Cost Management

Question 1

What are the 4 key financial concepts in Cost Management?

Answer 1

1. Profits
2. Profit margin: ratio of profit to revenue
3. Life cycle costing: considers the total cost of ownership (TCO) - upfront cost plus support/maintenance costs
4. Cash flow analysis: an estimate of annual costs and benefits for a project resulting in annual cash flow

Question 2

What are the five types of costs and benefits?

Answer 2

Tangible costs or benefits -

Intangible costs or benefits

Direct costs - directly relates to the production of goods and services in the project

Indirect costs - indirectly related to the goods and services - related to performing the project

Sunk cost: Money that has already been spent but should not be considered when deciding whether to continue a project

Question 3

What is EV Mangement?

Answer 3

Earned Value Management

Question 4

What are key EVM terms?

Answer 4

Planned Value (PV)

Actual Cost (AC) - total of direct and indirect costs incurred accomplishing the work

Earned Value (EV) - estimate of value of the physical work ACTUALLY completed

Rate of performance (RP) -