7.4 Control Costs Flashcards
What is control costs process?
Process of monitoring the status of the project to update the project costs and managing changes to the cost baseline
What is the benefit of this process?
it provides the means to recognise variance from the plan in order to take corrective action and minimize risks.
What does cost control invovle?
It involves analyzing the relationship between the consumption of project funds to the physical work being accomplished for such expenditures.
How costs are controlled?
/influencing the factors that create changes to the authorized cost baseline
/ensuring that all changes are acted on in a timely manner
/managing the actual changes when they occur
/ensuring that cost expenditures do not exceed authorized funding by period, by WBS component, by activity, and in total for the project
/monitor work performance against funds expended
/preventing unapproved costs from being included in the reported costs or resource usage
/informing all stakeholders of approved changes and associated costs
/bringing expected cost overruns within acceptable limits
What are the inputs to control costs process?
/project management plan-cost baseline, cost management plan
/project funding requirements - projected expenditure and anticipated liabilities
/work performance data-progress of activities, costs that have been authorised and incurred
/organisational process assets-Existing cost control-related policies, procedures and guidelines, tools and monitoring and reporting methods to be used
How project management plan helps control costs?
/it contains cost baseline
/cost management plan that tell how costs are managed and controlled.
How project funding requirements help?
It contains projected expenditure and liabilities
How org process assets help
Contains formal / informal policies, procedures and guidelines to control costs
Cost control tools
Monitoring and reporting methods to be used
what are the control costs tools and techniques?
/earned value management /forecasting /To-complete performance index /Performance reviews /project management software /reserve analysis
What is EVM (earned value management)?
It is a methodology that combines scope, schedule and resource measurements to assess project performance and progress. It integrates scope baseline with cost baseline along with the schedule baseline to form the performance measurement baseline which helps the project management team assess and measure project performance and progress for the duration of the project.
What are the 3 key dimensions developed and monitored by EVM for each work package and control account?
/Planned value (PV): Authorised budget allocated to scheduled work, not including management reserve. At a given time PV defines the physical work that should have been completed.
/Earned value (EV): It is the budget associated with the authorized work that has been completed. It is not the actual cost, but the planned cost for that piece of work.
/Actual Cost (AC): It is the reaslised cost incurred for the work performed on an activity during a specified time period
What is scheduled variance(SV) ?
It is a measure of schedule performance expressed as a difference between earned value (EV) and planned value (PV).
SV = EV - PV
What is cost variance (CV)
CV = EV - AC
What is SPI (Schedule Performance Index)?
SPI = EV/PV
SPI < 1 means behind schedule
SPI > 1 means ahead of schedule
since SPI is for the whole project, analysis to be done along the critical path to determine the impact
What is Cost Performance Index(CPI)?
CPI=EV/AC
CPI > 1 indicates a cost underrun for work completed
CPI < 1 indicates a cost overrun for work completed
