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PMP > Chapter 7 - Cost > Flashcards

Chapter 7 - Cost Flashcards

1
Q

What happens in Plan Cost Management process group?

A

Establishes the policies, procedures, and documentation for planning, managing, expending and controlling project costs.

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2
Q

What are the inputs to Plan Cost Management?

A
  1. Project Management Plan
  2. Project Charter
  3. Enterprise environmental factors
  4. Organizational process assets
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3
Q

What are the tools and techniques for Plan Cost Management?

A
  1. Expert judgment
  2. Analytical techniques
  3. Meetings
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4
Q

What are the outputs of Plan Cost Management?

A

Cost management plan

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5
Q

The Cost Management Plan can establish the following:

A
  • Units of measure
  • Level of precision
  • Level of accuracy
  • Organizational procedure measurement
  • Control thresholds
  • Rules of performance measurement
  • Reporting formats
  • Process descriptions
  • Varying additional details
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6
Q

What happens in the Estimate Costs process group?

A

Develop the monetary resources needed to complete the project activities.

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7
Q

What are the inputs to Estimate Costs?

A
  1. Cost management plan
  2. HR Management Plan
  3. Scope baseline (includes scope statement, WBS and WBS dictionary)
  4. Project schedule
  5. Risk register
  6. Enterprise environmental factors
  7. Organizational process assets
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8
Q

What are the formulas for 3-point estimating?

A 
Triangular Distribution -  cE=(c0 + cM + cP)/ 3
Beta Distribution (from a traditional PERT analysis). cE=(c0 + 4cM + cP) / 6
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9
Q

What does analogous estimating entail?

A

Using the actual cost of previous, similar projects; historical info and expert judgment

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10
Q

What is the advantage and disadvantage of analogous estimating?

A

Adv: Less time-consuming and costly
Disadvantage: Less accurate

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11
Q

What is parametric estimating?

A

Uses statistical relationship between historical data and other variables

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12
Q

What is the advantage of parametric estimating?

A

More accurate

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13
Q

What is bottom-up estimating?

A

Costs of individual work activities are estimated and the estimates are rolled up to higher levels for subsequent reporting

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14
Q

What is the reserve analysis?

A

Includes the contingency reserve, which may be a percentage of the estimated cost.

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15
Q

What is cost of quality (COQ)?

A

Assumptions about the cost of quality

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16
Q

What are the outputs of Estimate Costs?

A
  1. Activity cost estimates
  2. Basis of estimates
  3. Project documents updates
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17
Q

What is the basis of estimates?

A

Documents supporting how the cost of estimates was derived.

18
Q

What happens in the Determine Budget process group?

A

Estimated costs are used to establish a cost baseline

19
Q

What are in the inputs to Determine Budget?

A
  1. Cost Management Plan
  2. Scope baseline
  3. Activity cost estimates
  4. Basis of estimates
  5. Project schedule
  6. Resource calendars
  7. Risk register
  8. Agreements
  9. Organizational process assets
20
Q

What are the tools and techniques of Determine Budget?

A
  1. Cost aggregation
  2. Reserve analysis
  3. Expert judgment
  4. Historical relationships
  5. Funding limit reconciliation
21
Q

What are the outputs of Determine Budget?

A
  1. Cost baseline
  2. Project funding requirements
  3. Project documents updates
22
Q

What happens in the Control Costs process group?

A

Monitor the status of the project, update the project budget and manage changes to cost baseline

23
Q

What the inputs to Control Costs?

A
  1. Project Management Plan (cost performance baseline/cost management plan)
  2. Project funding requirements
  3. Work performance data
  4. Organizational process assets
24
Q

What are the tools and technique for Control Costs?

A
  1. Earned Value Management
  2. Forecasting
  3. To-complete Performance Index (TCPI)
  4. Performance reviews
  5. Project management software
  6. Reserve analysis
25
Q

What is Earned Value Management (EVM)?

A

It measures project performance against scope, schedule and cost baselines. They indicate potential deviations:

  1. Planned Value
  2. Earned Value
  3. Actual Cost
  4. Schedule Variance
  5. Cost Variance
  6. Schedule Performance Index
  7. Cost Performance Index
26
Q

What is Planned Value (PV)?

A

The authorized budget. The estimated value of the work planned to be done.

27
Q

What is Earned Value (EV)?

A

The value of the work performed to date

28
Q

What is the formula for schedule variance (SV) and what does it represent?

A

SV = EV – PV

Indicates project status with regard to baseline schedule: Positive is ahead of schedule. Will be zero when schedule is completed.

29
Q

What is the formula for cost variance (CV) and what does it represent?

A

CV= EV – AC

Measures project cost performance: positive is under budget. Cost variance at end of project will be BAC minus the actual amount spent.

30
Q

What is schedule performance index (SPI) and what does it represent?

A

SPI = EV/PV

Measure progress achieved versus progress planned. Forecasts project completion.

31
Q

What is the formula for cost performance index (CPI) and what does it represent?

A

CPI = EV/AC

Measures value of work completed compared to actual cost. Measures cost efficiency.

32
Q

What is budget at completion (BAC)?

A

How much we budget for the total project

33
Q

What is the formula for estimate at completion (EAC) and what does it represent?

A

EAC = AC + (BAC – EV)

EAC = BAC/cumulative CPI

Measures what we estimate the total project to cost

34
Q

What is variance at completion (VAC)?

A

How much over or under budget we expect to be at the end of the project.

35
Q

What is estimate to complete (ETC)?

A

How much more we expect the project to cost to finish

36
Q

What is the formula for to-complete performance index (TCPI) and what does it represent?

A 
TCPI = (BAC – EV)/ (BAC – AC)
TCPI = (BAC – EV)/(EAC – AC)

Calculates the cost performance that must be achieve to meet a specific goal such as BAC or EAC

37
Q

What are the outputs to Control Costs?

A
  1. Work performance information
  2. Cost forecasts
  3. Change requests
  4. Project management plan updates
  5. Project documents updates
  6. Organizational process assets updates
38
Q

What are the types of cost and give examples of each?

A
  1. Variable: change with the work (materials, wages, supplies)
  2. Fixed: do not change as production changes (cost of setup, rental)
  3. Direct: directly attributable to work (team travel, wages, cost of material)
  4. Indirect: overhead (taxes, fringe benefits)
39
Q

What are the Rough Order of Magnitude (ROM) estimates?

A

+/- 50%

40
Q

What is the definitive estimate ranges?

A

+/- 10%

41
Q

What are the two types of reserves?

A
  1. Contingency – for known risks

2. Management – for unknown risks

PMP (5 decks)

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