M3 Flashcards
Inputs for Plan Cost Management
Project Charter
Project management plan
enterprise environmental factors
organizational process assets
Tools and Techniques for Plan Cost Management
Expert Judgment
Data analysis
Meetings
Outputs for Plan Cost Management
Cost management plan
establishes policies, procedures, and documentation for the project cost management
Plan Cost Management
a management control point where scope, budget, actual cost, and schedule are integrated and compared to earned value for performance measurement
Control Account
Cost Management can include:
data collection
cost estimation
budgeting
cost accounting and cost control
Common sources of costs:
labour
materials
subcontractors
equipment and facilities
travel and expenses
types of cost
direct
indirect
recurring
non recurring
fixed
variable
normal
expedited
the overall plan or guidance for the cost management knowledge area
Cost Management Plan
Cost management plan can establish what?
units of measure
level of precision
level of accuracy
organizational procedure links
control thresholds
rules of performance measurements
reporting formats
process descriptions
additional details
degree to which activity cost estimates will be rounded up or down
level of precision
the acceptable range used in determining realistic cost estimates
level of accuracy
how wbs will be linked to control accounts
organizational procedure links
what agreed upon thresholds indicates action needs to be taken
control threshold
level in the WBS in which measurement of control accounts will be performed, measurements techniques used (weighted milestones, fixed-formula, percent complete), specify EVM equations for calculating EACs
rules of performance measurement
format and frequency for the various cost reports
reporting formats
cost management processes are documented
process descriptions
strategic funding choices, dealing with currency exchange rates, procedure for project cost recording
additional details
create a reasonable budget baseline for the project
cost estimation processes
creation of a budget based estimates
budgeting
serves as the chief mechanisms for identifying and maintaining control over project costs
cost accounting and cost control
Accounts in the WBS where we are capturing ongoing expenditures in our project
Control Accounts
EVM
Earned Value Management
EAC
estimate at completion
Costs that are clearly assigned to the project
direct costs
costs that cannot be attributed solely to a single project
Indirect costs
2 major categories of Indirect costs
Overhead cost
selling and general administration
ex: utilities, taxes, insurance, property and repairs, depreciation, health and retirement benefits
overhead cost
ex: advertising, shipping, salaries, sale and secretarial support
selling and general administration
costs that continue to operate over the project’s life cycle
recurring costs
recurring costs examples
labour, material, logistics, sales costs
Costs that can be associated with charges applied once at the beginning or end of the project
non recurring costs
nonrecurring cost examples
one-time training
marketing research costs
Costs that do not vary with usage
Fixed costs
costs that accelerate or increase through usage
Variable costs
Refers to those incurred in the routine process of working to complete the project according to the original, planned schedule
Normal costs
unplanned costs incurred when steps are taken to speed up the project’s completion
Expedited costs
examples of expedited costs
overtime
hiring additional staff
hiring subcontractors
higher transportation costs
the cost that you have incurred that may or may not have value
sunk cost
Cost Classification - Direct Labour
direct
recurring
variable
normal
Cost Classification - building lease
indirect
recurring
fixed
normal
Cost Classification - expedite
direct
non-recurring
variable
expedited
Cost Classification - material
direct
recurring
variable
normal
cost allocated to the production of a product or service
Overhead factor
consideration for hours labour is not working
Personal time factor
total expenditure incurred by a company to produce, store, and sell one unit of a particular product or service
unit cost
the production level at which the total costs are covered by the revenue generated
breakeven point
the level which your production costs meet the purchase costs
breakeven point
measure of how spread out numbers are
Standard deviation
the process of developing an approximation of the cost of resources needed to complete the project work
estimate costs
a method of estimating a component of work
the detailed cost is summarized or rolled up to higher levels
Bottom-up estimating
the cost of the activity, based on realistic effort assessment for the required work and any predicted expenses
most likely
PERT
Project Evaluation Review Technique
