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PMP Exam Prep > Chapter 7: Project Cost Management > Flashcards

Chapter 7: Project Cost Management Flashcards

1
Q

What are the 10 tools and techniques for Estimated Costs?

A 
Expert judgement
Analogous estimating 
Parametric estimated
Bottom-up estimating
Three-point estimating
Reserve analysis
Cost of quality
Project management software
Vendor bid analysis
Group decision-making techniques
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2
Q

What are the 3 outputs of the Determine Budget process?

A

Costbaseline
Project funding requirements
Project documents updates

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3
Q

What are the 7 inputs to the Estimated Cost process?

A 
Cost management plan
Human resource management plan
Scope baseline
Risk register
Enterprise environmental factors
Organizational process assets
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4
Q

What are the 4 processes of Project Cost Management?

A

Plan Cost Management
Estimate Costs
Determine Budget
Control Costs

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5
Q

What is the Determine Budget process?

A

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

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6
Q

What are the 4 inputs to the Control Costs process

A

Project management plan
Project funding requirements
Work performance data
organizational process assets

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7
Q

What is bottom-up estimating?

A

A method of estimating project duration or cost by aggregating the estimates of the lower-level components of the work breakdown structure (WBS)

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8
Q

What does the scope baseline consist of?

A

Scope statement
WBS
WBS dictionary

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9
Q

What are the 3 outputs of the Estimate Cost process?

A

Activity cost estimates
Basis of estimates
Project documents updates

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10
Q

What is the total planned value for a project also known as?

A

The BAC (Budget at completion)

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11
Q

What are the 8 parameters normally established by the cost management plan?

A 
Units of measure
Level of precision
Level of accuracy
Organizational procedure links 
Control thresholds
Rules of performance measurement
Reporting formats
Process descriptions
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12
Q

What is the three-point estimate named PERT?

A

A technique for estimating that applies a weighted average of optimistic, pessimistic, and most likely estimates when is uncertainty with the individual activity estimates.

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13
Q

What are some resources for which cost estimates should be developed on a project?

A 
Labor
Materials
Equipment
Services
Facilities
Inflation allowance
Contingency 
Cost of financing
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14
Q

What are the 2 main categories of cost in cost of quality?

A

Conformance and nonconformance

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15
Q

What are the 5 tools and techniques for the Determine Budget process

A 
Cost aggregation
Reserve analysis
Expert judgement
Historical relationships
Funding limit reconciliation
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16
Q

What are the 6 tools and techniques for the Control Cost process

A 
Earned value management
Forecasting
To-complete performance index (TCPI)
Performance reviews
Project management software
Reserve analysis
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17
Q

What are the term EAC mean?

A

Estimate at completion

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18
Q

What is the most accurate EAC formula that works in every project case and must be used when the original estimates are fundamentally flawed?

A

EAC = AC + a new bottom-up ETC

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19
Q

What is the EAC forecast for ETC work considering both SPI and CPI factors?

A

EAC = AC [BAC - EV/Cumulative CPI x Cumulative SPI]

20
Q

What is the standard deviation (@) formula for the PERT equation?

A

@ = (Cp - Co)/6

21
Q

What are the 3 earned value data points?

A

PV (planned value)
EV (earned value)
AC (actual cost)

22
Q

What are the 4 constraints that might affect your cost estimates?

A

Limited budget
Required delivery dates
Availability of skilled resources
organizational policies

23
Q

What is the usual method of showing the cost baseline and expenditures?

A

An S-curve

24
Q

What are the 9 inputs to the Determine Budget process?

A 
Cost management plan
Scope baseline
Activity cost estimates
Basis of estimates 
Project schedule
Resource calendars
Risk register
Agreements
Organizational process assets
25
Q

What are the 6 outputs of the Control Costs process?

A 
Work performance information
Cost forecasts
Change requests 
Project management plan updates
Project documents updates
Operational process assets updates
26
Q

What is EV (earned value)?

A

The measure of work performed expressed in terms of the budget authorized for that work.

27
Q

On the perfect project (executed on schedule and on budget), what will be true relative to EVM at completion?

A

PV = EV = AV = BAC

28
Q

What is the EAC forecast for a project that has experienced a one-time anomaly, but the remaining work is expected to go as originally planned?

A

EAC = AC + (BAC-EV)/CPI

29
Q

In the initiation phase, what is the cost estimate called? What is the range?

A

ROM (rough order of magnitude)

Range = 25% to +75%

30
Q

What are the 3 PERT estimate?

A

Most likely (Cm)
Optimistic (Co)
Pessimistic (Cp)

31
Q

What are 4 of the different ways to determine EV

A

Fixed formula rule
Weighted milestone
Apportioned effort
Percent complete

32
Q

What are the formulas for SV (schedule variance) and CV (cost variance)?

A 
SV= EV - PV
CV= EV - AC
33
Q

What is the general form of the EAC formula?

A

EAC = AC + ETC

34
Q

What is the TCPI (to complete performance index) formula when the BAC is still achievable?

A

TCPI = BAC - EV \ BAC - AC

35
Q

What is PV (planned value)?

A

The authorized budget assigned to scheduled work

36
Q

What is the Estimate Cost process?

A

The process of developing an approximation of the monetary resources needed to complete project activities.

37
Q

What is analogous estimating?

A

A technique for estimating duration or cost of an activity or a project using historical data from a similar activity or project.

38
Q

What is parametric estimating?

A

An estimating technique in which an algorithm is used t calculate cost or duration based on historical data or project parameters.

39
Q

What is AC (actual cost)

A

The realized cost incurred for the work performed on an activity during a specific time period

40
Q

Later in the Planning phase, what is the cost Estimate called?
What is its range?

A

Definitive estimate

Range = -5% to +10%

41
Q

What is the function of the reserve analysis tool in Estimate Cost?

A

To establish the contingency reserve, which is an allowance for unplanned, not initially identified, but potentially required changes (known unknowns).

To make sure that adequate reserves remain as the project progresses

42
Q

What does forecasting mean?

A

An estimating or prediction of conditions and event in the project’s future based on information and knowledge available at the time of the forecast. The information is based on the project’s past performance, and includes information that could impact the project in the future, such as estimate at completion and estimate to complete.

43
Q

What are the formulas for SPI (schedule performance index) and CPI (cost performance index)?

A 
SPI = EV ÷ PV
CPI = EV ÷ AC
44
Q

What is the EAC forecast for a project that is expected to accomplish the ETC the ETC work at the current CPI rate?

A

EAC = [BAC\Cumulative CPI]

45
Q

What is the TCPI (to-complete performance index) formula when the original BAC is no longer achievable and the project is rebaselined to the new EAC?

A

TCPI = BAC - EV \ EAC - AC

46
Q

What are the 4 EVM status measures?

A

SV (schedule variance)
CV (cost variance)
SPI (schedule performance index)
CPI (cost performance index)

47
Q

What is the PERT formula for the mean cost?

A

Mean cost = Co + 4Cm + Cp \6

PMP Exam Prep (11 decks)

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