Project Cost Management Flashcards
TCO
Total Cost of Ownership
- Considers life cycle cost of the deliverable for the customer
Cost Management Plan
- Addresses how costs are estimated, how project budget is managed and how costs will be controlled
- Includes information on units of measure, level of precision, level of accuracy, control thresholds, cost estimating approach, rules of performance measurement, reporting formats)
ITTOs: Plan Cost Management
Inputs:
- Project Charter
- Project Management Plan
- EEfs
- OPAs
T&T:
- Expert Judgement
- Data Analysis
- Meetings
Outputs:
- Cost Management Plan
Which subsidiary plans do you need for planning cost management?
- Schedule Management Plan (processes and controls that will impact cost estimation and management)
- Risk Management Plan (processes and controls that will impact cost estimation and management)
- EEFs (Culture, market conditions, currency exchange rates, commercial database, etc.)
ITTOs: Estimate Costs
Inputs:
- Project Management Plan
- Project Documents
- EEFs
- OPAs
T&T:
- Expert Judgement
- Analagous estimating
- Parametric estimating
- Bottom-up estimating
- Three-point estimating
- Data Analysis
- PMIS
- Decision Making
- Voting
Outputs:
- Cost estimates
- Basis of estimates
- Project Doc Updates
Direct cost
- attributed only for your project
Indirect cost
- shared to more than one project
- ex. piece of equipment used across other projects
Variable cost
- varies based on conditions in the project
ex. number of meeting participants, travel,
Fixed cost
- constant throughout the project
ex. rented equipment, fixed-price consultant
ROM
Rough order of magnitude
-25% to +75% accurate
Budget Estimate
- 10% to +25% accurate
- Based on scope
Definitive Estimate
-5% to +10% accurate
Parametric Estimating
- Mathematical model based on known parameters to predict cost
- ## Cost per unit
Regression Analysis
- statistical approach that predicts what future values may be, based on variables from historical values
- which factors from historical info matter the most
Learning Curve
- The cost per unit decreases the more units workers complete
- Workers learn as they complete the required work and perform tasks more quickly
Reserve Analysis
- if risk events start happening, money is being taken out of the reserve
- sooner that you eat into reserve, the more dangerous it is for the project.
- goal in risk analysis is to combat early risks
Cost of Quality
- Cost needed in order to maintain the needed level of quality
What does the project budget exclude?
- Management Reserves
- Includes contingency reserves
ITTOs: Determine Budget
- Inputs:
- Project management plan
- Project documents
- Business documents
- Agreements
- EEFs
- OPAs
T&T:
- Expert Judgement
- Cost Aggregation
- Data Analysis
- Historical Information Review
- Funding Limit Reconciliation
- Financing
Outputs:
- Cost Baseline
- Project Funding Requirements
- Project Document Updates
Funding Limit Reconciliation
- Reconcile planned and actual costs
- If they don’t match-up, then you have a variance and need to take a corrective action
Cost Baseline
- Shows total cost and when those costs will be spent over the project
- measures performance
- usually shown as an S curve
- Predicts when the project will be spending monies
- Discrepancies early show issues
Large projects and cost baselines
- Can have multiple, one for each phase
- Predict spending plans
Project Funding requirements
- cost baseline used to determine this
- mapped to the schedule
Project step funding
- Funding at different points in the project
- based off of first phase get more money to go to second phase
ITTOs: Control Costs
Inputs:
- Project Management Plan
- Project Documents
- Project Funding requirements
- WPD
- OPA
T&T:
- Expert judgement
- Data Analysis
- To-Complete Performance Index
- PMIS
Outputs:
- WPI
- Cost forecasts
- Change Requests
- Project Management Plan Updates
- Project Document Updates
Earned Value Management
- EV (Earned Value) = % Complete X BAC
- PV (Planned Value) = %Planned X BAC
EV-AC (Actual cost) = Cost Variance
EV-PV = Schedule Variance
BAC
Budget at Completion
Cost Performance Index
EV/AC
Closer to 1, better the cost performance
Estimate at Completion (EAC)
BAC/CPI
ETC
Estimte to Completion
- How much more do you need to get to completion
EAC: Current Cost Performance
- Future work at planned costs
- Trying to forecast final project cost based off of current performance (predicting the future)
AC + (BAC - EV)
Value Engineering
- Systematic approach to find less costly ways to complete the same work
Opportunity Cost
- The worth of a project that wasn’t completed or chosen
