Estimate Costs Flashcards
Planning
What is the purpose of the Estimate Costs process?
To develop an approximation of the monetary resources needed to complete project activities.
What is Fixed Costs?
Business expenses not dependent upon the level of goods or services produced by the business. i.e. rent, payments per month, salary, etc.
What is Variable Costs?
Expenses that change in proportion to the activity of a business. i.e. costs on amount of raw materials
What is Direct Costs?
Costs that can be directly related to producing specific goods or performing a specific service. i.e. wages of employee specifically engaged for producing a product can attributed directly to manufacturing that product.
What is a Rough Order of Magnitude (ROM)?
An initial cost estimate range of accuracy between -25% to +75% used at the outset, before detailed planning occurs.
What is a Definitive Estimate?
A progressively-elaborated cost estimate range of accuracy between -5% to +10%.
What are the two types of Risk Reserves?
1) Contingency Reserves are intended to address “known-unknowns” which are uncertain events that could at least be foreseen while 2) Management Reserves are meant to address “unknown unknowns”, which are completely unforeseeable events.
What are the tools and techniques to Estimate Costs?
1) Expert Judging, 2) Analogous Estimating, 3) Parametric Estimating, 4) Bottom-up Estimating, 5) Three-Point Estimating, 6) Reserve Analysis, 7) Cost of Quality, 8) Project Management Software, 9) Vendor Bid Analysis, 10) Group Decision-making technique.
What is Vendor Bid Analysis?
Bids received from qualified vendors in order to estimate how much an activity is likely to cost.
What is Activity Costs Estimates?
Quantitative Assessments of the probable costs required to complete project work.
What is Basis of Estimates?
Provides a clear and complete understanding of how the cost estimates were derived.
What EEF that should be considered in the Estimate Costs process?
Market Conditions and Public Commercial Information
