Chapter 7 Flashcards
Name the two discretionary funding allocations a project may receive.
Contingency Reserve and Management Reserve
Name the negative risk responses
Accept, Avoid, Transfer, Mitigate
Name the positive risk responses
Exploit, Share, Enhance, Accept
Choosing to accept the consequences of the risk
Accept
Actual cost of completing the work component in a given time period
Actual Costs AC
Avoiding the risk altogether or eliminating the cause of the risk event.
Avoid
the most precise cost estimating technique. It assigns a cost to each work package on the project. It is also the costliest.
Bottom-Up Estimating
the process of aggregating all the cost estimates and establishing a cost baseline.
Budgeting
How fast you’re going through the money
Burn Rate
Certain amount of money set aside to cover costs resulting from possible adverse events or unexpected issues on the project. PM usually controls
Contingency Reserve
the total expected cost for the project.
Cost Baseline
Measures the value of work completed at the measurement date against the actual cost.
Cost Performance Index CPI
Measures actual performance to date against what’s been spent.
Cost Variance CV
Performance measurement technique that compares what your project has produced to what you’ve spent by monitoring the planned value, earned value, and actual costs expended to produce the work of the project.
Earned Value Measurement EVM
Value of the worked completed to date as it compares to budgeted amount (PV) for that period. Example: Budgeted amount is $1k. 30 percent of work completed. This is $300
Earned Value EV
Monitoring the probability or impact of the risk event to assure benefits are realized.
Enhance
The expected cost to finish all the remaining project work
Estimate to Completion ETC
Includes measuring the project spending to date, determining the burn rate, and tracking expenditures to the cost baseline so that stakeholders can see what was planned versus what actually spent on the project.
Expenditure Tracking
Mechanism used to report on the current state of the project budget
Expenditure Reporting
Looking for opportunities to take advantage of positive impacts.
Exploit
Consequence or opportunity the risk poses to the project if it occurs. Can be defined as:
- High: 1.0
- Medium: 0.5
- Low: 0.1
Risk Impact
Amount set aside by upper management to cover future situations that can’t be predicted. Contingency spending authority is under the discretion of the project manager or upper management.
Management Reserve
Reducing the impact or the probability of the risk.
Mitigate
A cost-estimating technique that uses the actual cost of a previous, similar project as the basis for estimating the cost of the current project; also called analogous estimates. They are the least accurate and least expensive.
Top Down Estimating / Order-of-Magnitude Estimating
The cost of the work that has been authorized and budgeted for a specific schedule activity or WBS component during a given time period or phase
Planned Value PV
the likelihood that a risk event will occur, expressed as a number from 0.0 to 1.0 with 1 being absolute certainty.
Probability
a tool for the project team to aid in prioritizing risks.
Probability and Impact Matrix
Potential future event that can have either negative or positive impacts on the project.
Risk
Process of identifying those risks that have the greatest possibility of occurring and the greatest impact to the project if they do occur.
Risk Analysis
The process of determining and documenting the potential risks that could occur on your project.
Risk Identification
Deals with how you manage the areas of uncertainty in your project. Identify, analyze, and develop a response.
Risk Planning
List of risks that you can record in a simple spreadsheet that includes an identification number, risk name, description, risk owner, and response plan.
Risk Register
the process of developing options, and determining actions to enhance opportunities and reduce threats to the project’s objectives
Risk Response Plan
Sign or a precursor signaling that a risk event is about to occur.
Risk Triggers
Measures the progress to date against the progress that was planned.
• Formula: SPI = EV/PV
• Results: <1: Behind schedule >1: Ahead of schedule
Schedule Performance Index SPI
Compares an activity’s actual progress to date to the estimated progress and is represented in terms of cost.
Schedule Variance
Assigning the risk to a third party who is best able to bring about the opportunity.
Share
SWOT
Strengths, Weaknesses, Opportunities, and Threats.
Involves analyzing the project from each perspective: strengths, weaknesses, opportunities, and threats.
SWOT Analysis
Average of the most likely estimate, the optimistic estimate, and the pessimistic estimate. Subject matter experts should give the estimates.
• Formula: Estimate + Optimistic + Pessimistic/3
Three-Points Estimate
Moving the liability for the risk to a third party by purchasing insurance, performance bonds, and so on.
Transfer
The total time it takes for a person to complete the task if they do nothing else from the time they start until the task is completed. Need to know actual hours spent performing task. Example resource is spending 5 hours a day over 4 days. Work effort is 20 hours.
Work Effort
