Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

PMP > Cost Management Ch 7 > Flashcards

Cost Management Ch 7 Flashcards

1
Q

When is the ability to influence costs greatest in a project?

A

the beginning

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What processes are involved in Cost Management?

A

Plan Cost Management

Estimate Cost

Determine Budget

Control Costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is Earned Value Management (EVM)?

A

Assesses “how are we doing now” and predicts “how will we do in future”

Uses scope baseline, cost baseline and schedule baseline to form performance measurement baseline

  • PV
  • EV
  • AC
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is Planned Value (PV)?

A

authorized budget assigned to work to be accomplished for an activity or WBS component.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is Budget At Completed (BAC)?

A

Total of planned value for project

-adding up the planned value for all of the activities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is Actual Cost (AC)?

A

Actual Cost is the total cost incurred for the actual work completed to date

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is Earned Value (EV)?

A

Earned Value is the value of the work actually completed to date

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Define: Plan Cost Management (7.1)

A

establishes the framework/policies/procedures for how to estimate and manage costs

The key benefit of this process is that it provides guidance and direction on how costs are managed from project initiation to closure

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What does the Cost Management Plan cover?

A

Units of measure

Level of precision

Level of accuracy

Control thresholds

Reporting formats

Organizational procedures links

Rules of performance measurement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Inputs: Plan Cost Management

A

Project Charter

Project Management Plan:

  • schedule management plan
  • risk management plan

EEFs

OPAs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Tools/Techniques: Plan Cost Management

A

Expert Judgement

Data Analysis (alternatives analysis)

Meetings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What are the some ways to fund a project?

A

self funding

funding with equity (share in exchange for cash investment)

funding with debt (when a company raises money for spending by selling debt)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Outputs: Plan Cost Management

A

Cost Management Plan

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is a Control Threshold?

A

Variance thresholds for monitoring cost performance may be specified to indicate an agreed-upon amount of allowed variation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Define: Estimate Costs (7.2)

A

Process of developing estimates for resources

Key benefit: outlines the $ needed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Inputs: Estimate Costs

A

Project Management Plan

Project Documents

EEFs

OPAs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What are the important components of the Project Management Plan for Estimate Costs?

A

Cost Management Plan

Quality Management Plan

Scope Baseline

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Why is the Quality Management Plan important?

A

outlines resources needed to achieve quality

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What goes into a Scope Baseline?

A

Project scope statement: (includes funding constraints for the project)

WBS: (provides relationships among all of the project deliverables)

WBS dictionary

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Tools/Techniques: Estimate Costs

A

Expert Judgement

Analogous Estimating

Parametric Estimating

Bottom-up Estimating

3 Point Estimating

Data Analysis (alternatives, reserve and cost of quality)

Project Management Information System (PMIS)

Decision Making

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is Reserve Analysis?

A

Accounts for cost uncertainty/identified risks. Viewed as a part of the budget to account for unknowns

22
Q

Outputs: Estimate Costs

A

Cost Estimates

Basis of Estimates

Project Document UPDATES (assumption log, lessons learned register and risk register)

23
Q

What do you need to consider while estimating costs?

A

Basis of estimation

assumptions

constraints

range of possible estimates

confidence level of estimate

24
Q

What are Variable Costs?

A

Costs that change with amount of production/work

E.G. cost of materials, supplies and wages

25
What are Direct Costs?
Costs that are directly attributed to the project work E.G. team travel, team wages, cost of material used on project
26
What are Indirect Costs?
Items/costs that can benefit more than one project E.G. fringe benefits, taxes
27
Define: Determine Budget (7.3)
Process of aggregating the estimated costs of individual activities or work packages to create a authorized cost baseline Key Benefit: determines the cost baseline against which project performance can be controlled and monitored
28
What is a Cost Baseline?
Approved budget, excluding management reserves which can only be changed through formal change control procedures
29
Inputs: Determine Budget
Project Management Plan (cost management plan, resource management plan and scope baseline) Project Documents (basis of estimates, cost estimates, project schedule, risk register) Business Documents (business case and benefits management plan) Agreement EEFs OPAs
30
What is the importance of reviewing the Business Case?
Identifies the critical success factors for the project including financial success factors
31
Why is the Benefits Management Plan important at this stage?
Includes target benefits (NOV calculations), timeframe for realizing benefits and metrics associated with benefits
32
Tools/Techniques: Determine Budget:
Expert Judgement Cost Aggregation Data Analysis (management reserves) Historical Information Review Funding Limit Reconciliation Financing
33
What is Cost Aggregation?
Total cost estimate for the work packages within all levels of the WBS
34
Outputs: Determine Budget
Cost Baseline Project Funding Requirements Project Document UPDATES (cost estimate, project schedule and risk register)
35
What do Project Funding Requirements include?
total funding and periodic funding (annually, quarterly, etc) cost baseline plus management reserves
36
Define: Control Costs (7.4)
Process of monitoring the status of the project to update project costs and managing changes to the cost baseline Key benefit: cost baseline is maintained
37
Inputs: Control Costs
Project Management Plan (cost management plan, cost baseline, performance measurement baseline) Project Documents Project Funding Requirements Work Performance Data OPAs
38
When is Performance Measurement Baseline used?
when using earned value analysis, the performance measurement baseline is compared to actual results to determine if a change, corrective action or preventative action is needed
39
Tools/Techniques: Control Costs
Expert Judgment Data Analysis: EVA, Variance analysis, Trend analysis, Reserve analysis To Complete Performance Index (TCPI) Project Management Information Systems (PMIS)
40
What is Schedule Variance (SV)? How is it calculated?
Amount by which project is ahead or behind schedule SV = EV - PV
41
What is Cost Variance (CV)? How is it calculated?
Amount that budget is above or below allocated amount at a given time CV = EV - AC
42
What is Schedule Performance Index (SPI)? How is it calculated?
Measures how efficiently the project team is accomplishing the work Used in conjunction with CPI to forecast final project completion estimates SPI = EV / PV
43
What does an SPI above 1.0 indicate?
Project is ahead of schedule
44
What is a Cost Performance Index (CPI)? How is it calculated?
Measure of cost efficiency of budgeted resources CPI = EV / AC
45
What does a CPI less than 1.0 indicate?
Project is over budget
46
What is Estimate at Completion (EAC)?
Expected total cost of completing all work expressed as the sum of the actual cost to date and the estimate to complete
47
What is Estimate to Complete (ETC)?
Assuming work is proceeding on plan the cost of completing the remaining authorized work can be calculated using ETC = EAC - AC
48
What is To-Complete Performance Index (TCPI)?
Measure of cost performance that must be met with the remaining resources so to meet the goal within budget TCPI = (BAC-EV)/(BAC-AC)
49
What does a TCPI greater than 1.0 indicate?
harder to complete
50
What is a TCPI of 1.0 indicate?
same to complete
51
Outputs: Control Costs
Work Performance Information Cost Forecasts Change Requests Project Management Plan UPDATES Project Document UPDATES

PMP (5 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions