Chapter 7

Question 1

includes processes involved in planning, estimating, budgeting, financing, funding, managing, and controlling costs so that the project can be completed with in the approved budge.

Answer 1

Project Cost Management

Question 2

defines how the project costs be estimated, budgeted, managed, monitored, and controlled.

Answer 2

Plan cost managment

Question 3

develop an approximation of monetary resources needed to complete project work.

Answer 3

Estimate costs

Question 4

process of aggregating the estimated costs of individual activities or work packages to establish an authorized budget

Answer 4

Determine budget

Question 5

monitor status of project to update the costs and manage changes to the cost baseline

Answer 5

control costs

Question 6

extension to the theory and practice of EVM. Replaces schedule theory variance measures used in traditional EVM (Earned Value-Planned Value) with ES and actual time (AT)

Answer 6

ES- Earned Schedule

Question 7

alternate equation for calculating the schedule variance

Answer 7

ES- AT

ES greater than 0 the project is ahead of schedule.

Question 8

Scheduled performance index formula that indicates efficiency with the work being scheduled

Answer 8

ES/AT

Question 9

Plan cost management input that preapprove the financial resources and project approval requirements

Answer 9

Project charter

Question 10

describes how the project will be planned, structured and controlled.

Answer 10

Cost management plan

Question 11

degree which cost estimates will be rounded up or down base on scope of activities and magnitude of the project

Answer 11

Level of precision

Question 12

the work breakdown structure (WBS) provides the framework for the cost management plan allowing for consistency with the estimates/budgets/and control costs

Answer 12

Organizational procedure links

Question 13

WBS component used for project cost accounting. each account assigned a unique code or account number(s) that links directly to the performing organizations accounting system.

Answer 13

Control account

Question 14

variance thresholds used for monitory may specify the agreed upon amount of variation, allowed before action needs to be taken.
*expressed as a percentage of deviation from the baseline

Answer 14

Control Threshold.

Question 15

types/quantity to each work package/activity

Answer 15

Resource requirements

Question 16

Rough order of magnitude (ROM)

Answer 16

Start-up phase (-25% to +75%)

Question 17

uses values, or attributes of previous projects that are similar to current projects
- Attributes: scope, cost, budget, duration, and measures of scale (weight/Size)

Answer 17

Analogous Estimating

Question 18

using statistical relationships between historical data and other variables to calculate costs.

• higher level of accuracy depending on model data sophistication
• estimates applied to total project or segments in conjunction with other estimating methods.

Answer 18

Parametric Estimating

Question 19

method of estimating component of work

• estimating individual work packages or activities to the highest specified detail.
• Detail cost is summarized or “Rolled-up” to higher levels for reporting/tracking purposes’-
• accuracy influenced by the size of the activity.

Answer 19

Bottom-up estimating

Question 20

defines an approximate range for activity cost

Answer 20

Three point estimating:

Most likely (cM)
Optimistic (cO)
Pessimistic (cP)
Expected cost, cE

Question 21

triangular distribution formula

Answer 21

cE= (cO +cM + CP)/3

Question 22

Beta distribution formula

Answer 22

cE= (cO+4 cM + cP)/6

Question 23

amount of additional details supporting the cost estimates

- clear and complete on how cost estimates were derived.

Answer 23

basis of estimates

Question 24

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

Answer 24

Determine budget

Question 25

approved version of the time-phase project budget, excluding management reserves, which can be changed only through formal change control procedures.

Answer 25

Cost Baseline

Question 26

• summation of control accounts
• made up by estimates tied directly to schedule activity
• represented in S-curve for time phase view
• EVM is a type.

Answer 26

Cost Baseline

Question 27

cost baseline referred to as performance measurement baseline

Question 28

added to cost baseline to produce the budget. Change warrant process to move fund from reserves to baseline

Answer 28

Management reserves

Question 29

1) Management reserves - Cost _________
2) Contingency reserves- _____ ______estimates
3) Activity Contingency Reserves- _______ _______ estimates

Answer 29

1) Cost baseline
2) work package
3) activity cost

Question 30

Total project funding requirements and periodic funding requirements are derived from

Answer 30

cost baseline.

