Chapter 7- Project Cost Management Flashcards
Plan Cost Management
Process that establishes the policies, procedures, and documentation for planning, managing, expending, and controlling project costs. The Key Benefit of this process is that it provides guidance and direction on how the project costs will be managed throughout the project.
What part of PMP is used for cost estimating
Scope Baseline, Schedule baseline, cost related scheduling, risks and communication decisions.
Cost Management Plan includes
Units of measure Level of precision ( rounding up the sums) Level of accuracy ( e.g.+/- 10%) Organisational procedures links Control thresholds Rules of performance measurement -( Earned Value management rules of measurements are set. Reporting formats Process descriptions Additional details
Control Account
The WBS component used for the project cost estimating. Each control account is assigned a unique code or account numbers that link directly to the performing organisation’s accounting system.
Estimate Costs
Process of developing an approximation of the monetary resources needed to complete project activities. Key benefit is that it determines the amount of cost required to complete project work.
Plan Cost Management ITTO
Inputs: PMP Charter Organisational process assets Enterprise environmental factors
T&T
Analytical techniques
Expert judgements
Meetings
Outputs
Cost Management Plan
Estimate cost ITTO
Inputs Cost Management Plan Scope Baseline Human Resource Management Plan Project Schedule Risk register Enterprise Environmental Factors Organisational process Assets
TT Expert Judgement Analogous estimating Parametric Estimating Bottom-up estimating Three-point estimating Reserve analysis Cost of quality Project Management software Vendor bid analysis Group decision making techniques
Outputs
Activity cost estimates
Basis for estimates
Project documents updates
Determine budget ( what is it?)
Process of aggregating the estimated cost of individual activities or work packages to establish an authorised cost baseline.
Determine budget ITTO
Inputs: Cost Management Plan Scope baseline Activity cost estimates Basis for estimates Project Schedule Resource calendars Risk register Agreements Organisational Process assets
T&T Cost aggregation Reserve analysis Expert judgement Historical relationships Funding limit reconciliation
Outputs
Cost baseline
Project funding requirements
Project Document updates
Control Cost
Inputs: Project Management Plan Project Funding requirements Work performance data Organisational Process Assets
T&T Earned value management Forecasting To-complete performance index Performance reviews Project Management software Reserve analysis
Outputs Work performance information Cost forecasts Change requests PMP updates Project documents updates Organisational process assets updates
Actual Cost AC
The actual amount of money the project has spent to date
Analogous estimating
An approach that relies on historical information to predict the cost of the current project. It is also known as to-down estimating and is the least reliable of all the cost-estimating approaches
Bottom-up estimating
An estimating approach that starts from zero, accounts for each component of the WBS, and arrives at a sum for the project. It is completed with the project team and can be one of the most time-consuming and most reliable methods to predict costs.
Budget estimate
The estimate is also somewhat broad and is used early in the planning processes and also is top-down estimates. The range of variance for the estimate can be from -10 tp +25 percent
Commercial database
A cost estimating approach that uses a database, typically software-driven, to create the cost estimate for a project.
Contingency reviews
A contingency allowance to account for overrun in costs. Contingency allowances are used at the project manager’s discretion and with management’s approval to counteract cost overruns for scheduled activities and risk events.
Cost aggregation
Costs are parallel to each WBS work package. The costs of each work package are aggregated to the corresponding control accounts. Each control account then is aggregated to the sum of the project costs.
Cost baseline
A time-lapse exposure of when the project monies are to be spend in relation to cumulative values of the work completed in the project.
Cost budgeting
The cost aggregation achieved by assigning specific dollar amounts for each of the schedules activities or, more likely, for each of the work packages in the WBS. Cost budgeting applies the cost estimates over time.
Cost change control system
A system that examines any chances associates with scope changes, the cost of material, and the cost of any other resources, and the associated impact on the overall project cost.
