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86 Cards in this Set
- Front
- Back
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Actual Cost (AC) is...?
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Actual Cost is the actual cost of work performed during the selected time period; As of today, what are the actual costs incurred to date?
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Analogous Estimating has what advantages/disadvantages?
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1. Quick 2. Activities need not be identified 3.Less costly 4. Gives PM an idea of mgmnt's expectations 5. Overall project costs will be capped 1. Less accurate 2. Estimates are prepared with limited non-detailed data 3. requires experience 4. infighting to grab biggest piece of budget 5. extremely difficult for projects with uncertainty 6. Does not take into account the differences between projects
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Bottom-up Estimating has what advantages/disadvantages?
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1. More accurate 2. gains buy-in from team 3. based on details analysis of project 4. provides basis for monitoring and controlling, perf measurement, and mgmnt 1. takes time and expense 2. tendency for team to pad 3. requires project be well defined and understood 4. requires time to break the project down into smaller pieces
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Bottom-up Estimating is...?
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Detailed estimates for each activity to work package; then they are rolled up into control accounts, then into an overall project estimate
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Budget At Completion (BAC) is...?
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How much did we budget for the total project?
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Budget Estimate can be described as?
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1. Made during planning process 2. typical range of -10 - +25% from actual
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Can historical information improve estimate accuracy?
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Yes
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Changes: When should changes be requested?
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When cost problems occur
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Constraints: Should a PM just accept constraints from mgmnt?
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No; analyze the needs of the project, come up with own estimates, reconcile differences and present realistic objectives
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Control Costs Process can be described as?
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1. The process of monitoring project status to updates project budget and managing changes to the cost baseline 2. This effort includes updating actual costs spent 3. Any increase to the budget must be approved through Perform Integrated Change Control 4. As we monitor costs we also must ensure that we are receiving value for the cost expended. We will find the earned value management technique useful in this context.
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Controlling Costs includes what?
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1. influencing factors that create changes to the cost baseline 2. Ensuring requested changes are acted on timely 3. Managing the actual changes when and as they occur 4. Assuring that expenditures do not exceed the authorized funding by period and in total for the project 5. Monitoring cost performance to detect and understand variances from the cost baseline 6. Monitoring work performance against funds expended 7. Preventing incorrect, inappropriate, or unapproved changes from being included in the reported cost or resource use 8. Informing appropriate stakeholders of approved changes 9. Acting to bring expected cost overruns within approved limits.
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Control Costs Process has what inputs?
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1. Project management plan, which contains the cost management plan and the cost performance baseline 2. Project funding requirements from Determine Budget 3. Work performance information which comes from Direct and Manage Project Execution, and provides deliverable status, actual costs and estimates for cmpleted work 4. Organizational process assets, including cost control policies, procedures, and guidelines, as well as tools and monitoring and reporting methods.
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Control Costs Process has what outputs?
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1. Work performance measurements (CV, SV, CPI, and SPI) for WBS components and control accounts. 2. Budget forcasts 3. Organizational process assets updates with historical information and lessons learned 4. Change requests when the baseline must be changed. These are processed through Perform Integrated Change Control process. 5. Project management plan updates, including the cost performance baseline and the cost management plan 6. Project document updates, including cost estimates and basis of cost estimates
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Control Costs process TOOLS AND TECHNIQUES are?
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1. Earned value management 2. Forecasting 3. To complete performance index 4. Performance reviews 5. Variance analysis 6. Project management software
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Control Costs: What actions should a PM take to control costs?
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1. follow the mgmnt cost plan 2. look at org process assets available 3. manage changes 4. measure project progress
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Cost Aggregation can be described as?
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1. Activity costs rolled into work packages 2. work packages rolled into control accounts then proj costs.
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Cost Baseline is usually graphed as what?
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The Cost Baseline is usually displayed as an S curve.
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Cost Baseline is…?
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Contains the contingency reserves - represents the funds authorized
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Cost Budget is…?
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Is the cost baseline plus the mgmnt reserves
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Cost estimating techniques are (4)?
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1. one-point 2. analogous 3. parametric 4. three -point
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Cost Management Plan can be described as?
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During the Develop Project Management Plan process the management team develops a cost management plan, included as part of the project management plan. It describes the form and criteria for planning, estimating, budgeting, and controlling project costs. It covers the "How" of cost management for project; 1. Level of accuracy - what rounding is used in cost estimating 2. Units of measure - days, weeks, dollars, Euros 3. Organizational procedure links, particularly through the specification of control accounts in the WBS 4. Control thresholds, to set an agre
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Cost Performance Index (CPI) is…?
