Lecture 6 Flashcards
What Five phases can Management Cost and Control System (MCCS) be divided into?
- Planning
- Work and contract authorisation and release
- Cost data collation and reporting
- Cost accounting, tracking cost
- Customer and management reporting
How are Management cost and control systems used?
To evaluate the performance of resources
Stage 1 of MCCS - planning includes (6)
- WBS
- Work planning authorisation
- master production schedule
- detailed schedule
- program plan
- MCCS budget
Stage 3 of MCCS - cost data collation and reporting includes (2)
- Actual cost ACWP
- Budgeted cost for work performed BCWP
Stage 4 of MCCS Cost accounting, tracking cost using : (2)
- cost accounting variance analysis (difference between planned/budgeted)
- Earned value
Stage 5 of MCCS customer & management reporting including : (6)
- Variance analysis
- estimate at completion
- cost summary
- schedule summary
- milestone report
- event report
Cost control is important to compare resource usage against budgets, which three main aspects are compared?
- time
- cost
- performance
steps to effectively control systems
- schedule performance
- compare expenditure against budgets
- identify variances
- take corrective action when needed
Budgets must be (4)
- reasonable
- attainable
- based on contractually negotiated costs
- based on the statement of work
Budgets are usually based upon (3)
- historical cost
- best estimate
- industrial engineering standards
Budgets must not only be outlined for normal procedures but also for (3)
- management reserve
- unforeseen problems
- contingencies for additional costs resulting in out-of-scope work and expences
What two types of variances are there?
- Budgeted cost for work scheduled
- Actual cost for work performed
What is BCWS
Budgeted cost for work scheduled : includes cost and level of effort (aka earned value) which needs to be accomplished in a set period of time
What is ACWP
Actual cost for work performed
what is the difference between cost and scheduling variance
they both provide a comparison between planned and actual performance but scheduling does not include cost
cost and schedule trends can be analysed using
performance indexes which can produce an early warning system to alleviate unfavorable trends through corrective actions
Budget at completion BAC
sum of all the budgets BCWS allocated - which forms the baseline for total cost
Estimate at completion EAC
total cost to date in addition to a realistic estimation of all the remaining work
The aim of Status reporting SR
To keep executives up to date on project process (inform them that everything is on track/ initiate a process of corrective action if things are not on track)
Status Reports should be concise including (6)
- variance analysis
- estimate at completion
- cost summary
- schedule summary
- milestone report
- event report
risk management systems are designed to
- quantify risk
- predict impact
risk is a measure of
- probability and consequences of not achieving goal
Risk definition
a function of uncertainty and damage that forms modelling scenarios for risk forecasting
formal process of identifying and measuring risk (3)
- risk factors systematically identified, assessed and provided for
- areas or events of high risk are identified and controlled
- risk factors are responded to throughout lifetime
