Cost Management Flashcards
Cost Attributed directly to the project work and cannot be shared among projects.
Direct Costs
Shared to more than one project. Facilities, project management software, licenses.
Indirect Costs
Costs vary based on conditions in the project. Number of meeting participants, supply and demand of materials.
Variable Costs
Costs constant throughout the project. Rented equipment, consultant, etc.
Fixed Costs
Rough Order of Magnitude
Rough estimate, -25% to +75%
Budget Estimate
Based on scope, -10% to +25%
Definitive Estimate
Based on WBS -5% to +10%
Money set aside for known risk events
Contingency Reserve
Parametric Estimating
Uses a statistical relationship between relevant historical data and other variables to calculate a cost estimate for project work.
Regression Analysis
Statistical approach predicts what future values may be, based on variables from historical values
Learning Curve
The cost per unit decreases the more units workers complete
Bottom Up Estimating
A method of estimating a component of work. The cost of individual work packages or activities is estimated to the greatest level of specified detail. Detailed cost is then summarized or rolled up to higher levels for subsequent reporting and tracking purposes.
Three Point Cost Estimate
Finds an average of Optimistic, Most Likely, and Pessimistic. (O+ML+P)/3
Alternative Analysis
A technique used to evaluate identified options in order to select which options or approaches to use to execute and perform the work of a project.
Reserve Analysis
Cost estimates may include contingency reserves to account for cost uncertainty. The budget within the cost baseline that is allocated for identified risks.
Cost of Quality
Assumptions about costs of quality may be used to prepare the estimates. This includes evaluating the cost impact of additional investment in conformance versus the cost of nonconformance.
The approved version of the tie phased project budget, excluding any management reserves, which can only be changed through formal change control procedures
Cost Baseline
Compares the performance measurement baseline to the actual schedule and cost performance. Integrates the scope baseline with the cost baseline and schedule baseline to form the performance measurement baseline
Earned Value Analysis
The authorized budget assigned to scheduled work. It is the authorized budget planned for the work to be accomplished for an activity or WBS component, not including management reserve.
Planned Value
Measure of work performed expressed in terms of the budget authorized for that work. It is the budget associated with the authorized work that has been completed
Earned Value
The realized cost incurred for the work performed on an activity during a specific time period.
Actual Cost
Measure of schedule performance expressed as the difference between the earned value and the planned value. It is the amount by which the project is ahead or behind the planned delivery date. Earned Value minus Planned Value.
Schedule Variance SV = EV - PV
The amount of budget deficit or surplus at a given point in time, expressed as the difference between earned value and the actual cost.
Cost Variance CV = EV - AC
A measure of schedule efficiency expressed as the ratio of earned value to planned value. Measure how efficiently the project team is accomplishing the work.
Schedule Performance Index (SPI) SPI = EV /PV