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Cost Performance Index (CPI) is the earned value divided by the actual cost (EV/AC).; CPI = EV/AC; We are getting $_____worth of work out of every dollar spent. Funds are or are not being used efficiently
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Cost Reconciliation is done in what knowledge area?
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Integration Mgmnt
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Cost Risk can be described as…
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Who bears the cost of risk; i.e. for s fixed price contract, the seller bears the risk
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Cost Variance (CV) is...?
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Cost Variance (CV) is the earned value minus the actual cost (EV - AC); negative = behind schedule; positive = ahead of schedule
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Cost: If the question on cost is relating to cost the formula will relate to?
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AC
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Cost: What are the 4 types of cost?
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1. Variable 2. Fixed 3. Direct 4. Indirect
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Definitive Estimate can be described as?
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1. Made during later in the project 2. typical range of +/-10 from actual
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Depreciation is...?
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Depreciation is devaluing an asset in the tax system. There are two kinds: 1. Standard depreciation, where the difference between start value and scrap value is divided by the number of periods 2. Accelerated depreciation, which generally requires tables of data to calculate. Two types are Sum of the Years Digits, and Double Declining Balance (DDB). Depreciates faster than standard. (just recognize these terms)
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Determine Budget Process can be described as?
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Aggregating the estimated cost of individual schedule activities or work packages to establish a total cost baseline for measuring project performance. It includes all authorized budgets but excludes management reserves.
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Determine Budget Process has what inputs?
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1. activity cost estimates, from Estimate Costs process 2. Basis of estimates, from Estimate Costs 3. Scope baseline, containing the scope statement, which may contain limitations by period for project expenditures from the organization, contract, or government agency. It also includes the WBS and WBS dictionary. 4. Project schedule, from Develop Schedule, which provides the "when" for costs. 5. Resource calendars, which may indicate resource costs over the length of the project (e.g. rate increases) 6. Contracts for products, services or results that are purchased. 7. Organizational process assets, including policies, procedures, and guidelines related to budgeting, as well as budgeting tools and reporting methods.
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Determine Budget Process has what outputs?
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1. Cost performance baseline, an authorized time-phased budget used to measure and monitor project cost performance. Sumss the approved budget expenditures by time period, and is displayed as an S-curve showing accumulated expenditures over time 2. Project funding requirements, which are set in a step function to stay ahead of the cost baseline considering cash flow delays. 3. Project document updates, including cost estimates, project schedule, and the risk register.
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Determine Budget process TOOLS AND TECHNIQUES are?
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1. Cost aggregation, which aggregates by work package, then to higher levels such as control accounts, and ultimately the entire project cost 2. Reserve analysis, to establish contingency and management reserve requirements. 3. Expect judgement, particularly related to the application area of the project 4. Historical relationships for parametric or analogous estimates 5. Funding limit reconciliation, to relate timing of expenditures to any limitations on the commitment of funds during the project.
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EAC: What EAC do you use when current variances are thought to be atypical of the future, assuming poor cost performance and a need to hit a firm completion date?
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AC + [(BAC - EV) / Cumulative CPI x Cumulative SPI)]
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EAC: What EAC do you use when current variances are thought to be atypical of the future?
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AC + (BAC - EV)
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EAC: What EAC do you use when the original estimate was fundamentally flawed?
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EAC = AC + Bottom-up ETC
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EAC: What EAC do you use when there are no variances or you will continue at the same rate of spending?
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BAC/Cumulative CPI
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Earned Value (EV) is...?
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Earned Value (EV) is the budgeted value of work completed during the selected time period; As of today, what is the estimated value of the work actually accomplished?; Indicates potential deviation of the project from the scope, cost, and schedule baselines; will lead to budget forecasts, change requests and other items that will need to be communicated
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Earned Value Management (EVM) is…?
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1. Earned value is a commonly used method of measuring project performance. It integrates scope, cost, and schedule measures 2. The focus is the accurate measurement of physical performance against a detailed plan 3. It also allows for accurate prediction 1. EVM measures true cost performance "what we got for what we spent." 2. It has three dimensions of data:A. The Planned Value (PV) of the work B. The Earned Value (EV) of the physical work accomplishedC. The Actual Costs (AC) incurred to accomplish the project
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Estimate at Completion (EAC) is…?
