Cost Flashcards
What is NPV?
NPV compares the value of a dollar today vs the value of the same dollar in the future after taking inflation and discount rate into account.
What are 4 types of cost?
Direct cost: Cost directly attributable to the work of the project (salaries of coders)
Indirect cost: Cost indirectly attributable to work of the project (project building security cost)
Fixed cost: Consistent cost throughout the life of the project regardless of activity of project.
Variable cost: Cost that fluctuates with activity on project
What is ROI?
Return on Investment - Chose the biggest
What is IRR?
Internal rate of return: NPV of all cash flow equal to zero.
What is BCR?
Benefit to cost ratio: Compares benefit of project to cost. Usually want 1:1.
What is Opportunity cost?
Cost associated with taking another oppty.
What is payback period?
Payback period is the amount of time need to earn back the investment.
What is future value?
The value of something (cash) at a point in the future - for ex. FV of 1000 invested at 8% for three years 1259.
FV=PV x (1.r) to the n power
What is present value? PV
Present value of something today that you need to create a certain amount of investment in the future.
PV= FV/(1+r) to the n power
What is sunk cost?
Cost that has been already spent on a project. Do not consider sunk cost when making project decisions.
What is depreciation?
The process of devaluing a capital asset in the tax system. (Wear and tear on an asset)
How is standard depreciation calculated?
Starting value - Scrape value / timeframe
What is accelerated depreciation?
This allows a company / project to realize more depreciation sooner. Two types:
Sum of year digit
Double declining balance
What is lifecyle costing (total cost of ownership)?
Process of examining all costs associated with a project.
What is fixed formula progress reporting?
aka earned value rules. Technique that creates a consistent status report for project activities. Used for shorter duration not exceeding to reporting periods.
What is weighted milestone?
Usu used for activities that are longer than two reporting periods. Work is divided into multiple milestones with a measurable output for each section.
What is plan cost management?
Process used to create the cost mgmt plan.
What are inputs to Plan Cost Mgmt?
Project mgmt plan
Project charter
EEFs
OPAs
What are tools and techs to Plan Cost Mgmt?
Expert judgement
Analytical techs
What are inputs to Estimate Cost?
Cost mgmt plan HR plan Scope baseline Proj schedule Risk register
What are tools and techs to Estimate Cost?
Expert judgement Analogous estimating Parametric estimating Bottom up estimating Three point estimating Reserve analysis Cost of quality Vendor bid analysis Proj mgmt software
What is cost range?
Key principle in any environment is that the less is known earlier in proj the wider tolerance needed for project costs. (could be -25% to +75%)
What are inputs to Determine Budget?
Cost mgmt plan Scope baseline Activity cost est Basis of est Proj schedule Resource calendars Risk register Agreements
What are tool and techs to Estimate Cost?
Cost aggregation Reserve analysis Expert judgement Historical relationships Funding limit reconciliation
What are outputs to Estimate Cost?
Cost baseline
Report funding requirements
What is chart of accounts?
List of accounts used by accounting to track budgets associated with project
What is code of accounts?
Numbering system applied to project mgmt to identify individual pieces of work in the WBS.
What are inputs to Control Costs?
Project mgmt plan
Proj funding reqs
Work performance data
OPAs
What are tools and techs to Control Costs?
Earned Value mgmt Forecasting TCPI (To complete performance index) Performance review PM software Reserve analysis
What is earned value management?
Technique for measuring the progress of a project by looking at its scope, schedule, and cost in an integrated manner.
Types of earned value:
Budget at Completion?
Amount you expect the project to cost.
Types of earned value:
What is planned value?
What is budgeted cost of the work scheduled?
Types of earned value:
What is actual cost?
AC
Cost of work completed.
Types of earned value:
What is earned value?
Measurement of progress of project including any work started ahead of schedule.
Types of earned value:
What is schedule performance index?
EV/PV
An effeciency indicator that denote the amount of work done at a single point in time. If result is 1, work is on track.
Types of earned value:
What is schedule variance?
SV
EV-PV
Denotes the difference between the value of the work completed and value of the work that should have been completed.
Types of earned value:
Cost performance index (CPI)
EV/AC
Denotes the return on each dollar spent at a point in time. Result of 1 means project is on track.
Types of earned value:
What is cost variance?
EV-AC
Denotes difference btw cost of work completed vs value of work completed. Result of 0 means project is on track.
Forecasting: What is Estimate at Completion?
Current projected final cost based on the current spending efficiency.
EAC = BAC / CPI
Forecasting: What is Estimate to Complete?
Amount needed to finish the project based on the current spending efficiency of the project.
ETC = EAC-AC
Forecasting: What is Variance at Completion?
Difference between the budget at completion and estimate at completion.
VAC = BAC - EAC
Forecasting: What is to complete performance index?
Effeciency needed from the remaining resources to meet the cost goals and finish on time.
TCPI = (BAC - EV) / (BAC - AC)
What is S-Curve?
Graphic representation of interaction between cost, scope, and time over life of project.
