Chapter 7 Project Cost Management Flashcards
EVM
Earned Value Measurement
(PV-EV)
ES
Earned Schedule
If greater than 0 project is ahead of schedule
SPI
Schedule Performance Index - ES/AT. It indicates the efficiency with which work is being accomplished.
Plan Cost Management
The process of defining how the project costs will be estimated, budgeted, managed, monitored or controlled.
Occurs early in the project to create framework for cost management processes
Cost management plan - tools, techniques, and processes to manage costs
Cost Management Plan
Component of the Project Management Plan that describes how project costs will be planned, structured and controlled. Units of measure, precision, control thresholds
Cost Estimate
Quantitative assessment of the likely costs for resources required to complete the activity. It’s accuracy will increase as the project progresses.
Bottoms Up Estimating
The cost of individual work packages or activities is estimated to the greatest level of specific detail.
Three Point Estimating
Factoring in uncertainty and risk to define an estimate range.
Triangular Distribution
CE= (cO + cM + cP)/3
Beta Distribution
CE = (cO + cM + cP)/6
Determine Budget
The process of aggregating the estimated costs of individual activities or work packages to estimate an authorized baseline.
Includes all funds authorized to execute the project.
Cost Quality
Evaluating the cost impact of additional investment in conformance vs. the cost of non-conformance
Cost Baseline
Approved version of the time-phased project budget that includes contingency reserves but excludes management reserve.
Summation of the Control Accounts = Work Packages and Contingency Reserves
Cost Aggregation
Cost estimates are aggregated by work packages in accordance with the WBS. Work package estimates are then aggregated for the higher component levels of the WBS and then ultimately the entire package.
Reserve Analysis
One of the techniques used to determine a project budget. During Reserve Analysis, a project is analyzed from a cost overruns point of view and buffers are placed in appropriate place. These buffers are called Contingency and Management Reserves
Management Reserves
An amount of the budget withheld for management control purposes and reserved for unforeseen work that is within the scope. It’s not included in the baseline.
Contingency Reserve
Used to manage identified risks, or “known-unknown” (known = identified, unknown = risks). This reserve can be measured in either cost or time.
Not a random reserve; it is an estimated reserve based on various risk management techniques.
Funding Limit Reconcilliation
The expenditure of funds should be reconciled with any funding limits on the commitment of funds for the project.
Control Costs
Monitoring the status of the project to update project costs + managing changes to the baseline.
Any increase in budget must go through integrated change control.
Analyzing the relationship between the consumption of project funds and the work being accomplished
EVA
Earned Value Analysis
Compares the performance measurement baseline to the actual schedule and cost performance.
EVM
Earned Value Measurement
Integrates the scope baseline with cost baseline and schedule baseline to form the performance measurement baseline.
PV
Planned Value
The authorized budget assigned to scheduled work. Defines the physical work that should be accomplished.
Performance Measurement Baseline
Total planned value for the project
BAC
Budget at Completion
The total amount budgeted for the project
EV
Earned Value
The measure of work performed expressed in terms of the budget authorized for the work.
Cannot be more than Planned Value
Used to calculate % complete on a project
AC
Actual Cost
The realized cost incurred for the work performed on an activity during a specific time period. Total cost incurred in accomplishing the work.
SV
Schedule Variance
The measure of schedule performance expressed as the difference between Earned Value and Planned Value.
CV
Cost Variance
The amount of budget deficit or surplus at a point in time. The difference b/w Earned Value and Actual Cost. Cost Variance at the end of a project is BAC-AC.
Indicates the relationship of the physical performance to costs spent.
SPI
Schedule Performance Index
Measure of schedule efficiency expressed as the ratio of EV/PV.
Less than 1 = less work done
More than 1 = more work completed than planned
CPI
Cost Performance Index
Measure of the cost efficiency of the budgeted resources, expressed as a ratio of EV/AC
Less than 1 = cost over-run
More than 1 = cost under-run
