Cost Flashcards
What is lifecycle costing?
Total cost, not just project cost.
What is cost risk?
relative risk of contract for buyer and seller
What is discounted cash flow?
evaluate investment by estimating future cash flows and discounting them to current value
What is a heuristic?
Generally accepted rule like 80/20.
Results of parametric estimating can become heuristics.
Three-point estimating: Know formulas for beta and triangular distributions
tri: P+M+O / 3
beta: P+4M+O / 6
beta std dev: P-O / 6
greater std dev = greater risk
In which two KAs does three-point estimating work?
Time and cost
What is the difference between estimate padding and performing contingency reserve analysis?
Former is a guess, latter is calculated.
Differentiate among ROM estimate, budget estimate, & definitive estimate?
ROM - initiating -25 75%
BE - planning -10 25%
DE - execution -5 10%
How are risks considered when budgeting?
PM MUST perform risk mgmt activities & include reserve analysis
What is cost aggregation?
- Summing bottom-up estimates
* activity-work pkg-control acct-project
What are funding limit reconciliation and cost-constraint reconciliation? In what KA are they?
- FLR - check cash flows
- CCR - if planning estimate exceeds charter constraints, PM must meet w/ sponsors to explain/get approval.
• Integration Mgmt
what is value analysis (value engineering)?
How can we decrease cost with same scope?