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As of now, how much do expect the total project to cost?
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Estimate Costs Process has what inputs?
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1. Scope baseline, includes the project scope statement, the WBS, and WBS dictionary. These are the sources of information about components and products of the project, as well as assumptions and constraints. 2. Project schedule, Which includes the quantity and amount of time resources will be required. This achieves the close linkage between Estimate Activity Resources and Estimate Costs 3. Human resource plan, indicates staffing requirements, cost rates, related reward costs 4. Risk register, so that risk mitigation costs are included in cost estimates 5. Enterprise environmental factors, including market conditions and published commercial databases or seller price lists 6. Organizational process assets, including cost estimation policies and templates, along with historical information and lessons learned
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Estimate Costs Process has what outputs?
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1. Activity costs estimates, in summary form or in detail 2. Basis of estimates includes detail necessary to support the estimate and how it was determined. Also indicates the range of possible results as an indicator of the expected accuracy of the estimate 3. Project document updates including the risk register.
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Estimate Costs Process is...?
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1. Develop an approximation of the costs of resources required for project activities 2. Estimates are based on the information known at a particular time, and can be expected to be reflined as the project proceeds, from a rough order of magnitude estimate
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Estimate Costs process TOOLS AND TECHNIQUES are?
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1. Expert judgement, to guide the application of historical and other information in determining project estimates 2. Analogous estimating, which uses historical information from a previous project. Analogous estimating is useful when information and time are limited, but is not as accurate as detailed estimating 3. Parametric estimating 4. Bottom-up estimating, which estimates at the lower levels then accumulates cost upward. It's more accurate than analogous estimate 5. Three point estimates. Allows consideration of a range of possible estimates 6. Reserve analysis, to set up contingency reserves to account for cost uncertainty. Contingency reserves are part of the project's funding requirements 7. Cost of quality, to provide for quality assurance and control costs of the project 8. Project management estimating software, including things like computerized spreadsheets, simulation and statistical tools 9. Vendor bid analysis in which vendor cost bids are analyzed to determine reasonable "should costs" estimates.
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Estimate To Complete (ETC) is…?
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ETC = EAC - AC; "How much more will the project cost?"; From this point on, home much more to we expect to spend?
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Estimate to Completion should be calculated periodically by the PM; True or False?
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True, to make sure there are adequate funds
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Estimated is…?
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Costs of 1. quality efforts 2. risk efforts 3. PM's time 4. PM activities 5. project associated costs (training, paper, etc.) 6. Office space 7. profit when applicable 8. overhead costs
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Estimated Value for in-process work packages is established how?
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1. The Measurement method should be specified in the cost management plan 2. Keep the EV calculation method as simple as possible 3. The first EV analysis should be performed at the 15-20% period of the project life cycle 4. Measurement methods: A. 0/100 : No credit until its done - You understate/conservative B. 50/50 : Take 50% when you start and 100 when done C. % Complete : Base on estimating and prone to subjective opinion D. Milestone E. Apportioned Effect : Divy % of hours to various tasks F. Level of Effort
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Estimates are more accurate if…
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If smaller sized work components are estimated
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Estimates should be reviewed for padding & reasonableness; True or False?
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TRUE
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Estimates: What are the three types of estimates?
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1. Rough Order of Magnitude (ROM) Estimate 2. Budget Estimate 3. Definitive Estimate
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Estimates: What can decrease estimates?
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Reducing or eliminating risks
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Estimates: Who should estimate the work?
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The person doing the work
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Estimating cost process: What do you have at the completion of estimating cost process?
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1. activity cost estimates 2. and the basis for those costs 3. updates to risk register 4. project documents
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Estimating should be based on what to improve accuracy?
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The WBS
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For indices (index), is greater than one good or bad?
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Good; less than one is bad
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For variances, is a negative good or bad?
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Bad; positive is good
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Forecast: What two cost formulas relate to Forecast spending?
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ETC & EAC
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Forecasting: Describe forecasting and its three approaches
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1. Making estimates or predictions of conditions in the project's future based on information and knowledge available at the time of the forecast 2. As the project progresses, the project team may develop a forecast of the estimated cost at completion tha; 1. EAC forecast for ETC at the budgeted rate: EAC = AC + BAC - EV 2. EAC forecast for ETC at the cumulative CPI: EAC = BAC / CPI 3. EAC forecast for ETC considering both the CPI and SPI factors. This is used when we have a negative cost performance to date, and must meet a firm schedule date commitment. EAC = AC + (BAC - EV) / (CPI X SPI)
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Future Value is…?
