Cost Mgmt Flashcards
Earned Value
How much work has been completed as of today
Budget at Completion
What is the total budget for the project
Variance at Completion
How much do we expect to vary from the BAC (VAC=BAC-EAC)
Estimate to Complete
How much more (or less) do we need to spend over what we already have
Actual Cost
How much have we spent for the work completed
How much work was scheduled to be completed as of today
What is Planned Value
What is cost variance
The difference between the value of the work completed (EV) and the Actual Cost
Planned Value
How much work was scheduled to be completed today
“the difference between the the work completed and the work planned”
What is schedule variance
SV=EV - PV
The difference between the work completed and the the actual costs
What is cost variance
CV=EV - AC
Ratio of Earned Value to Actual Costs
Cost Efficiency
What is Cost Performance Index
CPI=EV/AC
What is Schedule Performance Index
Schedule efficiency
Ratio of value of the work completed to the The work scheduled to have been completed
SV=EV/PV
Budget Planned - Estimated Cost to complete
What is Variance at completion
VAC = BAC - EAC
Estimate at Completion
Expected Cost if Staying the Course: EAC = BAC/CPI If righting the Ship: AC - (BAC - EV) If dependent on CPI and SPI: EAC = (BAC-EV)/SPI*CPI
Estimate to Complete
The expected cost to finish the remaining work
ETC = EAC - AC
The ratio of the cost to finish the work, to the remaining budget where remaining budget can be the planned cost (BAC) or the Estimated Cost to complete the project (EAC)
What is TCPI
a measure of the cost performance that must be achieved with remaining resources
What is TCPI
a measure of the efficiency that must be maintained in order to complete the project
What is TCPI
What does a CPI < 1.0 tell us
Project over cost
What does a SPI < 1.0 tell us
Project behind schedule
What does a negative value of CV tell us
Project over cost
What does a positive value of SV tell us
Project ahead of schedule
What does a TCPI less than 1 tell us
Project EASIER to complete
Note difference integer value
Units of Measure
Agreed to units defined for each resource
The degree to which cost estimates will be rounded
What is level of precision
The acceptable range (e.g. +/- 10) used in determining realistic cost estimates
What is Level of Accuracy
A quantitative assessment of the likely costs for resources
What is a cost estimate
Beta distribution
(Optimistic + 4*Most Likely + Pessimistic)/6
The amount within the cost baseline allocated for known-unknown risks
What is Contingency reserve
Amount of budget held outside the cost baseline for mgmt control purposes
What is Mgmt Reserve
All cost incurred over the life of the product by investing in prophylactic investments to ensure project is in conformance to requirements
What is Cost of Quality
Basis of Estimates
How do you determine cost estimates–e.g. documentation of known constraints, assumptions made, confidence in final estimate, etc.
Why is the business case a key input to “Determine Budget”
It identifies the critical success factors for the project, including financial success factors
Why is the benefits mgmt plan a key document in “Determine Budgets”
It includes the target benefits such as present value calculations
The approved version of the time-phased budget, excluding mgmt reserve
What is the cost baseline
The summation of control accounts
What is the cost baseline
When is Mgmt reserve added in to the budget
In calculating the total funds req’d
It contains the data on project status such as which costs have been authorized, incurred, invoiced and paid
What is work performance data
Compares the performance measurement baseline to the actual schedule and cost
What is Earned Value analysis
How does EVM determine the performance measure baseline
Integrates the scope baseline, cost baseline, and schedule baseline
Performance measurement baseline
Integrated scope, schedule, and cost baselines used for comparison to manage, measure and control project execution
The total of the planned value
Performance measurement baseline
The authorized budget assigned to the SCHEDULED work
What is planned value
a measure of work performed expressed in terms of the budget authorized for that work
What is Earned Value
The total cost incurred in accomplishing the work that EV measured
What is Actual Cost
What term is particularly critical because it indicates the relationship of physical performance to costs spent
Cost Variance
Considered the most critical EV metric
What is Cost Performance index
Calculating the EAC that may differ from the BAC based on project performance
What is Forecasting
What does the PMIS measure
Monitor the 3 EVM dimensions
Contingency Reserves
Known-unknowns
Part of the project baseline
Mgmt Reserve
Unknown-unknowns
Not in cost baseline but are part of overall project budget
The value of the control accounts = contingency reserve plus…
work package cost estimates
Risk register
responses to opportunities and threats may have a cost to the project
Determine budget may aggregate individual activities or
work packages
Why is work performance data an an input to control costs
Data (actuals) on what is occurring related to the costs
When is the cost baseline created
“Determine budget”
When is the cost baseline updated?
“Control Costs”
Schedule forecasts are based on 1) planned performance or 2) actual performance
2) Actual performance
Tools and Techniques of Control Costs
EVM
Forecasting (EAC and ETC)
TCPI
Shows a comparison of actual data with the cost baseline
What is Work Performance Information
What is an expected output of “Control Costs”
Change Requests
What does a negative cost variance indicate
Over budget
What does a positive schedule variance indicate
Ahead of schedule
What does a integer value for cost performance index > 1 indicate?
