Planning: Cost Management Flashcards
The process of defining how the project costs will be estimated, budgeted, managed, monitored, and controlled
3.11 Plan Cost Management
A component of a project or program management plan that describes how cost will be planned, structured, and controlled.
Cost Management Plan
A technique used to evaluate identified options in order to select the options or approaches to use to execute and perform the work of the project.
Alternative Analysis
A methodology that combines scope, schedule, and resource measurements to assess project performance and progress.
Earned Value Management
The measure of work performed expressed in terms of the budget authorized for that work.
Earned Value (EV)
The expected total cost of completing all work expressed as the sum of the actual cost to date and the estimate to complete.
Estimate at Completion (EAC)
The expected cost to finish all the remaining project work.
Estimate to Complete (ETC)
The process of developing an approximation of the monetary resources needed to complete project work.
3.12 Estimate Costs
All costs incurred over the life of the product by investment in preventing nonconformance to requirements, appraisal of the product or service for conformance to requirements, and failure to meet requirements.
Cost of Quality (CoQ)
Techniques used to select a course of action from different alternatives.
Decision-Making Techniques
Expenses that are not dependent on the level of goods or services produced by the business. They tend to be time-related, such as rents being paid per month.
Fixed costs
Expenses that change in proportion to the activity of a business. When activity is decreased, less raw material is used, so spending for raw materials falls.
Variable costs
A cost that can be directly related to producing specific goods or performing a specific service.
Ex: wages of an employee engaged in producing a product
Direct costs
Costs that are not directly attributable to a particular project, such as heat and light (overhead).
Indirect costs
-25% to +75%
initial cost estimate range of accuracy
typically used during Initiation when details are not yet developed
Rough Order of Magnitude
(Estimating terminology)
-5% to +10%
Definitive Estimate
(Estimating terminology)
Prevention and appraisal costs
Cost of Conformance
Internal and external failure costs
Cost of Non-conformance
Formula for BETA Distribution (PERT)
[Optimistic + (4 x Most Likely) + Pessimistic] / 6
Formula for Triangular Distribution
[Optimistic + Most Likely + Pessimistic] / 3
Formula for Range of the Estimates
Expected Activity Cost +- Activity Standard Deviation
Purpose bring To develop an approximation of the monetary resources needed to complete project activities.
Estimate Costs process
Purpose being To aggregate the estimated costs of individual activities or work packages to establish an authorized cost baseline.
Determine Budget process
What includes the quantitative assessments of the probable costs required to complete the project work?
Activity Cost Estimates
The process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline.
Determine Budget
A component of the project management plan that describes how project resources are acquired, allocated, monitored, and controlled.
Resource Management Plan
A repository in which outputs of risk management processes are recorded.
Risk Register
Summing the lower-level cost estimates associated with the various work packages for a given level within the project’s WBS or for a given cost control account.
Process of rolling up costs through each level of the WBS
Cost Aggregation
Documents and data on prior projects include project files, records, correspondence, closed contracts, and closed projects.
Historical Information
Using parametric or analogous estimate models based on past experiences can aid in predicting total project costs.
Historical Information Review
The process of comparing the planned expenditure of project funds against any limits on the commitment of funds for the project to identify any variances between the funding limits and the planned expenditures.
Funding Limit Reconciliation
The approved version of the time-phased project budget, excluding any management reserves, which can be changed only through formal change control procedures and is used as a basis for comparison to actual results.
Cost Baseline
Forecast project costs to be paid that are derived from the cost baseline for total or periodic requirements, including projected expenditures plus anticipated liabilities.
Project Funding Requirements
What is the difference between the Cost Baseline and Project Budget.
Cost Baseline does not include Management Reserves, and Project Budget includes everything.