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Future Value is the value of something at a specific time in the future; FV = PV * (1 + r)to the n power; PV = Present Value; r = Interest Rate; n = Number of Periods; FV = Future Value
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Index: If the question on cost is regarding an index the formula will start with what?
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EV / something
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Life Cycle Costing is…?
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Looking at the cost for the whole life of the product, not just the project
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Padding: Is it acceptable?
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No
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Percent Complete (performance) is determined with what equation?
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Earned Value / Budget at Completion; EV/BAC
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Percent Completion (schedule) is determined with what equation?
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Project Value / Budget at Completion; PV/BAC
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Performance Measurement Baseline is...?
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The combination of the scope, cost, and schedule baselines
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Performance Reviews are completed using what three tools?
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1. Variance analysis 2. Trend analysis 3. Earned value performance
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Performance Reviews are used for what?
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To compare cost performance over time, schedule activities or work packages over-running and under-running budget (Planned Value), milestones due, and milestones met.
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Planned Spending: What two cost formulas relate to original planned spending?
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PV & BAC
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Present Value is…?
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Present Value is the value of something today to create a certain value in the future; PV = FV / (1 + r) to the n power; PV = Present Value; r = Interest Rate; n = Number of Periods; FV = Future Value; Planned Value is the budgeted cost for the work scheduled during the selected time period; As of today, what is the estimated value of the work planned to be done?
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Project Cost Management can be described as?
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Project Cost Management includes the processes involved in estimating, budgeting, and controlling costs so that project can be completed within the approved budgets.
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Project Estimate: What two items can the project estimate not be completed without?
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1. risk mgmnt activities 2. inclusion of reserves
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Project Management Software is used how?
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Software may be used to process actual costs and the EVM values, and to display graphical trends.
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Project Selection Cost Measures are what?
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1. ROI : Return on Investment - IRR : Internal Rate of Return - NPV : Net Present Value- BCR : Benefit Cost Ration - For the above, pick the highest value - Payback Period, pick shortest ation - Opportunity Cost: the cost of projects not selected
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Reserves are defined as?
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1. Contingency reserves are allowances for unplanned but potentially required changes resulting from the risks identified in the risk register. Included in the cost baseline 2. Management reserves are budgets reserved for unplanned changes to project sco
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Rough Order of Magnitude (ROM) Estimate can be described as?
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1. Made during initiating process 2. typical range +/- 50% from actual
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Schedule performance index (SPI) is…?
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Schedule Performance Index (SPI) is the earned value divided by the planned value (EV/PV); SPI = EV/PV; We are only progressing at ____percent of rate originally planned
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Schedule Variance (SV) is…?
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SV = EV - PV; negative = over budget; positive = under budget
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Schedule: If the question on cost is relating to schedule the formula will relate to?
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PV
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To Complete Performance Index (TCPI) is...?
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TCPI = (BAC - EV) / (BAC - AC); It answers, "In order to stay within budget, what rate must we meet for the remaining work?"; To Complete Performance Index (TCPI) is used to determine cost performance efficiency required to complete project within the original budget (BAC) or revised budget (EAC); 1. Revised Budget: TCPI (EAC) = (BAC-EV)/(EAC-AC) 2. If budget can NOT be revised: TCPI (BAC) = (BAC/EV)/(BAC-AC)
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Variance Analysis...?
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Involves finding a less costly way to do the work; The cost management plan, created in Develop Project Management Plan, describes how cost variances will be managed. - Example: response might be different for major versus minor variance. Plan would define what constitutes minor, and what to do - Variances should decrease as project progresses; therefore the definition of minor variance may change during the project
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Variance At Completion (VAC) is...?
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VAC = BAC - EAC; How much over budget or under budget will we be at the end of the project?; VAC = BAC - EAC; BAC = Budget at completion; EAC = Estimate at completion
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Variance: If the question on cost is regarding a variance, the formula will start with what?
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EV - something
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Variances VS. Performances Indexes: What are the differences?
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1. Variances are measured in absolute values, like dollars 2. Performance indices are ratios 3. A variance indicates where you are. A performance index measures how well you are performing against planned efficiency 4. Both are useful measures 5. Varianc
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What cost formula relates to actual spending?
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AC
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What do you do after the Cost Baseline & Cost Budget are completed?
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Check cash flow (part of funding limit reconciliation)
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