PMP Study Deck - Cost

Question 1

Cost Aggregation

Answer 1

Bottom up estimate to get overall total budget.

Question 2

Contingency Reserve

Answer 2

Known unknowns; weather days, etc.

Question 3

Management Reserve

Answer 3

Unknown unknowns; hurricane, etc.

Question 4

Funding Limits

Answer 4

Time phased funds available throughout the project

Question 5

Cost of Quality

Answer 5

Includes evaluating the cost impact of additional investment in conformance versus the cost of nonconformance.

Is lowest for prevention and inspections (Cost of Conformance) but highest for failures (involving: rework, defect repair, lost reputation and sales and external costs — Cost of Non-conformance).

Question 6

BAC

Answer 6

Budget at Completion

Question 7

S-Curve

Answer 7

Time based budget

PMBOK pg 255

Question 8

AC

Answer 8

Actual Cost

Question 9

PV

Answer 9

Planned Value

Question 10

EV

Answer 10

Earned Value

Question 11

Cost Baseline

Answer 11

Is a “time-phased budget that is used as a basis against which to measure, monitor, and control overall cost performance on the project”.

Question 12

Cost Variance (CV)

Answer 12

Earned Value minus Actual Cost

CV = EV - AC

Question 13

CPI

Answer 13

Cost Performance Index
Earned Value divided by Actual Cost

CPI = EV / AC

Question 14

Schedule Variance (SV)

Answer 14

Earned Value minus Planned Value

SV = EV - PV

Question 15

SPI

Answer 15

Schedule Performance Index
Earned value divided by planned value

SPI = EV / PV

Question 16

EAC

Answer 16

Estimate at Completion

Question 17

ETC

Answer 17

Estimate to Complete

Question 18

TCPI

Answer 18

To Complete Performance Index
Performance needed to complete without needing additional money

TCPI = (BAC - EV) / (BAC-AC)

Alternate Formula: (BAC-EV) / (EAC - AC)

Question 19

VAC

Answer 19

Variance at Completion
Budget at Completion minus Estimate at Competion;
VAC = BAC - EAC