Cost Flashcards
What might you need to estimate cost for?
Work package, activity, or project as a whole.
What happens to the accuracy of a project estimate as the project progresses through the project life cycle?
Project estimate will increase
Contingency reserves (confused on exam)
Set aside money to implement a risk response or to respond to risk events should they occur. Typically, this money is used to use a risk register.
Management reserves
Set aside for unexpected activities related to in-scope work. May be managed by the project owner, sponsor, product owner, or PMO.
Accuracy
Measure of correctness. The lower the accuracy, the more extensive the potential range of values. An estimate at the beginning of the project will have lower accuracy than later in the project and, as a result, a higher range.
Precision
A measure of exactness. An estimate of two days is more precise than sometime this week. It can also refer to the degree to which estimates are rounded up or down.
Earned value analysis
Compares the performance measurement baseline to the actual schedule and cost performance of the project.
Planned value (PV)
Shows us the work that should have been completed by a given point in time.
Earned value (EV)
What we have actually completed at a given point in time.
Actual cost (AC)
What we have spent at a specific moment in time.
Budget at completion (BAC)
Total planned value (PV) at the end of the project.
Variance analysis
Technique for finding the difference between the baseline and actual performance.
Cost variance
EV-AC - If the cost variance is negative when our actual cost exceeds our earned value, we are over budget. If the cost variance is positive, we are under budget
Cost performance index (CPI)
EV/AC - When the CPI is under 1, we have delivered less, and we are over budget. When our CPI is greater than 1 we have delivered more and we’re under budget.
Schedule variance
EV-PV - When our planned value (PV) exceeds our earned value (EV), a negative schedule variance means we are behind schedule.
Schedule performance index (SPI)
EV/PV = When our SPI is under one, we have delivered less and are behind schedule. When our SPI exceeds 1, we have delivered more ahead of schedule.
Estimate at completion
Replaces the budget at completion as the project evolves.
Cost management process
involves planning, estimating, budgeting, financing, funding, and controlling project costs to ensure the project stays within the approved budget.
Cost management plan
a component of the Project Management Plan that defines how project costs will be estimated, budgeted, managed, monitored, and controlled throughout the project lifecycle.
Unit of measure
What we measure money against - staff days or weeks, tons, etc.
Level of precision
Degree to which we round up or down
Level of accuracy
Acceptable range in estimares
Organizational procedure links
Links to anything we need
Control thresholds
When do we need to escalate or gain approval
Earned value management (EVM)
Refers to techniques such as planned value, earned value, actual cost, and budget at completion.
Analogous cost estimating
Uses values or attributes of a previous project that are similar to the current project like an analogy.
Reserve analysis
Used to see how much of our contingency reserve is left, which is allocated for project risks.
Cost of quality
Allocate budget for prevention, appraisal, or failure costs
