Cost Management Flashcards
What is the key output of the Plan Cost Management process?
The Cost Management Plan
What is the process of Cost Management?
Plan cost management
Estimate cost
Determine budget
Control costs
What are the key inputs to the Estimate Costs process?
Cost management Plan Scope baseline Project schedule Human resources management plan Risk register Enterprise environmental factors Organizational process assets
What are the key outputs of the Estimate Costs process?
Activity cost estimates
Basis of estimates
Updates to the project documents
What are the key outputs of the Determine Budget process?
Cost baseline
Project funding requirements
Updates to project documents
What are the key outputs of the Control Costs process?
Work performance information
Cost forecasts
Change requests
Updates to project management plan and project documents
What are the main approaches to cost of schedule estimating?
One-point Analogous Bottom-up Parametric Three-point
What is analogous estimating?
Top-down estimating that uses expert judgement and historical information to predict the future (e.g. the last 3 projects cost $25k or took 6 months, and so should this one)
What is bottom-up estimating?
Creating estimates based on the details of the project (e.g. from the bottom of the work breakdown structure), which are then rolled up into project estimates
What is parametric estimating?
Calculating estimates by looking at the relationships between variables on an activity (e.g. cost per line of code, hours per installation), based on historical information, industry requirements, standard metrics, or other sources
What is earned value measurement and how is it used?
A method for measuring project performance that looks at the value earned for work accomplished by reviewing project performance against the scope, schedule, and cost baselines
It can be used to predict future cost performance and project completion dates
What is the typical range for a rough order of magnitude (ROM) estimate?
-25 to +75 percent from actual
What is the typical range for a budget estimate?
-10 to 25% from actual
What is the typical range for a definitive estimate?
+/- 10% from actual
What is the difference between a cost budget and a cost baseline?
The cost budget adds management reserves to the cost baseline
What is the formula for cost variance?
EV - AC = CV
Earned Value minus Actual Cost equals Cost Variance
What is the formula for schedule variance?
EV - PV = SV
What is the formula for cost performance index?
EV over AC = CPI
What is the formula for schedule performance index?
EV over PV equals SPI
What are the formulas for estimate at completion?
AC + Bottom-up ETC = EAC
BAC over CPI(C)
What is the formula for estimate to complete?
EAC - AC = ETC
What is the formula for variance at completion?
BAC - EAC = VAC
What is the formula to to-complete performance index?
BAC-EV over BAC-AC = TCPI
How do variable costs differ from fixed costs?
Variable costs vary with the amount of production or work done on the project
Fixed costs do not vary with the amount of production or work done on the project
What is a direct cost?
What is an indirect cost?
Direct cost: A cost that is directly attributable to the project
Indirect cost: Overhead costs or costs incurred for more than one project
What does life cycle costing mean?
Considering costs over the entire life of the product, not just the cost of the project to create the product
What is value analysis?
Finding a less costly way of doing essentially the same work (also known as value engineering)
