Chapter 7 - Project Cost Management 8% Flashcards
The process of defining how the project costs will be estimated, budgeted, managed, monitored, and controlled.
Plan Cost Management
The process of developing an approximation of the monetary resources needed to complete project work.
Estimate Costs
The process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline.
Determine Budget
The process of monitoring the status of the project to update the project costs and manage changes to the cost baseline.
Control Costs
Includes the processes involved in planning, estimating, budgeting, financing, funding, managing, and controlling costs so the project can be completed within the approved budget.
Project Cost Management
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).
Earned Schedule (ES)
A component of the project management plan and describes how the project costs will be planned, structured, and controlled.
Cost Management Plan
cE
Expected Cost
cE can be calculated with this triangular formula.
Triangular Distribution [cE = (cO + cM + cP) / 3]
cE can be calculated with this beta formula.
Beta Distribution [cE = (cO + 4cM + cP) / 6]
What two things make up the Work Package Cost Estimates?
Activity Contingency Reserve and Activity Cost Estimates
What two things make up the Control Accounts (amount)?
Contingency Reserve and Work Package Cost Estimates
What two things make up the Project Budget?
Management Reserve and Cost Baseline
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.
- Planned Value (PV)
- Earned Value (EV)
- Actual Cost (AC)
Earned Value Analysis (EVA)
The authorized budget assigned to scheduled work to be accomplished for an activity or WBC component, not including management reserve.
Planned Value (PV)
The total of the PV is sometimes referred to as ______ or ______.
Performance Measurement Baseline (PMB) or Budget at Completion (BAC)
del
del
The measure of work performed/completed expressed in terms of the budget authorized for that work.
Earned Value (EV)
The realized cost incurred for the work performed on an activity during a specific time period.
Actual Cost (AC)
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).
Schedule Variance (SV = EV - PV)
The amount of budget deficit or surplus at a given point in time, expressed as the difference between earned value and the actual cost.
Cost Variance (CV = EV - AC)
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.
Schedule Performance Index (SPI = EV/PV)
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.
Cost Performance Index (CPI = EV/AC)
Typically based on the actual costs incurred for work completed, plus an estimate to complete for the remaining work.
Estimate at Completion (EAC = AC + Bottom-up ETC)
The expected cost to finish all the remaining project work.
Estimate to Complete (ETC)
EAC forecast for ETC work performed at the budgeted rate.
EAC = AC + (BAC - EV)
EAC forecast for ETC work performed at the present CPI.
EAC = BAC / CPI
EAC forecast for ETC work considering both SPI and CPI factors.
EAC = AC + [(BAC - EV) / (CPI x SPI)]
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.
To-Complete Performance Index
(TCPI = (BAC - EV) / (BAC - AC)
or
(TCPI = (EAC - EV) / (EAC - AC)
