Cost Flashcards
Plan Cost Management
how the cost will be estimated, budgeted, managed, monitored and controlled.
Plan Cost Management
Benefit
provides guidance and direction on how the project cost will be managed
Plan Cost Management
Input
proj Charter
PMP: Schedule (impact cost est.); Risk (impact cost est and mgmt)
Plan Cost Management
Output
cost management plan
Plan Cost Management
TT
EDM
expert judgement, data analysis, meetings
cost management plan
components
units of measure, level of precision, level of accuracy, (range: 10%) org procedure links (WBS control account #/code) control thresholds (% deviation of baseline) rules of performance measurement reporting formats (EVM) additional details
estimate cost
develop an approximation of the cost of the resources needed to complete the project
estimate cost
benefit
determine the monetary resources required
estimate cost
input
- COST (level of precision); QUA; Scope baseline (PSS, WBS, dictionary)
Dos:
Proj schedule, resource requirement, risk register
estimate cost
out put
cost estimate
basis of estimate
estimate cost
TT
E + D + PABT
D=data analysis: alternative, reserve, cost of quality
determine budget
AGGREGATE the est. cost of individual activities or work package to establish the COST BASELINE
determine budget
benefit
determines the COST BASELINE against which project performance can be monitored can controlled
cost baseline
APPROVED version of time-phased project budget that includes CONTINGENCY RESERVES.
NOTE: EXCLUDES management reserve.
NOTE: If the project uses
earned value management (EVM), the cost baseline is
known as the performance measurement baseline.
Cost Range
rough order of magnitude (ROM)
during initiation, a tolerance range for a rough order of magnitude (ROM) estimate could be
- 25% to +75%, and as the project work evolves into execution, the tolerance could narrow to
- 5% to +10%.
determine budget
input
PMP: Cost, Resource, Scope baseline
Docs: cost est. basis of est. proj schedule, risk register
Aggreement
determine budget
output
cost baseline
project funding requirements
determine budget
TT
- cost aggregation
- historical info review
- funding limit reconciliation
- expert judgement
- data analysis: reserve
(note: no estimation tools for determining budget)
project funding requirements
periodical funding requirements derived from cost baseline. Occurs in incremental amounts, may not evenly distributed.
control costs
monitor the status of project to update and manage changes to the cost baseline
control costs
benefit
maintain the cost baseline
control costs
input
- PMP: Cost MP, cost baseline, performance measurement baseline
- project funding requirements
- work performance data
control costs
output
- work performance info
- COST FORECASTS
- change request
- PMP update: cost baseline
control costs
TT
- EVTR (EVA, variance, trend, reserve)
- TCPI
cost forecasts
Forecasts are estimates or predictions of the future state of the project based on past performance and expected future performance. EAC, ETC, VAC
are documented and conveyed to stakeholders.
Budget at Completion (BAC)
aka Performance Baseline
The amount the project is expected to cost.
Total PV
Planned Value (PV) aka Budgeted Cost of Work Scheduled (BCWS)
The value of the work that should have been completed at a specific point in time,
EXCLUDING any work started ahead of schedule
Actual Cost (AC) aka Actual Cost of Work Performed (ACWP)
The cost of the work that has been completed at a specific point in time, including any work started
ahead of schedule.
regardless of its completion status (1% to 100%)
Earned Value (EV) aka Budgeted Cost of Work Performed (BCWP)
A measurement of the project’s
progress and the basis for cost
analysis, including any work
started ahead of schedule
Schedule Performance Index (SPI)
EV / PV
efficiency indicator, the amount of work done at a single point in time.
e.g. SPI=0.67 means only 67% of the work scheduled to be done has been done
Schedule Variance (SV)
EV - PV
>0, the project is ahead of schedule.
<0, the project is behind schedule.
cost analysis
Cost analysis, at its most basic, is determining progress in terms of the amount of work
completed (EV) versus what was paid to complete the work (AC). Using budget at completion,
planned value, actual cost, and earned value, the CPI, CV, and TCPI can be determined.
Cost Performance Index (CPI)
EV/AC
An efficiency indicator that denotes the return on each dollar spent at a single point in time.
e.g. CPI=0.5 means that 50 cents of project work is completed for every dollar spent.
Cost Variance (CV)
EV-AC
>0, the project is under budget.
<0, the projectis over budget.
Estimate at Completion (EAC)
based on the current spending efficiency (CPI)
EAC = BAC / CPI
EAC forecast for ETC work performed at budgeted rate
EAC = AC + (BAC-EV)
EAC forecast for manual, bottom-up ETC
EAC = AC + new/bottom-up ETC
EAC forecast using CPI
EAC = AC + [(BAC – EV)/(CPI x SPI)]
Variance at Completion (VAC)
VAC = BAC - EAC
Present Value (PV)
amount of money needed now at
the interest rate (r) for a desired future outcome
(FV) over a number of periods (n).
PV = FV/(1+R)n
Future Value (FV)
FV = PV x (1+r)n
Net Present Value
NPV
A value used in capital budgeting, in which the present value of cash inflow is subtracted from the present value of cash outflows;
compares the value of a dollar today versus the value of that same dollar in the future, after taking inflation and return into account
Internal Rate of Return (IRR)
A project comparison value; represents the discounted rate that ZEROs out the net present value (NPV)
