Chapter 7 Introducing Project Cost Management Flashcards
actual cost
The amount of funds the project has spent to date. The difference between actual costs and the earned value will reveal the cost variance.
analogous estimating
This relies on historical information to predict estimates for current projects. Analogous estimating is also known as top-down estimating and is a form of expert judgment.
bottom-up estimating
A technique where an estiate for each component in the WBS is developed and then totaled for an overall project budget. This is the longest method to complete, but it provides the most accurate estimate.
budget at completion
The predicted budget for the project; what the project should cost when it is completed. Budget at completion represents 100 percent of the planned value for the project’s completion.
chart of accounts
A coding system used by the performing organization’s accounting system to account for the project work.
cost baseline
This shows what the project is expected to spend. It’s usually shown in a S-curve and allows the project mananger and management to predict when the project will be spending monies and over what duration. The purpose of the cost baseline is to measure and predict project performance.
cost budgeting
A process of assigning a cost to an individual work package. This process shows costs over time. The cost budget results in an S-curve that becomes the cost baseline for the project.
cost change control
This is part of the integrated change control system and documents the procedures to request, approve, and incorporate changes to project costs.
cost control
an active process to control cause of cost change, to document cost changes, and to monitor cost fluctuations within the project. When changes occur, the cost baseline must be updated.
cost estimating
The process of calculating the costs, by category, of the identified resources to complete the project work.
cost management plan
A subsidiary plan of the overall project management plan that defines how costs will be estimated, budgeted, and controlled.
cost performance index
The process of calculating the costs, by category, of the identified resources to complete the project work.
cost variance
The difference between the earned value and the actual costs.
direct costs
These costs are attributed directly to the project and cannot be shared with operations or other projects.
earned value
the value of the work that has been completed and the budget for that work: EV = %Complete x BAC
earned value management
Earned value management integrates scope, schedule, and cost to give an objective, scalable, point-in-time assessment of the project. EVM calculates the performance of the project and compares current performance against plan. EVM can also be a harbinger of things to come. Results early in the project can predict the likelihood of the project’s success or failure.
estimate at completion
A hypothesis of what the total cost of the project will be. Before the project begins, the project manager completes and estimate for the project deliverables based on the WBS. As the project progresses, there will likely be some variances between what the cost estimate was and what the actual cost is. The EAC is calculated to predict what the new estimate at completion will be.
estimate to complete
Represents how much more money is neeeded to complete the project work: ETC = EAC - AC.
estimating publications
Typically, a commercial reference to help the project estimator confirm and predict the accuracy of estimates. If a project manager elects to use one of these commercial databases, the estimate should include a pointer to this document for future reference and verification.
fixed costs
Costs that remain the same throughout the project.
indirect costs
These costs can be shared across multiple projects that use the same resources - such as for a training room or piece of equipment.
parametric modeling
A mathematical model based on known parameters to predict the cost of a project. The parameters in the model can vary based on the type of work being done. A parameter can be cost per cubic yard, cost per unit, and so on.
parametric modling
A mathematical model based on known parameters to predict the cost of a project. The parameters in the model can vary based on the type of work being done. A parameter can be cost per cubic yard, cost per unit, and so on.
planned value
The worth of the work that should be completed by a specific time in the project schedule.
risk
An uncertain event that can have a positive or negative influence on the project’s success. It can affect the project costs, project schedule, and often both. All risks and their status should be recorded in the risk register.
schedule performance index
This reveals the efficiency of work. The closer the quotient is to 1, the better: SPI = EV/PV.
schedule variance
the difference between the planned work and the earned work.
to-complete performance index
An earned value management formula that can forecast the likelihood of a project to achieve its goals based on what’s currently happening in the project.
top-down estimating
A technique that bases the current project’s estimate on the total of a similar project. A percentage of the similar project’s total cost may be added to or subtracted from the total, depending on the size of the current project.
variable costs
Costs that vary, depending on the conditions within the project.
variance
the time or cost difference between what was planned and what was actually experienced.
