Study Cards - Chapter 7 Flashcards
The cost management Planning activities are…
- Estimate costs
- Determine budget
The cost management M&C activities are
- Control costs
Life cycle costing
- total cost of ownership for the lifetime of the product
Value Engineering
- looking for substitutions to reduce cost, improve quality or both
Estimate Costs - Key Outputs
- Activity Cost Estimates
- Basis of Estimates
Estimate Costs - Techniques
- Duration estimate types
- Cost of quality
- PM estimating software
- Vendor bid analysis
Estimate Costs - Key Inputs
- Scope Baseline
- Project Schedule
- Human Resource Plan
- Risk Register
PERT for cost
Mean = (Co + 4Cml + Cp) / 6
Standard Deviation = (Cp - Co) / 6
Variance = σ² (Standard Deviation squared)
Four types of cost are
- Fixed
- Variable
- Direct
- Indirect
Analougous estimating
- Little Time and effort
- Less costly to create
- Less accurate
- Information may not be available
Bottom-up estimatinge
- Improved accuracy
- Provides team buy-in to estimates
- Longer time and higher cost to create
- Subject to padded estimates
Parametric estimating
- Can be more accurate than analogous
- Quicker than bottom-up
- Accuracy varies widely
- Can be more costly than analogous
Rough order of magnitude
-50% to +50% (Initiating)
Definitive estimate
-10% to +10% (Planning)
Determine Budget - Key Inputs
- Activity cost estimates
- Schedule
- Scope baseline
Determing Budget - Techniques
- Cost aggregation
- Reserve analysis
- Funding limit reconciliation
Determing Budget - Key Outputs
- Cost baseline
- Funding requirements
Basis of estimates
- Detailed analysis of how the cost estimate was derived
- Can include assumptions, constraints, ranges, confidence level
Reserve Analysis
- addresses management reserve and contingency reserve in a project
- Reserves are not included in earned value calculations
Funding limit reconciliation
- addresses the variance between funding limit and the planned expenditures for the project
Control Costs - Inputs
- PM Plan (cost baseline)
- WPI
Control Costs - Tools
- EVM
- Forecasting
- Performance reviews
- Variance analysis
Control Costs - Outputs
- Forecasts
- CRs
- Updates
Cost Baseline
- Cost of all activities
- Includes contingency reserves
Cost (Total) Budget
- Includes cost baseline
- Includes managment reserve
Negative variance
- Over budget or behind schedule
Positive variance
- Under budget or ahead of schedule
Index under 1
- Over budget or behind schedule
Index over 1
- Under budget or ahead of schedule
Accrual methods
Upfront/At Completion
- 50/50
- 20/80
- 0/100