Question 31

cost baseline + management reserves

Answer 31

Total funds

Question 32

process of monitoring the status of the project to update costs and manage changes to the cost baseline.

Answer 32

Control costs

Question 33

KEY to effective cost control

Answer 33

management approved cost baseline

Question 34

describes how the project costs will be managed and controlled

Answer 34

cost management plan

Question 35

compared with the actual results determine a change, corrective action, or preventive action necessary

Answer 35

cost baseline

Question 36

data on project status as costs have been authorized, incurred, invoiced, and paid

Answer 36

work performance data

Question 37

compares performance measurement baseline to the actual schedule and cost performance

Answer 37

earned value analysis (EVA)

Question 38

integrated to form the performance measurement baseline

Answer 38

scope baseline integrated with cost baseline and schedule baseline

Question 39

measure of work performed expressed in terms of budget authorized for that work that has been completed

Answer 39

Earned Value (EV)

Question 40

the realized cost incurred to work performance on an activity during a specific time period and needs to correspond in def to what was budgeted in the PV and measure in the EV (direct hours only, direct costs only, or all costs including direct costs)

Answer 40

Actual Cost (AC)

Question 41

the explanation (cause, impact, and corrective action) for cost (CV= EV-AC), schedule (SV= EV-PV), and variance at completion (VAC= BAC - EAC) variances.

Answer 41

Variance analysis EVM

Question 42

a measure of schedule performance expressed as the difference between earned value and planned value. Amount project is ahead/behind on planned delivery day.

Answer 42

Schedule Variance (SV)

Question 43

SV= EV-PV

Answer 43

Schedule Variance

Question 44

EV schedule variance = 0 means:

Answer 44

Project completed

Question 45

Amount of budget deficit or surplus as a given point in time, EV-AC (Earned value-actual costs).
*Indicates relationship of physical performance to cost spent.

Answer 45

Cost variance (CV)

Question 46

BAC- AC

Answer 46

Cost variance at the end of the project

Question 47

A measure of schedule efficiency expressed as EV/PV

Answer 47

Schedule performance index (SPI)

Question 48

SPI Value

Answer 48

Less than 1.0- less work completed than planned

Greater than 1.0- more work was completed than planned.

Question 49

a measure of efficiency of a budgeted resource, expressed as a ratio of earned value to actual cost. EV/AC

Answer 49

Cost performance index (CPI)

Question 50

graphical analysis technique comparing current state to future state goals in the form of BAC versus estimated at completion (EAC) and completion dates

Answer 50

trend analysis

Question 51

Most common ETC forecast approach

Answer 51

manual, button-up summation by the PM and project team.

EAC= AC + Bottom-up ETC

EAC- Estimate at completion
ETC- Estimate to complete

Question 52

common forecast methods

- EAC forecast for ETC work performed at budgeted rate

Answer 52

EAC= AC + (BAC - EV)

Question 53

Common forecast method:

EAC forecast for ETC work performed at present CPI- Same cumulative cost performance index

Answer 53

EAC= BAC/CPI

Question 54

Common forecast method:

EAC forecast for ETC work considered both SPI and CPI factors

Answer 54

• Considers both cost and schedule performance indices
• Used when project schedule impacts ETC effort
• Weight the CPI and SPI at different values (80/20, 50/50)
• EAC= AC + [(BAC-EV)/(CPI x SPI)]

Question 55

used to monitor the status of contingency and the management reserve for the project to determine if these reserves are still needed or if additional reserves need to be requested.

Answer 55

Reserve analysis

Question 56

a measure of the cost performance that is required to be achieved with the remaining resources in order to meet a specific management goal, expressed as a ratio of the costs to finish the outstanding work. expressed as the BAC or EAC.

Answer 56

To-Complete Performance index (TCPI)