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Cost Management Flashcards

1
Q

Plan Cost Management

A

2.4.1 (Planning Process, Cost Mgmt KA)

The process that establishes the policies, procedures, and documentation for planning, managing, expending and controlling costs.

Inputs: Project Charter, Project Management Plan, EEF, OPA
Tools & Techniques: Expert Judgement, Data Analysis, Meetings
Outputs: Cost Management Plan

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2
Q

Cost Management Plan

A

2.4.1 Plan Cost Management Output

Component of the project management plan and describes how the project costs will be planned, structured, and controlled.

Can establish:

  • Units of measure
  • Level of precision
  • Level of accuracy
  • Organizational procedures link
  • Control thresholds
  • Rules of performance measurement
  • Reporting formats
  • Process descriptions
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3
Q

Estimate Costs

A

2.4.2 (Planning Process, Cost Mgmt KA)

The process of developing an approximation of the monetary resources needed to complete project activities.

Inputs: Project Management Plan, Project Documents, EEF, OPA
Tools & Techniques: Expert Judgement, Analogous Estimating, Parametric Estimating, Bottom-up Estimating, Three-point Estimating, Data Analysis, Project Management Information System, Decision Making
Outputs: Cost Estimates, Basis of Estimates, Project Document Updates

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4
Q

Bottom-Up Estimating

A

2.4.2 Estimate Costs TT

Cost of individual work packages is estimated to the greatest level of specified detail. The detailed cost is then summarized or ‘rolled up’ to higher levels for subsequent reporting and tracking purposes.

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5
Q

Analogous Estimating

A

2.4.2 Estimate Costs TT

Uses the values such as scope, cost, budget, and duration and measures of scale such as size, weights, and complexity from a previous, similar project as the basis for estimating the same parameter or measurement for a current project.

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6
Q

Parametric Estimating

A

2.4.2 Estimate Costs TT

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

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7
Q

Three-Point Estimating

A

2.4.2 Estimate Costs TT

Uses three estimates to define an approximate range for an activity’s cots

M - Most likely
O - Optimistic
P - Pessimistic

Triangular Distribution = average of all three
Beta Distribution or PERT = (4M + O + P) / 6

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8
Q

Rough Order of Magnitude (ROM)

A

2.4.2 Estimate Costs TT

Also known as ballpark estimate
When you make an estimate really early in the project and you don’t know much about it

-25% to +75%

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9
Q

Reserve Analysis

A

2.4.2 & 2.4.3 Estimate Costs TT

Setting aside cash to mitigate any future risks that cause expenditures.
Can establish both contingency and management reserves for the project

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10
Q

Cost of Quality

A

2.4.2 Estimate Costs TT

How much money it takes to do the project right

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11
Q

Benefit Cost Ratio

A

2.4.2 Estimate Costs TT

The amount of money a project is going to make versus how much it will cost to build it.

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12
Q

Net Present Value (NPV)

A

2.4.2 Estimate Costs TT

The actual value at a given time of the project minus all of the costs associated with it.

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13
Q

Opportunity Costs

A

2.4.2 Estimate Costs TT

The money you do not get because you chose not to do a project

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14
Q

Internal Rate of Return

A

2.4.2 Estimate Costs TT

The amount of money the project will return to the company that is funding it.

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15
Q

Depreciation

A

2.4.2 Estimate Costs TT

Rate at which your project loses value over time.

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16
Q

Lifecycle Costing

A

2.4.2 Estimate Costs TT

How much you expect a project to cost– not just to develop, but to support the product once it’s in place and being used by the customer.

17
Q

Basis of Estimates

A

2.4.2 Estimate Costs Output

Supporting documentation that provides a clear and complete understanding of how the cost estimate was derived

18
Q

Activity Cost Estimates

A

2.4.2 Estimate Costs Output

Quantitative assessments of the probable costs required to complete project work

19
Q

Determine Budget

A

2.4.3 (Planning Process Area, Cost Mgmt KA)

Process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline.

Inputs: Project Management Plan, Project Documents, Business Documents (business case, benefits management plan), Agreements, EEF, OPA
Tools & Techniques: Expert Judgement, Cost Aggregation, Data Analysis, Historical Relationships, Funding Limit Reconciliation, Financing
Outputs: Cost Baseline, Project Funding Requirements, Project Document Updates

20
Q

Cost Aggregation

A

2.4.3 Determine Budget TT

Cost estimates are rolled up into control accounts on your work breakdown structure.

