7. Project Cost Management Flashcards
Define the following knowledge area: Project Cost Management.
7.1 Understand the four project management processes in the project cost management knowledge area
Includes the processes involved in planning, estimating, budgeting, financing, funding, managing, and controlling costs so that the project can be completed within the approved budget.
- 1 Plan Cost Management
- 2 Estimate Costs
- 3 Determine Budget
- 4 Control Costs
* PMBOK Guide, Sixth Edition, 7 - Project Cost Management, p. 231*
Define the following process: Plan Cost Management.
7.1 Understand the four project management processes in the project cost management knowledge area
The proccess of defining how the project costs will be estimated, budgeted, managed, monitored, and controlled.
PMBOK Guide, Sixth Edition, 7.1 - Plan Cost Management, p. 235
Define the following process: Estimate Costs.
7.1 Understand the four project management processes in the project cost management knowledge area
The proccess of developing an approximation of the cost of resources needed to complete project work.
PMBOK Guide, Sixth Edition, 7.2 - Estimate Costs, p. 240
Define the following process: Determine Budget.
7.1 Understand the four project management processes in the project cost management knowledge area
The proccess of aggregating the estimated costs of individual actvities or work packages to establish an authorized cost baseline.
PMBOK Guide, Sixth Edition, 7.3 - Determine Budget, p. 248
Define the following process: Control Costs.
7.1 Understand the four project management processes in the project cost management knowledge area
The proccess of monitoring the status of the project to update the project costs and managing changes to the cost baseline.
PMBOK Guide, Sixth Edition, 7.4 - Control Costs, p. 257
Identify the inputs, tools, techniques, and outputs of the following process: Plan Cost Management.
7.2 Identify the input, tools, techniques, and outputs defined in the six processes in project cost management
PMBOK Guide, Sixth Edition, Figure 7-2. Plan Cost Management: Input, Tools & Techniques, and Outputs, p. 235
Identify the inputs, tools, techniques, and outputs of the following process: Estimate Costs.
7.2 Identify the input, tools, techniques, and outputs defined in the six processes in project cost management
PMBOK Guide, Sixth Edition, Figure 7-4. Estimate Costs: Inputs, Tools & Techniques, and Outputs, p. 240
Identify the inputs, tools, techniques, and outputs of the following process: Determine Budget.
7.2 Identify the input, tools, techniques, and outputs defined in the six processes in project cost management
PMBOK Guide, Sixth Edition, Figure 7-6. Determine Budget: Inputs, Tools & Techniques, and Outputs, p. 248
Identify the inputs, tools, techniques, and outputs of the following process: Control Costs.
7.2 Identify the input, tools, techniques, and outputs defined in the six processes in project cost management
PMBOK Guide, Sixth Edition, Figure 7-10. Control Costs: Inputs, Tools & Techniques, and Outputs, p. 257
Identify key concepts for Project Cost Management.
7.3 Identify key concepts in project cost management, including tailoring and special considerations for agile/adaptive environments
tl;dr
- ongoing use costs
- stakeholder expectations
- outsource performance analysis or nah
quotes
- [ongoing use costs] This knowledge area should also consider the effect of project decisions on the subsequent recurring cost of using, maintaining, and supporting project deliverables.
- [stakeholder expectations] Different stakeholders will measure project costs in different ways and at different times. Stakeholder requirements for managing costs should be considered explicitly.
- [outsource performance analysis or nah] Predicting and analyzing the prospective financial performance of the project’s product may be performed outside the project, or it may be part of Project Cost Management.
PMBOK Guide, Sixth Edition, Appendix X4: X4.4 - Key Concepts for Project Cost Management, p. 674
Identify the tailoring considerations for Project Cost Management.
7.3 Identify key concepts in project cost management, including tailoring and special considerations for agile/adaptive environments
- Knowledge management. Does the organization have a formal knowledge management and financial database repository that a project manager is required to use and that is readily acceeible?
- Estimating and budgeting. Does the organization have existing formal or informal cost estimating and budgeted-related policies, procedures, and guidelines?
- Earned value management. Does the organization use earned value management in managing projects?
- Use of agile approach. Does the organization use agile methodologies in managing projects? How does this impact cost estimating?
- Governance. Does the organization have formal or informal audit and governance policies, procedures, and guidelines?
PMBOK Guide, Sixth Edition, 7 - Project Cost Management, p. 234
Identify special consideration for agile/adaptive environments.
7.3 Identify key concepts in project cost management, including tailoring and special considerations for agile/adaptive environments
- Lightweight estimation methods can be used to generate a fast, high-level forecast or project labor csts, which can then be easily adjusted as changes arise.
- In cases where high-variability projects are also subject to strict budgets, the scope and schedule are more often adjusted to stay within cost constraints.
PMBOK Guide, Sixth Edition, 7 - Project Cost Management, p. 234
What is analogous cost estimating?
7.4 Understand and apply basic forecasting and earned value methods for project cost management
Analogous cost estimating uses values, or attributes, of a previous project that are similar to the current project. Comparison of these project values, or attributes, becomes the basis for estimating the same parameter or measurement for the current project.
PMBOK Guide, Sixth Edition, 7.2.2.2 - Analogous Estimating, p. 244
What is parametric cost estimating?
