Project Cost Management

Question 1

Cost Processes

Answer 1

Planning: Plan Cost Management
Estimate Costs
Determine Budget
Monitoring/Controlling: Control Costs

Question 2

Plan Cost Management

Answer 2

I: Project charter, PM plan, EEFs, OPAs
TT: Expert judgment, data analysis, meetings
O: Cost management plan

Question 3

Estimate Costs

Answer 3

I: PM plan, project documents, EEFs, OPAs
TT: Expert judgment, analogous estimating, parametric estimating, bottom-up estimating, three-point estimating, data analysis, PM information system, decision making
O: Cost estimates, basis of estimates, project documents updates

Question 4

Determine Budget

Answer 4

I: PM plan, project documents, business documents, agreements, EEFs, OPAs
TT: Expert judgment, cost aggregation, data analysis, historical information review, funding limit reconciliation, financing
O: Cost baseline, project funding requirements, project documents updates

Question 5

Control Costs

Answer 5

I: PM plan, project documents, project funding requirements, work performance data, OPAs
TT: Expert judgment, data analysis, to-complete performance index, PM information system
O: Work performance information, cost forecasts, change requests, PM plan updates, project documents updates

Question 6

Estimating

Answer 6

Bottom-up: start from activities, add up
Analogous: compare to past project
Parametric: use formula/model
Top-down: start with total then break it down
Three-point: most likely, optimistic, pessimistic = simple or weighted average

Question 7

Basis of Estimates

Answer 7

eg, What was I thinking? original thoughts, calculations, assumptions behind estimates

Question 8

Project Budget

Answer 8

Budget includes management reserve + cost baseline
Management reserve: time/money set aside tied to overall budget, can cover things not covered by contingency
Cost baseline / Control accounts includes cost estimates + contingencies
Contingency: for each work package, extra time/money reserved for risk reduction, released if unused

Question 9

Earned Value Analysis

PV / EV / AC / BAC: Definitions

Formulas: cost variation, schedule variation, schedule performance index, cost performance index

Answer 9

Integrates scope/cost/schedule baselines
Cumulative actual costs compared to planned costs (Eg, did you spend less because under budget or did less work)
Planned Value (according to budget, defines physical work that should have been completed)
Earned Value (measure of work performed: planned costs of only the work performed to date)
Actual Cost: realized cost incurred
BAC / Budget at Completion (cost baseline)
Cost Variation = EV - AC
Schedule Variation = EV - PV
Schedule Performance Index = EV/PV
<1: behind schedule; >1: ahead of schedule
Cost Performance Index = EV/AC
<1: over budget; >1: under budget