Module 21-project budgeting estimating cost Flashcards
top down estimation
an expert determines the length of the project duration based on their past.
Top down estimation methods
- parametric estimation
- Ratio method
- apportion method
Parametric Estimation
When these top-down methods are based on the relationship between the current project and historical data, they are often referred to asparametric estimating.This has tow applications: 1. Ratio method and apportion method
Ratio method
is used to describe an estimation technique where the baseline is estimated by comparing the proposed project’s size to the size of a similar project that was recently completed.
Apportion method
breaks out the baseline into appropriate phases for projects where the percentage of costs associated with that phase are known.
Bottom up estimation
is a a technique where the people who are assigned to perform the WBS tasks are asked how long they think their tasks will take; these are combined to put together the overall project baseline.
Cost management
is the process of measuring how close actual costs are to the budget and then making changes in project execution as needed.
Baseline project
Baselining means freezing the planned budget so that actual costs can be compared to it throughout the remainder of the project. The baseline budget is the approved budget and will be used as the standard for comparison of actual costs throughout the life of the project and identifying variances.
Direct overhead costs
(Also known as indirect cost) are costs from the project that are shared across the work activities. If workspace, supervision, project administration, equipment, or other resources are not related to a specific work activity, they are included as overhead and will be allocated to all work activities.
General and Administrative Costs
are overhead costs from the project organization. These are outside of the project team but often include expenses from corporate services such as legal, human resources, and payroll.
must be allocated as a % or fixed amount
Contingency reserves
Extra money in the budget used to cover known risks
management reserve
an amount added to the overall project budget to coverunknownrisks. A percentage of the overall cost of the project is often included in the project budget to cover unforeseen situations.(unknown risks that happen) for unforeseen costs
simple budget
A project where all the money is allocated before the project begins
