Project Cost Management

Question 1

What is project cost management?

Answer 1

Includes the porcesses invovled in planning, estimating, budgeting, financing, funding, managing and controlling costs so that the project can be completed within the approved budget.

Question 2

What are the process in project cost management?

Answer 2

Processes in project cost management are:

1. Plan Cost Management
2. Estimate Costs
3. Determine Budget
4. Control Costs

Question 3

What is plan cost management?

Answer 3

Plan cost management is the process of defining how the project costs will be estimated, budgeted, managed, monitored and controled.

• Key benefit is that it provides guidance and direction on how the project costs will be managed throughout the project.

Question 4

What are the inputs to plan cost management process?

Answer 4

Inputs to the plan cost management process are:

1. Project Charter
2. Project management plan:
   
   2. 1 Schedule management plan
   3. 2 Risk management plan
3. Enterprise environmental factors
4. Operational process assests

Question 5

What are the tools and techniques of plan cost management?

Answer 5

Tools and techniques of plan cost management are:

1. Expert judgement
2. Data analysis i.e. alternatives analysis
3. Meetings

Question 6

What is the output of plan cost management?

Answer 6

The Cost Management Plan is a component of the project management plan and describes how project costs will be planned, structured and controled.

• includes cost management processes and associated tools and techniques

Establishes:

1. Unit of measure
2. Level of precision (rounding up or down)
3. Level of accuracy
4. Organizational procedures links (WBS control account)
5. Control thresholds (variance thresholds for moitoring cost)
6. Rules of performance measurement
7. Reporting formats
8. Additional details (strategic funding choices, currency fluctuations, procedure for project cost recording)

Question 7

What is the estimate costs process?

Answer 7

Estimate costs is the process of developing the approximation of the cost of project resources needed to complete the project.

Key benefit is that it determines the monetary resources required for the project.

Question 8

What are inputs to the estimate costs process?

Answer 8

Inputs to the estimate costs process are:

1. Project Management plan
   
   1. 1 Cost management plan
   2. 2 Quality management plan
   3. 3 Scope baseline
2. Project documents
   
   2. 1 Project schedule
   3. 2 Lessons learned register
   4. 3 Risk register
   5. 4 Resource requirements
3. Enterprise environmental factors
4. Operational process assests

Question 9

What are the tools and techniques of estimate costs?

Answer 9

Tools and techniques of estimate costs are:

1. Expert judgement
2. Analogous estimating
3. Parametric estimating
4. Buttom-up estimating
5. Three-point estimating
   
   5. 1 Triangular distribution (cO+cM+cP)/3
      5. 2 Beta distribution (cO+4cM+cP)/6
6. Data Analysis
   
   6. 1 Alternatives analysis
   7. 2 Reserve analysis
   8. 3 Cost of Quality (COQ) - cost of additional investment in conformance vs. of cost of non-concofmance; short-term cost reductions vs implication of more frequent problems later on in product life cycle
7. Decission making (i.e. voting)
8. Project Management Information System (PMIS)

Question 10

What are the output of Estimate Costs?

Answer 10

Outputs of estimate costs are:

1. Cost estimates - quantitative assessments of the :
   
   • probable cost (all resources) to complete work
   • contingency amounts to account for identified risks
   • management reserve to cover unplanned work
2. Basis of estimates
3. Project document updates:
   
   3. 1 Assumption log
   4. 2 Lessons learned register
   5. 3 Risk register

Question 11

What is determine budget?

Answer 11

Determine budget is the process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline.

Key benefit is that it determines the cost baseline against which project performance can be monitored and controlled.

Project budget includes all the funds authorized to execute the project.

Question 12

What is cost baseline?

Answer 12

Cost baseline is the approved version of the time-phased project budget that includes contingency reserves but excludes management reserves.

• used for comparison to actual results

Question 13

What are inputs to determine budget?

Answer 13

Inputs to determinne budget are:

1. Project management plan:
   
   1. 1 Cost management plan
   2. 2 Resource management plan
   3. 3 Scope baseline
2. Project documents
   
   2. 1 Basis of estimates
   3. 2 Cost estimates
   4. 3 Project schedule
   5. 4 Risk register
3. Business documents:
   
   3. 1 Business Case
   4. 2 Benefits management plan
4. Agreements
5. Enterpise environmental factors
6. Operational process assets

Question 14

What are the tools and techniques of determine budget?

Answer 14

Tools and techniques of determine budet are:

1. Expert judgement
2. Cost aggregation - cost estimates are aggregated by work packages in accordance with the WBS
3. Data analysis (reserve analysis)
4. Historical information review
5. Funding limit reconciliation (funding expenditures vs funding limits)
6. Financing

Question 15

What are the outputs of determine budget?

Answer 15

Outputs of Determine budget are:
1.  Cost baseline 
2.  Project funding requirements
3  Project document updates:
     3.1 Cost estimates
     3.2 Project schedule
     3.3  Risk register

Question 16

What is control costs?

Answer 16

Control costs is the process of monitoring the status of the project to update the project costs and managing changes to the cost baseline.

Key benefit is that the cost baseline is maintained throughout the project.

Question 17

What are the inputs to control costs?

Answer 17

Inputs to the control costs process are:

1. Project management paln
   
   1. 1 Cost management plan
   2. 2 Cost baseline
   3. 3 Performance measurement baseline
2. Lessons learned register
3. Work performance data
4. Project funding requirements
5. Operational process assets

Question 18

What are the tools and techniques of control costs?

Answer 18

Tools and techniques of control costs process are:

1. Expert judgement
2. Data analysis
   
   2. 1 Earn value analysis (PV,EV,AC)
   3. 2 Variance analysis (CV, SV, CPI, SPI, VAC)
   4. 3 Trend analysis
      
      2. 3.1 Charts
      3. 3.2 Forecasting (EAC, ETC)
   5. 4 Reserve analysis
3. To-Complete Performance Index
4. Project Management Information System (PMIS)

Question 19

What are the outputs of control costs?

Answer 19

Outputs of control costs are:

1. Work performance information
2. Cost forecasts
3. Project management plan
   
   3. 1 Cost management plan
   4. 2 Cost baseline
   5. 3 Performance measurement baseline
4. Project documents updates
   
   4. 1 Assumption log
   5. 2 Lessons learned
   6. 3 Basis of estimates
   7. 4 Cost estimates
   8. 5 Risk register