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17 Cards in this Set
- Front
- Back
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Project Cost Management
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Includes the processes involved in
estimating, budgeting and controlling costs so that the project can be completed within the approved budget. Estimate Costs Determine Budget Control Costs |
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Estimate Classes
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Analogous (Top-Down) Estimating
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Used for Class 6 - Order of Magnitude
Compare total costs for similar projects Advantages Fast, understandable, inexpensive Information may be readily available Based on actual cost expenditures Disadvantages Lack of similar projects Lack of reliable information |
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Detailed (Bottom-Up) Estimating
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Used for Class 1 - Definitive Estimates
Requires detailed measurement of all components (e.g. quantity surveying) Uses established rates for each part, based on industry standards, known labour input, and supplier costs Possible only when the design and specifications are complete |
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Parametric Modelling
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Use formulae derived from projects
Two methods are available to calculate a parametric formula 1 Statistical analysis 2 Logical analysis Either approach can result in a valid models Both require recent data from similar projects For Detailed Estimates - Class 2 or 3 Use complex models from extensive statistical or logical analysis Best to use separate value for each parameter For Preliminary Estimates - Class 4 or 5 Use simple models based on average rates |
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Detailed Cost Estimating Process
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Use formulae derived from projects
Two methods are available to calculate a parametric formula 1 Statistical analysis 2 Logical analysis Either approach can result in a valid models Both require recent data from similar projects For Detailed Estimates - Class 2 or 3 Use complex models from extensive statistical or logical analysis Best to use separate value for each parameter For Preliminary Estimates - Class 4 or 5 Use simple models based on average rates |
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Determine Budget I-TT-O
Process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost base line |
Inputs
• Activity cost estimates • Bases of estimates • Scope baseline • Project schedule • Resource calendar • Contracts •Organizational process assets Tools and Techniques • Cost aggregation • Reserve analysis • Expert judgment • Historical relationships • Funding limit reconciliation Outputs • Cost performance baseline • Project funding requirements • Project document updates |
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Control Costs I-TT-O
Monitoring cost performance to detect variances from the baseline Ensuring that all appropriate changes are recorded accurately and authorized |
Inputs
• Project management plan • Project funding requirements •Work performance information •Organizational process assets Tools and Techniques • Earned value management • Forecasting • To complete performance index • Performance reviews • Variance analysis • Project management software Outputs •Work performance measurements • Budget forecasts •Organizational process assets updates • Change requests • Project management plan updates • Project document updates |
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Earned Value Management:
The Key Components |
1 PLANNED VALUE (PV): What did we plan to achieve by now?
also called: the budgeted cost of the work scheduled (BCWS) the portion of the approved cost estimate planned to be spent on the activity during a given period includes both direct and indirect costs 2 EARNED VALUE (EV): What have we achieved so far? also called: the budgeted cost of the work performed (BCWP) a percentage of the total budget equal to the percentage of the work actually completed can include an estimated value for partly completed activities 3 ACTUAL COST (AC) What have we spent so far? also called: the actual cost of the work performed (ACWP) the total of direct and indirect costs incurred in accomplishing work on the activity in a given period |
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Determining the Earned Value of a
Work Package |
Not started: No earned value (of course)
Completed: Earned value is equal to the planned value for that task In progress: Different ways to calculate: Percent complete – Based on reports from staff Effort Left - Input from staff The 0/100 Rule – No value given until task is complete The 50/50 Rule – Task is given half the PV when started, the balance when completed Other approaches can be used for certain tasks |
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Cost Variance
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CV = earned value - actual cost = BCWP - ACWP
CV = EV - AC negative CV is the $ value that performance lags behind costs |
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Schedule Variance
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SV = earned value - planned value = BCWP - BCWS
SV = EV - PV negative SV is the $ value that performance is behind plan |
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Cost Performance Index
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CPI = earned value / actual cost = BCWP / ACWP
CPI = EV/AC CPI gives performance as a ratio of actual costs to date |
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Schedule Performance Index
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SPI = earned value / planned value = BCWP / BCWS
SPI = EV/PV SPI gives performance as a ratio of the budget to date |
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Estimated Actual Cost ( end of project)
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EAC = Total Budget / CPI
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To-complete Performance Index
(TCPI) |
Calculated projection of cost performance
that must be achieved on the remaining work to meet specified management goal TCPI = Work Remaining(BAC-EV) / Funds Remaining (BAC-AC) or (EAC-AC) |
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Earned Value Management
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SV - Schedule Variance
SV = EV - PV SPI - Schedule Performance Index SPI = EV / PV CV - Cost Variance CV = EV - AC CPI - Cost Performance Index CPI = EV / AC |
