Chapter 7 - Project Cost Management 8%

Question 1

The process of defining how the project costs will be estimated, budgeted, managed, monitored, and controlled.

Answer 1

Plan Cost Management

Question 2

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

Answer 2

Estimate Costs

Question 3

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

Answer 3

Determine Budget

Question 4

The process of monitoring the status of the project to update the project costs and manage changes to the cost baseline.

Answer 4

Control Costs

Question 5

Includes the processes involved in planning, estimating, budgeting, financing, funding, managing, and controlling costs so the project can be completed within the approved budget.

Answer 5

Project Cost Management

Question 6

An extension to the theory and practice of Earned Value Management (EVM).

It replaces the schedule variance measures used in traditional EVM (earned value - planned value) with ______ and actual time (AT). Using the alternate equation for calculating schedule variances ______ - AT, if the amount of ______ is greater than 0, then the project is considered ahead of schedule (the project earned more than planned at a given point in time).

Answer 6

Earned Schedule (ES)

Question 7

A component of the project management plan and describes how the project costs will be planned, structured, and controlled.

Answer 7

Cost Management Plan

Question 8

cE

Answer 8

Expected Cost

Question 9

cE can be calculated with this triangular formula.

Answer 9

Triangular Distribution [cE = (cO + cM + cP) / 3]

Question 10

cE can be calculated with this beta formula.

Answer 10

Beta Distribution [cE = (cO + 4cM + cP) / 6]

Question 11

What two things make up the Work Package Cost Estimates?

Answer 11

Activity Contingency Reserve and Activity Cost Estimates

Question 12

What two things make up the Control Accounts (amount)?

Answer 12

Contingency Reserve and Work Package Cost Estimates

Question 13

What two things make up the Project Budget?

Answer 13

Management Reserve and Cost Baseline

Question 14

Compares the performance measurement baseline to the actual schedule and cost performance.

Integrates the scope baseline with the cost baseline and schedule baseline to form the performance measurement baseline.

Develops and monitors 3 keys dimensions for each work package and control account.

1. Planned Value (PV)
2. Earned Value (EV)
3. Actual Cost (AC)

Answer 14

Earned Value Analysis (EVA)

Question 15

The authorized budget assigned to scheduled work to be accomplished for an activity or WBC component, not including management reserve.

Answer 15

Planned Value (PV)

Question 16

The total of the PV is sometimes referred to as ______ or ______.

Answer 16

Performance Measurement Baseline (PMB) or Budget at Completion (BAC)

Question 17

del

Answer 17

del

Question 18

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

Answer 18

Earned Value (EV)

Question 19

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

Answer 19

Actual Cost (AC)

Question 20

A measure of schedule performance expressed as the difference between the earned value and the planned value. (the amt the project is ahead or behind the planned delivery date).

Answer 20

Schedule Variance (SV = EV - PV)

Question 21

The amount of budget deficit or surplus at a given point in time, expressed as the difference between earned value and the actual cost.

Answer 21

Cost Variance (CV = EV - AC)

Question 22

A measure of schedule efficiency expressed as the ratio of earned value to planned value. A value less than 1.0 indicates less work was completed than was planed. A value greater than 1.0 indicates more work was completed than was planned.

Answer 22

Schedule Performance Index (SPI = EV/PV)

Question 23

A measure of the cost efficiency of budgeted resources expressed as a ratio of earned value to actual cost. A value of less than 1.0 indicates a cost overrun for work completed. A value greater than 1/0 indicates a cost underrun of performance to date.

Answer 23

Cost Performance Index (CPI = EV/AC)

Question 24

Typically based on the actual costs incurred for work completed, plus an estimate to complete for the remaining work.

Answer 24

Estimate at Completion (EAC = AC + Bottom-up ETC)

Question 25

The expected cost to finish all the remaining project work.

Answer 25

Estimate to Complete (ETC)

Question 26

EAC forecast for ETC work performed at the budgeted rate.

Answer 26

EAC = AC + (BAC - EV)

Question 27

EAC forecast for ETC work performed at the present CPI.

Answer 27

EAC = BAC / CPI

Question 28

EAC forecast for ETC work considering both SPI and CPI factors.

Answer 28

EAC = AC + [(BAC - EV) / (CPI x SPI)]

Question 29

The measure of the cost performance that is required to be achieved with the remaining resources in order to meet a specific management goal, expressed as the ration of the cost to finish the outstanding work to the remaining budget.

Answer 29

To-Complete Performance Index
(TCPI = (BAC - EV) / (BAC - AC)
or
(TCPI = (EAC - EV) / (EAC - AC)