Budget and cost control

Question 1

Creating a budget?

Answer 1

1. Plan how much money is needed (from estimates) to complete required scope to a certain quality. 2. Estimates used (to enable budget setting, create a resource schedule, support judgements of value for money). 3. Consider all types of cost and when they will hit. 4. Information required from external sources like supplier costs. 5. look at uncertainties and assumptions being made

Question 2

CBS

Answer 2

cost breakdown structure - hierarchical structure used to organise project costs according to category, easier to track budget

Question 3

Types of cost

Answer 3

Fixed/non-recurring - occurs once, non recurring, costs the same. variable/recurring dependent on how much product will be produced, occurs periodically. materials or monthly fees. Direct - associated with project work/scope specifically and has a direct impact. Indirect - like overheads, incurred by operating the business, required to support the project

Question 4

Cost planning/funding linear

Answer 4

funding released only at decision gates, end of milestone. At business case, allows for funding to be pidgeonholed for project. will have resources allocated and costed at start. subject to change control if scope changes.can use a histogram to bottom up cost

Question 5

cost planning iterative

Answer 5

1. funding relaesed more requently - fixed cost for each timebox. 2. planning packages used to set aside work in larger chuncks which are converted into work packages.

Question 6

Why monitor and control cost?

Answer 6

1. can run out of money if don’t. 2. ensure project is still viable. 3. actively identify any variaitons. 4. used for decision making, identify problems. 5. identify areas of overspend. 6. inform future projects by providing insights for lessons learned

Question 7

Elements of cost

Answer 7

1.Commitments like leases, money that is already been allocated to be spent on something specific. 2. accruals, work complete but not paid for yet. 3. forecast, plan for future help manage cashflow. 4. cashflow, get paid asap

Question 8

Cost control techniques

Answer 8

1. anticipated final cost. 2. cashflow forecasting. 3. EV analysis.

Question 9

Earned Value

Answer 9

identifies difference between what we planned to spend, actual spend and value of deliverables so far - can see true performance of project.

Question 10

PC, AC, BAC

Answer 10

planned cost, actual cost, budget at completion

Question 11

EV, CV, SV

Answer 11

earned value (%completeXBAC), Cost variance (EV-AC), schedule variance (EV-PC)

Question 12

CPI, SPI

Answer 12

cost performance index EV/AV (efficiency of spend), schedule performance index EV/PC (productivity

Question 13

FCC, FTC

Answer 13

forcast cost at completion, BAC/CPI, forecast time at completion orginal duration/SPI

Question 14

-CV, -SV

Answer 14

spending more than earned, behind plan (less productive)

Question 15

+cv, +sv

Answer 15

spending less, ahead of plan, more productive, need less resources

Question 16

SPI/CPI greater than 1

Answer 16

ahead of schedule, underspending, more productive

Question 17

SPI/CPI less than 1

Answer 17

behind schedule, overspending, less productive

Question 18

Type of financial information which will be reported on

Answer 18

actual vs forecasted cost/spend, EV, cashflow and drawdown requests, resource costs, change request costs, financial benefit realisation

Question 19

Types of financial report throughout project

Answer 19

Cost performance, financial performance, dashboard, cost and benefit forecasting

Question 20

Types of financial report with sponsor during review

Answer 20

EV to track performance

Question 21

Types of financial report at stage reviews

Answer 21

use baseline docs to compare, cashflow

Question 22

Types of financial report at end of project

Answer 22

ROI analysis, benefit realisation report

Question 23

Reporting system

Answer 23

Dashboards, excel, accounting system like ERP

Question 24

Closing down process

Answer 24

1. reassign resources (demobilise staff or return materials) 2. formally close contracts (settle outstanding invoices and confirm final payments) 3. accounting and management systems updated (acknowledge conclusion of project. 4. Surplus funding returned (given back to the business.