Cost Management

Question 1

What is value engineering

Answer 1

Find the less costly way of doing work

Question 2

What’s the difference between direct vs indirect cost

Answer 2

Direct: billed directly to project
Indirect: shared & allocated among several projects

Question 3

Plan cost management

Answer 3

How project costs is estimated, budgeted, managed, monitored, and controlled

Question 4

What cost management plan includes

Answer 4

How costs is planned, structured, controlled
unit of measure
level of accuracy
reporting format
control threshold

Question 5

Accuracy of cost estimation would increase as the project progresses through project lifecycle (T/F)?

Answer 5

True

Question 6

Examples of cost estimates

Answer 6

labor, material, equipement, service, facility
inflation allowance,
cost of financing
contingency cost

Question 7

Rough order of magnitude

Answer 7

-25% <= X <= +75% (initating)

most inaccurate

Question 8

budget estimate

Answer 8

-10% <= X <= +25%

Question 9

definitive estimate

Answer 9

-5% <= X <= +10%

Question 10

What is analogous estimating

Answer 10

top down estimating (based on previous projects) and inaccurate

Question 11

Parametric estimating

Answer 11

Mathematical estimation

Question 12

Bottom up estimating

Answer 12

breakdown of work and identify its pieces and aggregate back up

Question 13

What are the ways of cost estimation

Answer 13

Analogous estimating
Parametric estimating
bottom up
three point estimation (PERT)

Question 14

Reserve analysis

Answer 14

add reserve time to over work risks

Risk register indicates how to respond to risk (e.g. adding more costs)

Question 15

Difference between contingency reserve and management reserve

Answer 15

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

Question 16

What are the key outputs of estimating costs

Answer 16

1. Cost estimates (associated with each activity)
2. Basis of estimates
   a. Range of estimates
   b. Confidence level of estimates

Question 17

What is determine budget

Answer 17

Aggregate activity cost to project cost

Question 18

Key inputs of budgeting

Answer 18

1. Project Management Plan
   a. Cost Management Plan
   b. Scope baseline
   c. Resource Management Plan
2. Project documents
   a. Cost estimates
   b. basis of estimation
   c. risk register
3. Business Documents
   a. Biz case
   b. Benefit Managemetn Plan
4. Agreement

Question 19

Key T&T of budgeting

Answer 19

1. Cost aggregation (scheduled activity)
2. Data analysis
   a. Contingency reserve
   b. Management reserve
3. Historical information review
   a. Analogous
   b. Parametric
4. Funding limit reconciliation
5. Financing

Question 20

Key outputs of budgeting

Answer 20

Cost Baseline

Question 21

What is the purpose of controlling cost

Answer 21

1. Planned vs actual work

2. Investigative and take corrective/preventive action

Question 22

What’s the key input of controlling cost

Answer 22

1. PMP: Cost management plan; cost baseline
2. Funding requirement: how much funding
3. Work performance data: actual cost

Question 23

T&T

Answer 23

1. Earned value analysis: calculation to give stat about project performance
2. Reserve analysis: ensure risk has correct response
3. variance analysis
4. trend analysis

Question 24

Output of control cost

Answer 24

1. Work performance info
2. Cost forecast
3. Change request

Question 25

Burn rate cost

Answer 25

average cost per hour person used for agile

cost /person X hours X working hours/week X week