Under budget
What does a integer value for schedule performance index < 1 indicate?
Behind Schedule
Specific percentage of the PV is assigned to the start of a work package/activity and the remaining at junctures
What is Fixed Formula
Activity get 0% when it starts and 100% when it completes
What is the 0/100 rule
Breaks execution into milestones and a percentage of PV is paid at the milestone per the agree to %
What is a weighted milestone
At the end of each time period, the % complete of the work package is multiplied by the BAC
What is “Percent Complete”
Relates to the amount of work actually completed
What is “Physical measurement”
If the question provides you QUANTITATIVE information, focus on that
If given a scenario, e,g, CPI = .98 and 8 weeks behind schedule, focus on the .98. (You don’t know what the schedule delta is compared to the actual length of the schedule)
What does a TCPI < 1.0 indicate
EASIER to complete (smaller # is GOOD here), opposite CPI and SPI
The cost baseline is an input to which process
Control Costs
EVA is a Tool and technique of what process
Control Costs
Project funding rqmts are an
Input to Control Costs
Project Funding Rqmts are an
Output of determine budget
Read the question!
Are they asking for a variance or an index
cost/schedule indices
< 1.0: behind/over (BAD!)
TCPI index
< 1.0 easier to complete (GOOD!)
If a CPI is 1.2; what does this mean
It is costing $1.20 to complete $1.00 worth of work.
0/100
The Rule associated with equipment deliveries
Cost of a subcontractor working on the project
A direct cost (??)
Defining how the project costs will be estimated, budgeted, managed, monitored and controlled
What is “Plan Cost Mgmt”
Developing an approximation of the monetary resources needed to complete the project work
What is “Estimate Costs”
Monitoring the status of the project to update the project costs and manage changes to the cost baseline
What is “Control Costs”
Aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline
What is “Determine Budget”
How Many sub-processes are in “Project Cost Management”
4
Plan Cost Mgmt
Estimate Costs
Determine Budget
Control Costs
The WBS component used for the project cost accounting
What is the control account
Why is the charter an input to “Plan Cost Mgmt”?
Provides the pre-approved financial resources
What is the key output of “Plan Cost Mgmt”
Cost Mgmt Plan
What are the key outputs of “Estimate Costs”
Cost Estimates
Basis of estimates
What are the key inputs to “Estimate Costs”
Cost Mgmt Plan
Scope Baseline
Why is the scope baseline an input to “Estimate Costs”
Scope Statement has info on funding constraints
WBS provides relationships among deliverables
WBS Dictionary identifies the work in each deliverable
What are some of the Tools and Techniques of “Estimate Costs”
Analogous estimating parametric estimating bottom-up estimating reserve analysis Cost of Quality PMIS
What are the key inputs of “Determine Budget”
- Cost Mgmt Plan
- Resource Mgmt Plan
- Business Documents
- Business Case
- Benefits Mgmt Plan
- Scope Baseline
- Basis of Estimates
Why is the “Business Case” an input to “Determine Budget”
Identifies the financial success factors
Why is the “Benefits Mgmt Plan” and input to “Determine Budget”
It includes target benefits, such as net present value calculations
Cost estimates are WHAT? by work packages in accordance with WBS.
Aggregated
A variance between the funding limits and planned expenditures which may necessitate rescheduling work
What is “Funding Limit Reconciliation”
Key outputs of “Determine Budget”
Cost Baseline
Key input to “Control Costs”
Work Performance Data
e.g. which costs have been authorized, incurred, invoiced, and paid.
Key Tools and Techniques for “Control Budget”
Earned Value Analysis
Variance Analysis (SV, CV, SPI, CPI)
Trend Analysis
Forecasting (EAC, ETC, etc.)
Compares the performance measurements baseline to the actual schedule and cost performance
What is Earned Value Analysis
What comprises the Performance Measurement Baseline
Integration of the scope, cost, and schedule baselines through EVM
What are the three components EVM monitors at the work package and control account level
EV, PV, AC
What is a key output of “Control Costs”
Work Performance Information (e.g. how project costs are performing in relation to cost baseline”
What does an SPI of 1.3 mean
The project is progressing at 130% of the rate expected.
What does An SPI of 0.82 mean
the project is progressing at 82% of the rate expected
What does a value < 1 mean for CPI and SPI
Project is under performing
Go back to equations!
What does a value < 0 mean for SV and CV
Project is under performing
Go back to equations!
What does a CPI and SPI > 1 mean
Project is over performing
Go back to equations!
What does a CV and SV > 0 mean
Project is over performing
Go back to equations!
A distinct, scheduled portion of work performed during the course of a project
What is an activity
The work defined at the lowest level of the work breakdown structure for which cost and duration are estimated and managed
What is a work package
the element in PDM (i.e. network diagrams
What is an activity
What is the difference btwn an activity and a work package
An activity describes the work in the work package
What does an SPI of 0.82 mean
The project is progressing at 82% of the work expected
A CPI of 0.8 means
For every $ we spend, we are only getting 80 cents on the dollar
