Cost Management Flashcards
What is value engineering
Find the less costly way of doing work
What’s the difference between direct vs indirect cost
Direct: billed directly to project
Indirect: shared & allocated among several projects
Plan cost management
How project costs is estimated, budgeted, managed, monitored, and controlled
What cost management plan includes
How costs is planned, structured, controlled unit of measure level of accuracy reporting format control threshold
Accuracy of cost estimation would increase as the project progresses through project lifecycle (T/F)?
True
Examples of cost estimates
labor, material, equipement, service, facility
inflation allowance,
cost of financing
contingency cost
Rough order of magnitude
-25% <= X <= +75% (initating)
most inaccurate
budget estimate
-10% <= X <= +25%
definitive estimate
-5% <= X <= +10%
What is analogous estimating
top down estimating (based on previous projects) and inaccurate
Parametric estimating
Mathematical estimation
Bottom up estimating
breakdown of work and identify its pieces and aggregate back up
What are the ways of cost estimation
Analogous estimating
Parametric estimating
bottom up
three point estimation (PERT)
Reserve analysis
add reserve time to over work risks
Risk register indicates how to respond to risk (e.g. adding more costs)
Difference between contingency reserve and management reserve
Contingency reserve (known unknown): include in cost baseline and within control of PM Management reserve: extra money allocated by management in case needs more funding; not included in cost baseline
What are the key outputs of estimating costs
- Cost estimates (associated with each activity)
- Basis of estimates
a. Range of estimates
b. Confidence level of estimates
What is determine budget
Aggregate activity cost to project cost
Key inputs of budgeting
- Project Management Plan
a. Cost Management Plan
b. Scope baseline
c. Resource Management Plan - Project documents
a. Cost estimates
b. basis of estimation
c. risk register - Business Documents
a. Biz case
b. Benefit Managemetn Plan - Agreement
Key T&T of budgeting
- Cost aggregation (scheduled activity)
- Data analysis
a. Contingency reserve
b. Management reserve - Historical information review
a. Analogous
b. Parametric - Funding limit reconciliation
- Financing
Key outputs of budgeting
Cost Baseline
What is the purpose of controlling cost
- Planned vs actual work
2. Investigative and take corrective/preventive action
What’s the key input of controlling cost
- PMP: Cost management plan; cost baseline
- Funding requirement: how much funding
- Work performance data: actual cost
T&T
- Earned value analysis: calculation to give stat about project performance
- Reserve analysis: ensure risk has correct response
- variance analysis
- trend analysis
Output of control cost
- Work performance info
- Cost forecast
- Change request
Burn rate cost
average cost per hour person used for agile
cost /person X hours X working hours/week X week
