Cost Management Flashcards
Life Cycle Costing
Looks at entire life of product (including maintenance)
Value Analysis
aka Value Engineering
finds least costly way to do the same work (decrease cost while maintaining scope)
Inputs: Plan Cost Management
- PM Plan
- Project Charter
- EEFs
- OPAs
Outputs: Plan Cost Management
Cost Management Plan
Inputs: Estimate Costs
- PM Plan
- Project docs
- Project Schedule
- Risk Register
- Lessons Learned Register
- Resource Requirements
- EEFs
- OPAs
Outputs: Estimate Costs
- Cost Estimates
- Basis of Estimates
- Project docs updates
Basis of Estimates
doucuments how the estimates were developed and their ranges, including assumptions made and constraints impacting the estimate
Components of Cost Management Plan
- levels of accuracy and precision needed for estimates
- approved estimating techniques
- reporting formats
- rules for measuring cost performance
- guidance re: documenting costs & inclusion of directs & indirect costs
- control thresholds
- change control procedures
- information on control accounts, and monitoring spending
Estimate Ranges
Rough Order of Magnitude Estimate
Budget Estimate
Definitive Estimate
Rough Order of Magnitude Estimate
made during project initiating, range is typically -25 to +75 percent
Budget Estimate
made during planning, range of -10 to +25 percent
Definitive Estimate
refined through planning process, typically with a range of -5 to +10%
Inputs: Determine Budget
- PM Plan
- Project docs
- activity cost estimates
- basis of estimates
- project schedule
- risk register
- Business documents (including business case and benefits mgmt plan)
- Agreements
- EEFs
- OPAs
Outputs: Determine Budget
- Cost baseline
- Project funding requirements
- Project docs updates
Project Funding Requirements
state how and when the project will be funded
Difference between cost baseline and cost budget
Cost Baseline: costs + cotntingency reserves
Cost Budget: Cost baseline + management reserves
Cost aggregation
first step in creating budget. activity costs are rolled up into work package costs, then work package costs to control account estimates, then control account estimates to project estimates.
Steps in Determine Budget
- cost aggregation
- check cash flows to determine schedule impacts
- reconcile with cost constraints in charter
Inputs: Control Costs
Cost Baseline
costs to produce all of the deliverables in the project, plust contingency reserves
S-curve accounts for timing with funding
Reserve Analysis
part of Control Costs process to determine if contingency reserves are still appropriate (may be increased due to new risks, or reduced due to contemplated risks on completed activities that did not occur)
reminder: any changes require a change request
What does the occurance of many unknown risks suggest?
Risk management efforts in planning were inadequate and need to be redone.
Use of Management Reserves
applied to unknown risks
requires a change request to move funds to cost baseline
Outputs: Control Costs
- Work performance information
- Cost forecasts
- Change requests
- PM Plan updates
- Project docs updates
- OPAs updates
Cost Forecast
Forecast of how much project could cost in the end – based on rate of spending now.
Calculated using Estimate at Completion
Earned Value Analysis
measures project performance against scope, schedule, and cost baselines
