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PMP > Cost Mgmt > Flashcards

Cost Mgmt Flashcards

1
Q

Cost management

A

Scope first, schedule second, cost third
Estimates from the bottom up
Budget is constructed from applying rates and dates against those resources and activities to creat activity cost estimates and a cost baseline, as prescribed in the cost mgmt plan

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2
Q

Cost management processes

A

Initiating - none
Planning - plan cost mgmt, estimate costs, determine budget
Executing - none
Monitoring & controlling - control costs
Closing - none

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3
Q

Plan cost mgmt output

A

Cost management plan

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4
Q

Estimate cost output

A

Cost estimates

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5
Q

Determine budget outputs

A

Cost baseline, project funding requirements

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6
Q

Control cost outputs

A

Work performance info, cost forecasts

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7
Q

Life cycle costing

A

Total cost of ownership from purchase/creation, through operations and finally to disposal

Encourages making decisions based on the bigger picture

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8
Q

Value engineering

A

Trying to get more out of the project in every possible way

Increase bottom line, decrease costs, improve quality, shorten schedule

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9
Q

Plan cost mgmt

A

Process that creates the plan that will guide and direct the three other cost mgmt processes

Overall budget could’ve been planned in advance but not the details

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10
Q

Cost mgmt plan

A

Plan that describes how the process of estimate costs, determine budgets and control costs will be carried out

Units of measure, levels of precision/accuracy, approval thresholds, reporting

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11
Q

Estimate costs

A

Each schedule activity is analyzed to evaluate the activity time estimate and the resource estimates associated with them, and a cost estimate is produced

The more you understand an activity, the more precise you want it to be

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12
Q

Estimate cost tools

A 
Analogous estimating 
Parametric estimating 
Three point estimating 
Bottom up estimating 
Data analysis - alternatives analysis, reserve analysis, cost of quality
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13
Q

Analogous estimating

A

Actual results of a project from estimates

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14
Q

Parametric estimating

A

Good historical info, linear/scalable

$9m for 1 mile, 8 would be $72m

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15
Q

Bottom up estimating

A

Separate estimate for each activity

Accurate but time consuming and labor intensive

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16
Q

Three point estimating

A

Beta and triangular distributions

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17
Q

Reserve analysis

A

Contingencies = reserve amounts, buffer

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18
Q

Cost of quality

A

costs associated with achieving quality

Also cost of poor quality = non conformant quality costs

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19
Q

Cost estimates

A

How much it would cost to complete each schedule activity along with a contingency/reserve amount

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20
Q

Basis of estimates

A

Never too much detail, how you derived the costs

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21
Q

Budget

A

Takes the estimated project expenditures and maps them back to dates on the calendar

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22
Q

Determine budget

A

Time phases the cost estimates so that the performing org will know how to plan for cash flow and likely expenditures

23
Q

Determine budget inputs

A

Agreements

24
Q

Agreements

A

Agreements and contracts can provide info on what costs the project is contractually obliged to occur as well as when

25
Q

Determine budget tools

A

Cost aggregation
Funding limit reconciliation
Financing

26
Q

Cost aggregation

A

Even though costs are estimated at the activity level, these costs estimates should be rolled up to the work package level where they will be measured, managed, and controlled during the project

27
Q

Funding limit reconciliation

A

Normal for a project to receive funding limit, but important for the project to reconcile planned spending with limits

Ex: 200k first month, 400k second month

28
Q

Financing

A

Acquiring capital from outside sources may be necessary

29
Q

Cost baseline

A

Cost estimates for all activities plus contingencies

What costs and when

Traditional projects have s curve - costs slow at first, accelerate throughout construction and then slow down during testing and closure

30
Q

Project funding requirements

A

Cost baseline plus management reserves

Almost always related to planned expenditures but not identical

Ex: may require higher earlier for stuff like equipment

31
Q

Control costs

A

Concerned with cost variance

Positive is good, negative is bad

Ensures costs stay on track and that change is detected whenever it occurs

32
Q

Control costs tools

A

Data analysis - earned value analysis, reserve analysis, variance analysis, trend analysis

TCPI - to complete performance index - performance needed in order to achieve your earned value targets

33
Q

Control costs work performance information

A

CV, SV, CPI, SPI, TCPI and AC

34
Q

Control costs cost forecasts

A

Estimate at completion, estimate to complete

35
Q

Budgeted at completion

A

BAC - how much was originally planned for the project to cost

36
Q

Planned value

A

AKA budgeted cost of work scheduled
PV / BCWS
How much work should have been completed at a point in time based on the plan. Derived by measuring planned work completed at a point in time

PV = planned / complete x bac

37
Q

Earned value

A

AKA budgeted cost of work performed - EV / BCWP

How much work was actually completed during a given period of time. Derived by measuring actual work completed at a point in the schedule

EV = actual / complete x bac

38
Q

Actual cost

A

AKA actual cost of work performed - AC / ACWP

The money spend during a period of time

39
Q

Cost variance

A

CV

The difference between what we expected to spend and what was actually spent

CV = EV - AC

Positive is better on cost than expected

40
Q

Schedule variance

A

SV - difference between where we planned to be in the schedule and where we are

SV = EV - PV

Positive means project is ahead of schedule

41
Q

Cost performance index

A

CPI - the rate at which the project performance is meeting cost expectations during a period of time

CPI = EV / AC

1 indicates directly on track, better than 1 is good

42
Q

Cumulative CPI

A

CPIc - the rate at which project performance is meeting cost expectations from the beginning up to a point in time. Used to forecast the project cost at completion

CPIc = EVc / ACc

43
Q

Schedule performance index

A

SPI - the rate at which project performance is meeting schedule expectations up to a point in time

SPI = EV / PV

Better than 1 is good

44
Q

Estimate at completion

A

EAC - project the total cost at completion based on project performance up to a time

EAC = BAC / CPIc

45
Q

Estimate to completion

A

ETC - project how much more will be spent on a project based on past performance

ETC = EAC - AC

46
Q

Variance at completion

A

VAC - the difference between what was budgeted and what was actually spent

VAC = BAC - EAC

Positive indicates doing better than projected

47
Q

To complete performance index

A

TCPI - performance that must be achieved in order to meet financial or schedule goals

TCPI = (BAC - EV) / remaining funds

Greater than 1 is bad

48
Q

Fixed costs

A

Stay the same throughout the life of the project

Ex: heavy equipment, renting a bulldozer

49
Q

Variable costs

A

May vary

Example: hourly labor, fueled

50
Q

Direct cost

A

Billed directly to the project

Ex: materials used to construct a building

51
Q

Indirect cost

A

Shared and allocated amount several or all projects

Example: manager’s salary

52
Q

Sunk cost

A

Invested into or expended, unrecoverable

53
Q

Opportunity cost

A

Cost of the loss of potential benefit from alternatives

PMP (14 decks)

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