC)Actual cost can sometimes be direct labor hours alone, direct costs alone, or all costs including indirect costs. Also referred to as the actual cost of work performed (ACWP).

07.4.2.1 Earned Value Management

44
Q

What is the authorized budget assigned to the scheduled work to be accomplished for a schedule activity or work breakdown structure component?

A

Planned Value (PV)Also referred to as the budgeted cost of work scheduled (BCWS).

07.4.2.1 Earned Value Management

45
Q

What is a measure of schedule efficiency on a project?It is the ratio of earned value (EV) to planned value (PV).

A

Schedule Performance Index (SPI)The SPI = EV divided by PV. An SPI equal to or greater than one indicates a favorable condition and a value of less than one indicates an unfavorable condition. See also earned value management.

07.4.2.1 Earned Value Management

46
Q

What is a measure of cost efficiency on a project? It is the ratio of earned value (EV) to actual costs (AC).

A

Cost Performance Index (CPI)CPI = EV divided by AC. A value equal to or greater than one indicates a favorable condition and a value less than one indicates an unfavorable condition.

07.4.2.1 Earned Value Management

47
Q

What are the four formulas for calculating EVM?

A
  1. CV = EV - AC
  2. CPI = EV / AC
  3. SV = EV - PV
  4. SPI = EV /PV

07.4.2.1 Earned Value Management

48
Q

What is Budgeted Cost of Work Scheduled (BCWS) equal to?

A

Planned Value (PV)

07.4.2.1 Earned Value Management

49
Q

What is Budgeted Cost of Work Performed (BCWP) equal to?

A

Earned Value (EV)

07.4.2.1 Earned Value Management

50
Q

What is BAC?

A

Budget at completionThe total planned value for the project.

07.4.2.1 Earned Value Management

51
Q

What is a commonly used and widely adopted method used for performance measurement?

A

Earned Value Management

07.4.2.1 Earned Value Management

52
Q

What requires the formation of an integrated baseline against which performance is measured?

A

Earned Value Management

07.4.2.1 Earned Value Management

53
Q

What is another definition for PV = Planned Value?

A

BCWS = Budgeted Cost of Work Scheduled

07.4.2.1 Earned Value Management

54
Q

What is another definition for EV = Earned Value?

A

BCWP = Budgeted Cost of Work Performed

07.4.2.1 Earned Value Management

55
Q

What develops and monitors three elements for each work package and control account?

A

Earned Value Management = EVM

07.4.2.1 Earned Value Management

56
Q

What is the value of the work performed expressed in the terms of the approved budget assigned to that work?

A

Earned Value = EV

07.4.2.1 Earned Value Management

57
Q

What is another definition for Actual Cost = AC?

A

ACWP = Actual Cost of Work Performed

07.4.2.1 Earned Value Management

58
Q

What is the CPI and who is it for?

A

Cost Performance Index, to be reviewed by management

07.4.2.1 Earned Value Management

59
Q

What is SPI and who is it for?

A

Schedule Performance Index, to be reviewed by management

07.4.2.1 Earned Value Management

60
Q

What is CV and who is it for?

A

Cost variance, for the project team

07.4.2.1 Earned Value Management

61
Q

What is the SV and who is it for?

A

Schedule variance and it is for the project team

07.4.2.1 Earned Value Management

62
Q

What is a BAC?

A

Budget at completion

07.4.2.1 Earned Value Management

63
Q

What else is the BAC known as?

A

Total PV at project completion

07.4.2.1 Earned Value Management

64
Q

What is the process used to determine how much more money we need to complete a project?

A

Forecasting

07.4.2.2 Forecasting

65
Q

What is the EAC based on?

A

The actual cost incurred for the work completed plus the Estimate to Completion (ETC).

07.4.2.2 Forecasting

66
Q

What is the calculated projection of cost performance that must be achieved on the remaining work to meet a goal?

A

TCPI

07.4.2.3 To-Complete Performance Index (TCPI)

67
Q

What is VAC?

A

Variance at completionA projection of the amount of budget deficit or surplus, expressed as the difference between the budget at completion and the estimate at completion.

07.4.2.4 Performance Reviews

PMP Exam 2 (14 decks)

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