21
Q

Cost Baseline

A

2.4.3 Determine Budget Output

Approved version of the time-phased project budget, excluding any management reserves, which can only be changed through formal change control procedures and is used as a basis for comparison to actual results.

22
Q

Funding Limit Reconciliation

A

2.4.3 Determine Budget TT

Expenditure of funds should be reconciled with any funding limits on the commitment of funds for the project.

23
Q

Project Funding Requirements

A

2.4.3 Determine Budget Output

A plan for how and when you will spend your budget, and document those plans. Also includes how you will make sure your project has money when it’s needed and that you have enough to cover unexpected risks as well as known cost increases that change with time.

24
Q

Control Costs

A

4.4.4 (Monitoring & Controlling Process Area; Cost Mgmt KA)

The process of monitoring the status of the project to update the project costs and managing changes to the cost baseline.

Inputs: Project Management Plan, Project Documents, Project Funding Requirements, Work Performance Data, OPA
Tools & Techniques: Expert Judgement, Data Analysis, To-complete Performance Index, Project Management Information System
Outputs: Work Performance Information, Cost Forecasts, Change Requests, Project Management Plan Updates, Project Document Updates

25
Q

Earned Value Management (EVM)

A

4.4.4 Control Costs TT

Methodology that combines scope, schedule, and resource measurements to assess project performance and progress.

26
Q

Planned Value (PV)

A

4.4.4 Control Costs TT

Component of EVM

BAC x Planned % Complete = PV

The authorized budget assigned to scheduled work. Work that’s completed– ‘earned’

27
Q

Budget at Completion

A

4.4.4 Control Costs TT

Component of EVM

The first number you think of when you work on your project costs. It’s the total budget that you have for a project– how much you plan to spend on it.

28
Q

Earned Value (EV)

A

4.4.4 Control Costs TT

Component of EVM

Technique to figure out how much of your project’s value has been delivered so far. Compare value of what your schedule says should have been delivered against the value of what was actually delivered.

BAC x Actual % Completed = EV

29
Q

Schedule Performance Index (SPI)

A

4.4.4 Control Costs TT

Component of EVM

Measure of schedule efficiency.
> 1 = ahead of schedule
< 1 = behind schedule

SPI = EV / PV

30
Q

Schedule Variance (SV)

A

4.4.4 Control Costs TT

Component of EVM

Positive SV = Ahead of schedule (in dollar amounts)
Negative SV = Behind schedule (in dollar amounts)

SV = EV - PV

31
Q

Cost Performance Index (CPI)

A

4.4.4 Control Costs TT

Component of EVM

Measure of the cost efficiency of budgeted resources

> 1 = under budget
< 1 = over budget

CPI = EV / AC

32
Q

Cost Variance (CV)

A

4.4.4 Control Costs TT

Component of EVM

Amount of budget deficit or surplus

CV = EV - AC

33
Q

Forecasting

A

4.4.4 Control Costs TT

Using Earned Value to come up with an accurate prediction of what your project will look like at completion

34
Q

Estimate at Completion

A

4.4.4 Control Costs TT

Component of Forecasting

What your project will actually cost based on current CPI

EAC = BAC / CPI (for current CPI rate)

EAC = AC + (BAC-EV) (for budgeted rate)

EAC = AC + {(BAC - EV) / (CPI x SPI)]

35
Q

Estimate to Complete

A

4.4.4 Control Costs TT

Component of Forecasting

Tells you how much more money you’ll probably have to spend on your project

ETC = EAC - AC

36
Q

Variance at Completion

A

4.4.4 Control Costs TT

Component of Forecasting

Predicts what your variance will be when the project is done

VAC = BAC - EAC

37
Q

To-Complete Performance Index

A

4.4.4 Control Costs TT

Measure of the cost performance that is required to be achieved with the remaining resources in order to meet a specified management goal.

Used to gauge where you need to be to get your project in under budget. Number represents a target that your CPI would have to hit to achieve your forecasted completion cost.

BAC-based TCPI = (BAC - EV) / (BAC - AC)

EAC-based TCPI = (BAC - EV) / (EAC - AC)

Budgeted work remaining divided by amount of budgeted money left

PMP Flashcards (11 decks)

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