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PMP With PMI > Chapter Seven | Cost Management > Flashcards

Chapter Seven | Cost Management Flashcards

1
Q

What does AC stand for and the interpretation

A

Actual cost

As of today, what is the actual cost incurred for the work completed?

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2
Q

What does AT stand for and def

A

Actual time

Actual time used to complete an activity

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3
Q

What does BAC stand for And what is the interpretation?

A

Budget at completion

How much did we budget for the total project effort?

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4
Q

What does COQ stand for

A

Cost of quality

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5
Q

What does CPI stand for

A

Cost performance index

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6
Q

What does CV stand for

A

Cost variance

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7
Q

What does EAC stand for

A

Estimate at completion

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8
Q

What does ES stand for and def

A

Earned schedule

Time allotted to complete an activity

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9
Q

What does ETC stand for, def and formula

A

Estimate to complete

Represents the funds needed to finish the project based on the current spending efficiency of the project

ETC= EAC - AC

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10
Q

What does EVA stand for and def

A

Earned value analysis

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

A snapshot in time

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11
Q

What does EVM stand for and def

A

Earned value management

Identifies and monitors key dimensions for each work package, control account, or total project budget BAC

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12
Q

What does IRR stand for

A

Internal rate of return

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13
Q

What does NPV stand for

A

Net present value

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14
Q

What does PERT stand for

A

Program evaluation and review technique

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15
Q

What does PMB stand for

A

Performance measurement baseline

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16
Q

What does PV stand for and interpretation

A

Planned value

As of today, but is there estimated value of the work planned, what “should” be done?

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17
Q

What does ROM stand for

A

Rough order of magnitude

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18
Q

What does SPI stand for

A

Schedule performance index

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19
Q

What does SV stand for

A

Schedule variance

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20
Q

What does TCPI stand for and def

A

To complete performance index

How to finish project on original budget

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21
Q

What does VAC stand for, def and formula

A

Variance at completion

The difference between the original budget at completion and the estimate at completion

This tells us how much the completed project was over or under budget

VAC= BAC - EAC

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22
Q

What is project cost management?

A

The process involved in planning estimating budgeting financing funding managing and controlling costs so the project can be completed within the approved budget

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23
Q

Once you pass the project on to where it will live

the impact on the budget of the department you pass this back to Is called what?