7.4 Understand and apply basic forecasting and earned value methods for project cost management
Parametric estimating uses a statistical relationship between relevant historical data and other variables (e.g. square footage in construction) to calculate a cost estimate for project work.
PMBOK Guide, Sixth Edition, 7.2.2.3 - Parametric Estimating, p. 244
What is bottom-up cost estimating?
7.4 Understand and apply basic forecasting and earned value methods for project cost management
The cost of individual work packages or activities is estimated to the greatest level of specified detail. The detailed cost is then summarized or “rolled up” to higher levels for subsequent reporting and tracking purposes.
PMBOK Guide, Sixth Edition, 7.2.2.4 - Bottom-Up Estimating, p. 244
What is three-point estimating?
7.4 Understand and apply basic forecasting and earned value methods for project cost management
A technique used to estimate cost or duration by applying an average or weighted average of optimistic, pessimistic, and most likely estimates when there is uncertainty with the individual activity estimates.
PMBOK Guide, Sixth Edition, Glossary, p. 724
- Most likely (tM). The cost of the activity, based on realistic effort assessment for the required work and any predicted expenses.
- Optimistic (tO). The cost based on analysis of the best-case scenario for the activity.
- Pessimistic (tP). The cost based on analysis of the worst-case scenario for the activity.
PMBOK Guide, Sixth Edition, 7.2.5.5 - Three-Point Estimating, p. 244
What is earned value analysis?
7.4 Understand and apply basic forecasting and earned value methods for project cost management
Compares the performance measurement baseline to the actual schedule and cost performance. EVM integrates the scope baseline with the cost baseline and schedule baseline to form the performance measurement baseline.
PMBOK Guide, Sixth Edition, 7.4.2.2 - Data Analysis, p. 261
What is variance at completion?
7.4 Understand and apply basic forecasting and earned value methods for project cost management
A projection of the amount of budget deficit or surplus, expressed as the difference between the budget at completion and the estimate at completion.
PMBOK Guide, Sixth Edition, Table 7-1 - Earned Value Calculations Summary Table, p. 267
What is to complete performance index?
7.4 Understand and apply basic forecasting and earned value methods for project cost management
A measure of the cost performance that must be achieved with the remaining resources in order to meet a specified management goal, expressed as the ratio of the cost to finish the outstanding work to the budget available.
PMBOK Guide, Sixth Edition, Table 7-1 - Earned Value Calculations Summary Table, p. 267
What is schedule variance?
7.4 Understand and apply basic forecasting and earned value methods for project cost management
The amount by which the project is ahead or behind the planned delivery date, at a given point in time, expressed as the difference between the earned value and the planned value.
PMBOK Guide, Sixth Edition, Table 7-1 - Earned Value Calculations Summary Table, p. 267
What is schedule performance index?
7.4 Understand and apply basic forecasting and earned value methods for project cost management
A measure of schedule efficiency expressed as the ratio of earned value to planned value.
PMBOK Guide, Sixth Edition, Table 7-1 - Earned Value Calculations Summary Table, p. 267
What is planned value?
7.4 Understand and apply basic forecasting and earned value methods for project cost management
The authorized budget assigned to scheduled work.
PMBOK Guide, Sixth Edition, Table 7-1 - Earned Value Calculations Summary Table, p. 267
What is estimate to complete?
7.4 Understand and apply basic forecasting and earned value methods for project cost management
The expected cost to finish all the remaining project work.
PMBOK Guide, Sixth Edition, Table 7-1 - Earned Value Calculations Summary Table, p. 267
What is estimate at completion?
7.4 Understand and apply basic forecasting and earned value methods for project cost management
The estimated total cost of completing all work expressed as the sum of the actual cost to date and the estimate to complete.
PMBOK Guide, Sixth Edition, Table 7-1 - Earned Value Calculations Summary Table, p. 267
What is earned value?
7.4 Understand and apply basic forecasting and earned value methods for project cost management
The measure of work performed expressed in terms of the budget authorized for that work.
PMBOK Guide, Sixth Edition, Table 7-1 - Earned Value Calculations Summary Table, p. 267
What is cost variance?
7.4 Understand and apply basic forecasting and earned value methods for project cost management
The amount of budget deficit or surplus at the given point in time, expressed as the difference between the earned value and the actual cost.
PMBOK Guide, Sixth Edition, Table 7-1 - Earned Value Calculations Summary Table, p. 267
What is cost performance index?
7.4 Understand and apply basic forecasting and earned value methods for project cost management
A measure of the cost efficiency of budgeted resources expressed as the ratio of earned value to actual cost.
PMBOK Guide, Sixth Edition, Table 7-1 - Earned Value Calculations Summary Table, p. 267
What is budget at completion?
7.4 Understand and apply basic forecasting and earned value methods for project cost management
The sum of all budgets established for the work to be performed.
PMBOK Guide, Sixth Edition, Table 7-1 - Earned Value Calculations Summary Table, p. 267
What is actual cost?
7.4 Understand and apply basic forecasting and earned value methods for project cost management
The realized cost incurred for the work performed on an activity during a specified time period.
PMBOK Guide, Sixth Edition, Table 7-1 - Earned Value Calculations Summary Table, p. 267
