SEVEN - Cost Management Flashcards
What is Value Analysis?
AKA Value Engineering. Its focus is on finding a less costly way to do the work. Answer’s the question: How can we decrease cost while maintaining same scope/performance?
What is Cost Risk?
Involves cost, risk, and procurement management. Means cost-related risk.
Example: Who has the cost-risk in a fixed price contract? The seller.
What does Plan Cost Management (P) involve?
Identifying how to plan (including estimating and budgeting), manage, and monitor and control project costs (including resource costs). Answers “How will i go about planning cost for the project” and “How will I manage the project cost to the cost baseline, control costs, and manage cost variances.”
What are some inputs to Plan Cost Management?
Project charter, OPAs/lessons learned,
What are the outputs to Plan Cost Management (P)?
Cost Management Plan
What may the Cost Management Plan include?
Specifications for how estimates should be stated (currency);
Levels of accuracy and precision;
Approved estimating techniques;
Reporting formats to be used;
Rules for measuring cost performance;
Whether indirect (overhead) costs will be included;
Guidelines for establishing a cost baseline;
Control thresholds;
Cost change control procedures;
Information on control accounts;
Funding decisions;
Methods for documenting costs;
Roles and responsibilities for various cost activities;
Guidelines for dealing with potential fluctuations in resource costs and exchange rates
What does Estimating Costs (P) involve?
Involves creating cost estimates for all project activities and resources required to complete them.
what costs does Estimating Costs includes?
Includes cost directly related with the project, such as labour, equipment, materials, training, as well as: Costs of quality efforts Costs of risk efforts Costs of the PM's time Costs of the PM activities Overhead/indirect costs
What are the two types of costs required to know for the exam?
Direct and indirect costs
What are direct costs?
Costs directly attributed to the work on the project. Examples such as team’s wages, travel, material, resources, etc
What are indirect costs?
They are overhead items or costs incurred for the benefit of more than one project. Such as taxes, janitorial services, rent, etc
What are the inputs to Estimate Costs (P)?
PM Plan - Cost, quality, scope
Project Documents - LL register, Schedule, Resource Requirements, Risk Register
OPAs
EEFs - exchange rates, inflation
What are the Tools and Techniques of Estimate Costs?
Data Analysis - Alternatives, Reserve, & Cost of Quality Analysis
PMIS - Estimating spreadsheets and software
Decision Making, Estimate Ranges, and the Estimating techniques same as schedule estimating (three-point, analogous, etc)
What is Cost of Quality?
Cost of work added to the project to accommodate quality efforts
What is Estimate ranges?
Organizations have standard ranges for estimating. These ranges tell how much time and effort need to go into estimating to make sure the actual cost is within the range of the estimate
What is Rough Order of Magnitude (ROM) estimate?
This type of estimate is usually made during project initiating and a typical range is -25 to +75%. This range can vary depending on how much is known about the project
What is Budget Estimate?
Has a range of -10 to +25%. It is best practice to narrow the range of the estimate from ROM before you begin iterating the plan
What is Definitive Estimate?
As project planning progresses, the estimate will be even more refined to +/- 10% or -5 to +10%
What is the Output to Estimate Costs (P)?
This process results in cost estimates, and an explanation of how those estimates were derived (which is known as the basis of estimates). Also results in changes or updates to project documents - risk register, assumption log, LL register
What is involved in the Determine Budget (P) process?
The PM calculates the total cost of the project, resulting in the calculation of the budget and the cost baseline.