A

Life cycle costing

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24
Q

What needs to be considered and tailoring a project cost plan? 5

A

Knowledge management

estimating and budgeting

earned value management

use of agile approach

governance

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25
Agile| Detailed estimates are only used for a what?
Short term planning in a just in time style
26
7.1. Plan cost management | What does this mean and what is the benefit?
The process of defining HOW the project cost will be estimated budget and managed monitored and controlled. The key benefit is that it provides guidance and direction on how the project costs will be managed throughout the project This is for the team
27
7.1. Cost can be either ________ or _________
Variable costs or fixed costs
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7.1 What does variable cost mean and what are three examples
Cost that change with the amount of production or work material equipment project labor
29
7.1 What does fixed costs mean and what are two examples
Costs that do not change as production changes set up cost facility rent
30
7.1 What is direct cost and what are some examples
Items or services used ONLY for the project ``` Travel expenses material project office space training equipment labor ```
31
7.1 What is the definition of indirect cost and examples
Items or services used for multiple projects, functional, or operational areas You pay your share ``` Taxes maintenance utilities security overhead IT support salaries services office expenses ```
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NOTE | 7.1 You cannot complete project budget until risk management plan is completed
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7.1. Output Cost mng plan establishes ``` Units of measure level of precision level of accuracy for estimating organizational procedure links rules for measuring cost performance reporting formats and frequencies strategic funding choices control thresholds ```
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34
7.1 output | What does the control thresholds do
Control threshold to tell you the amount of variation allowed from a baseline Crossing the threshold triggers a corrected or preventative action
35
7.2 cost estimating What is cost estimating?
The process of developing the likely costs for resources required to complete the project work and activities The likely cost for resources required to complete an activity and includes cost trade-offs and risk
36
7.2 What does estimating cost process results in
A set of activity cost estimates and the basis for each estimate
37
7.2 What are the three types of estimates and the ranges?
Rough order of magnitude estimate (-25% to +75%) budget estimate ``` definitive estimate (-5% to +10%) ```
38
7.2 T&T What are the four types of estimating tools and techniques
Analogous estimating parametric estimating bottom up estimating three point estimating
39
7.2 T&T What is analogous estimating aka And when is it used? (Top down)
Also known as management expectations applied early in a project when limited details are available utilizes expert judgment and historical information provides gross value estimate of the activity or summary activities
40
7.2 T&T What is parametric estimating and what does it provide? (Remember meters example)
When you trust the numbers Uses a relationship between historical data and variables to calculate an estimate for an activity provides higher level accuracy depending on sophistication and underlying data built into the model can be applied to the total project or to segments of the project
41
7.2 T&T Which technique provide the greatest level of detail
Bottom up estimating
42
7.2 T&T What are the two types of three point estimating?
Beta distribution triangular distribution
43
7.2 T&T | What are the two types of reserves And definitions
Contingency reserves KNOWN-UNKNOWN Funds within the cost baseline, budgeted for the uncertainty, or identified risks that can affect a project ``` Management reserves UNKNOWN-UNKNOWN or force majeure can affect the project are NOT included in the baseline but are part of the overall funding ```
44
7.2 output | What is the cost estimate output defined as
Quantitative evaluation of the probable costs to complete project work as well as contingency reserves for identified risk and management reserves to cover unplanned work
45
7.3 What is the definition of determine budget?
Determine budget is the process of aggregating the costs of the activities to establish an authorized cost baseline includes all funds required to execute the project the result of this aggregation is the COST BASELINE OR BUDGET
46
7.3 T&T | What happens in cost aggregation (the process)
To create a budget activity costs are rolled up to work package cost Work package cost along with the cost of risk contingency reserves are then rolled up to control accounts Summation of the control accounts make up the project cost baseline also known as the budget at completion (BAC) Management reserves are not part of the BAC
47
7.3 T&T | What is another way of thinking about funding limit reconciliation
Balancing your checkbook
48
7.3 output Note Cost baseline can only be changed through integrated change control procedures. Developed as a summation of the approved budgets by time. Typically shown as an S curve to compared to actual costs.
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49
7.3 output | And earned value management the cost performance baseline is also called what?
Performance measurement baseline (PMB)
50
7.4 What does the control costs process do and what are the key benefits
The process monitors the status of the project to update the project costs and manage changes to the cost baseline key benefit is that it provides the means to monitor the plan and recognize variances in order to take correct of action and minimize risk
51
7.4 What is the key to effective cost control
The management of the approved cost baseline and changes to that baseline
52
7.4 What will impact the cost of a project the most?
Project changes
53
7.4 T&T control cost What does earned value analysis integrate in order to form what?
Earned value analysis integrates the baselines for scope, cost, and schedule to form the performance measurement baseline
54
What does EV stand for and what is the interpretation
Earned value As of today, what is the estimated value of the work actually completed?
55
7.4 T&T control cost What is planned value?
The authorized budget assigned to scheduled work
56
Total PV is the what ________
Budget at completion also sometimes called performance measurement baseline BAC. PMB
57
7.4 T&T control cost What is earned value
The measure of actual work performed. It is expressed in terms of the budget authorized for the work
58
EV can never be more than ______
PV
59
7.4 T&T control cost EV Is the budget for authorized work that has been completed = planned value (PV) x %percent complete Needs to be related to the BAC Includes work done ahead of schedule Progressive measurement criteria should be establish for each WBS component to measure work in progress
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60
7.4 T&T control cost What is actual cost
The realized cost incurred for the work performed on an activity during a specific time period AC includes the cost of work done ahead of schedule
61
EVM things to remember For variance (CV and SV) Positive is _______ Negative is ______
Positive is good negative is bad -$200 CV or SV Means the project is over budget or behind schedule
62
EVM things to remember For index (CPI or SPI) Greater than one is _______ Less than one is ________
Greater than one is good Under budget or ahead of schedule Less than one is bad Over budget or behind schedule
63
Note EAC (estimate at completion) Atypical EAC if cost deviated, but you now expect to complete the remaining work 100% as planned Typical EAC if the project schedule is a factor impacting the etc and/or the client is insisting you complete the project on schedule
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64
TCPI What are the two formulas types
Original - budget at completion new approved - estimate at completion
65
TCPI | What is the formula if you need to complete the project in the original budget
TCPI = (BAC-EV) / (BAC-AC)
66
TCPI | What formula is used if you developed and got approval of a new cost estimate
TCPI = (BAC-EV) / (EAC-AC)
67
7.4 T&T control cost Earned schedule theory What are the two formulas
Schedule variance equals earn schedule minus actual time SV = ES - AT Schedule performance index equals Earned schedule divided by actual time SPI = ES/AT
68
Cost Summary for exam To improve accuracy, base estimates on the WBS Estimating should be done by the person doing the work Historical information from past projects is most accurate and key to improved estimates Accuracy of estimates can be increased by eliminating risk or reducing their impacts Estimates must be kept as realistic and as accurate as possible throughout the life of the project by re-estimating and reviewing them Remember, the PM has a professional responsibility to maintain the estimate accuracy for the life of the project
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69
Cost summary for exam Part II The cost baseline (schedule and scope baseline) should be kept and not changed UNLESS there is an approved change request or the perform in a graded change control process The cost baseline is the approved version of the budget and includes contingency reserves but excludes management reserves
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PMP With PMI (18 decks)

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