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20 Cards in this Set

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  • Back
Cost Estimating
IN: WBS, Scope Statement
OUT: Activity Cost Estimates
Cost Budgeting
IN: Activity Cost Estimates
OUT: Cost Baseline
Cost Control
IN: Cost Baseline
OUT: Cost Updates, Baseline Updates, Corrective Action
Time Value of Money
Money that we spend today is more expensive than money we will spend 3 years from now.

PV = FV / (1+r)^n
Net Present Value
Allows comparison of projects with very different budgets, durations, benefits.

Difference between present value of value of cash inflows and present value of cash outflows.
Payback Period
Number of periods it takes to equate to the project cost.

$3,000 cost of project that provides $1000 per year benefit. Period here is 3 years.
Internal Rate of Return (IRR)
Calculate financial alternatives based on interest rate of cash inflows and outflows.

Highest IRR is preferred.
EV
Earned Value

Value of work actually completed. Multiply the % complete by the cost baseline to get the value of what we've done so far.
PV
Planned Value

Value of work and planned to be completed. Comes from the Cost Baseline.
(we dont know the value of the work or how much is complete)
AC
Actual Cost

What actual costs that have incurred.
(we know the completion of work done and its value)
EAC
Estimate at Completion

BAC/CPI

What we think we will actually spend when the project is done.
CPI
Cost Performance Index

EV/AC

Less than 1 means bad, means project cost (AC) more its value (EV).
CV
Cost Variance

EV-AC

Less than 1 means bad, means project cost (AC) more its value (EV).
SV
Schedule Variance

EV-PV

Less than 1 means bad, means our current completion (EV) is less than planned (PV).
SPI
Schedule Performance Index

EV/PV


Less than 1 means bad, means our current completion (EV) is less than planned (PV).
Standard Deviation
(P-O)/6

Gives the confidence level at which we can give an estimate.

Greater the number, the greater the distance between estimates and the greater the risk.
Cost Baseline
Lists amount to spend on every WBS entry in every day of the project.

Also allows you to calculate how much value we should have created by a certain date (the heart of EV).
BAC
Budget at Completion

Total approved budget for project
Variance at Completion
BAC-EAC

Zero is the best result.
Time Value of Money
PV = FV / (1+r)^n

r=interest rate
n=time in periods

What money we spend now, what is it worth in the future. Good calculation for projects whose expenses are well in the future.