Cost Management

Question 1

Cost Attributed directly to the project work and cannot be shared among projects.

Answer 1

Direct Costs

Question 2

Shared to more than one project. Facilities, project management software, licenses.

Answer 2

Indirect Costs

Question 3

Costs vary based on conditions in the project. Number of meeting participants, supply and demand of materials.

Answer 3

Variable Costs

Question 4

Costs constant throughout the project. Rented equipment, consultant, etc.

Answer 4

Fixed Costs

Question 5

Rough Order of Magnitude

Answer 5

Rough estimate, -25% to +75%

Question 6

Budget Estimate

Answer 6

Based on scope, -10% to +25%

Question 7

Definitive Estimate

Answer 7

Based on WBS -5% to +10%

Question 8

Money set aside for known risk events

Answer 8

Contingency Reserve

Question 9

Parametric Estimating

Answer 9

Uses a statistical relationship between relevant historical data and other variables to calculate a cost estimate for project work.

Question 10

Regression Analysis

Answer 10

Statistical approach predicts what future values may be, based on variables from historical values

Question 11

Learning Curve

Answer 11

The cost per unit decreases the more units workers complete

Question 12

Bottom Up Estimating

Answer 12

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.

Question 13

Three Point Cost Estimate

Answer 13

Finds an average of Optimistic, Most Likely, and Pessimistic. (O+ML+P)/3

Question 14

Alternative Analysis

Answer 14

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.

Question 15

Reserve Analysis

Answer 15

Cost estimates may include contingency reserves to account for cost uncertainty. The budget within the cost baseline that is allocated for identified risks.

Question 16

Cost of Quality

Answer 16

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.

Question 17

The approved version of the tie phased project budget, excluding any management reserves, which can only be changed through formal change control procedures

Answer 17

Cost Baseline

Question 18

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

Answer 18

Earned Value Analysis

Question 19

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.

Answer 19

Planned Value

Question 20

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

Answer 20

Earned Value

Question 21

The realized cost incurred for the work performed on an activity during a specific time period.

Answer 21

Actual Cost

Question 22

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.

Answer 22

Schedule Variance SV = EV - PV

Question 23

The amount of budget deficit or surplus at a given point in time, expressed as the difference between earned value and the actual cost.

Answer 23

Cost Variance CV = EV - AC

Question 24

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.

Answer 24

Schedule Performance Index (SPI) SPI = EV /PV

Question 25

A measure of the cost efficiency of budgeted resources, expressed as a ratio of earned value to actual cost. A value of less than 1.0 indicates a cost overrun for work completed.

Answer 25

Cost Performance Index (CPI) CPI = EV / AC

Question 26

Examines project performance over time to determine if performance is improving or deteriorating.

Answer 26

Trend Analysis

Question 27

EAC forecast for ETC work performed at the budgeted rate

Answer 27

Accepts the actual project performance to date as represented by the actual costs and predicts that all future ETC work will be accomplished at the budgeted rate. EAC = AC + (BAC - EV)

Question 28

EAC forecast for ETC work performed at the present CPI

Answer 28

This method assumes that what the project has experienced to date can be expected to continue in the future. EAC = BAC / CPI

Question 29

EAC forecast for ETC work considering both SPI and CPI factors

Answer 29

In this forecast, the ETC work will be performed at an efficiency rate that considers both the cost and schedule performance indices. This method is most useful when the project schedule is a factor impacting the ETC effort. EAC = AC + [(BAC - EV) / (CPI x SPI)]

Question 30

To Complete Performance Index (TCPI)

Answer 30

Measure of the cost performance that is required to be achieved with the remaining resources in order to meet a specified management goal, expressed as the ratio of the cost to finish the outstanding work to the remaining budget. TCPI = (BAC - EV) / (BAC - AC)

Question 31

Estimate at Completion (EAC)

Answer 31

EAC = BAC / CPI

Question 32

Estimate to Complete (ETC)

Answer 32

ETC = EAC - AC

Question 33

Present Value Formula

Answer 33

FV / (1 + i)^n - FV is the future value, i is the interest rate, and n is the number of time periods.

Question 34

Straight-line Depreciation

Answer 34

Takes the purchase value of the item, minus the salvage price of the item, divided by the number of time periods.