Pmbok 5, Ch 7 - Definitions

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Activity Cost Estimates

Back 1

The projected cost of the schedule activity that includes the cost for all resources required to perform and complete the activity, including all cost types and cost components.

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Actual Cost (AC)

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The realized cost incurred for the work performed on an activity during a specific time period.

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Agreements

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Any document or communication that defines the initial intentions of a project. This can take the form of a contract, memorandum of understanding (MOU), letters of agreement, verbal agreements, email, etc.

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Analogous Estimating

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A technique for estimating the duration or cost of an activity or a project using historical data from a similar activity or project.

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Analytical Techniques

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Various techniques used to evaluate, analyze, or forecast potential outcomes based on possible variations of project or environmental variables and their relationships with other variables.

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Apportioned Effort

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An activity where effort is allotted proportionately across certain discrete efforts and not divisible into discrete efforts. [Note: This is one of three earned value management (EVM) types of activities used to measure work performance.]

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Beta Distribution

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Another name for a PERT estimate.

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Bottom-Up Estimating

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A method of estimating project duration or cost by aggregating the estimates of the lower-level components of the work breakdown structure (WBS).

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Brainstorming

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A general data gathering and creativity technique that can be used to identify risks, ideas, or solutions to issues by using a group of team members or subject matter experts.

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Budget

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The approved estimate for the project or any work breakdown structure component or any schedule activity.

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Budget at Completion (BAC)

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The sum of all budgets established for the work to be performed.

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Change Request

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A formal proposal to modify any document, deliverable, or baseline.

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Contingency

Back 13

An event or occurrence that could affect the execution of the project that may be accounted for with a reserve.

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Contingency Reserve

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Budget within the cost baseline or performance measurement baseline that is allocated for identified risks that are accepted and for which contingent or mitigating responses are developed.

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Control Costs

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The process of monitoring the status of the project to update the project costs and managing changes to the cost baseline.

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Cost Aggregation

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Summing the lower-level cost estimates associated with the various work packages for a given level within the project's WBS or for a given cost control account.

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Cost Baseline

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The approved version of the time-phased project budget, excluding any management reserves, which can be changed only through formal change control procedures and is used as a basis for comparison to actual results.

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Cost Management Plan

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A component of a project or program management plan that describes how costs will be planned, structured, and controlled.

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Cost of Quality

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A method of determining the costs incurred to ensure quality. Prevention and appraisal costs (cost of conformance) include costs for quality planning, quality control (QC), and quality assurance to ensure compliance to requirements (i.e., training, QC systems, etc.). Failure costs (cost of nonconformance) include costs to rework products, components, or processes that are non-compliant, costs of warranty work and waste, and loss of reputation.

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Cost Performance Index (CPI)

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A measure of the cost efficiency of budgeted resources expressed as the ratio of earned value to actual cost (EV/AC)

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Cost Variance (CV)

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The amount of budget deficit or surplus at a given point in time, expressed as the difference between the earned value and the actual cost.

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Control Costs

Back 22

The process of monitoring the status of the project to update the project costs and managing changes to the cost baseline.

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Cost Aggregation

Back 23

Summing the lower-level cost estimates associated with the various work packages for a given level within the project's WBS or for a given cost control account.

Front 24

Cost Baseline

Back 24

The approved version of the time-phased project budget, excluding any management reserves, which can be changed only through formal change control procedures and is used as a basis for comparison to actual results.

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Cost Management Plan

Back 25

A component of a project or program management plan that describes how costs will be planned, structured, and controlled.

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Cost of Quality

Back 26

A method of determining the costs incurred to ensure quality. Prevention and appraisal costs (cost of conformance) include costs for quality planning, quality control (QC), and quality assurance to ensure compliance to requirements (i.e., training, QC systems, etc.). Failure costs (cost of nonconformance) include costs to rework products, components, or processes that are non-compliant, costs of warranty work and waste, and loss of reputation.

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Cost Performance Index (CPI)

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A measure of the cost efficiency of budgeted resources expressed as the ratio of earned value to actual cost.

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Delphi Technique

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An information gathering technique used as a way to reach a consensus of experts on a subject. Experts on the subject participate in this technique anonymously. A facilitator uses a questionnaire to solicit ideas about the important project points related to the subject. The responses are summarized and are then recirculated to the experts for further comment. Consensus may be reached in a few rounds of this process. This technique helps reduce bias in the data and keeps any one person from having undue influence on the outcome.

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Determine Budget

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The process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline.

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Earned Value (EV)

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The measure of work performed expressed in terms of the budget authorized for that work.

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Enterprise Environmental Factors

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Conditions, not under the immediate control of the team, that influence, constrain, or direct the project, program, or portfolio.

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Estimate

Back 32

A quantitative assessment of the likely amount or outcome. Usually applied to project costs, resources, effort, and durations and is usually preceded by a modifier (i.e., preliminary, conceptual, feasibility, order-of-magnitude, definitive). It should always include some indication of accuracy (e.g., ± x percent). Related term: Budget and Cost.

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Estimate at Completion (EAC)

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The expected total cost of completing all work expressed as the sum of the actual cost to date and the estimate to complete.

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Estimate Costs

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The process of developing an approximation of the monetary resources needed to complete project activities.

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Estimate to Complete (ETC)

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The expected cost to finish all the remaining project work.

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Expert Judgment

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Judgment provided based upon expertise in an application area, knowledge area, discipline, industry, etc., as appropriate for the activity being performed. Such expertise may be provided by any group or person with specialized education, knowledge, skill, experience, or training.

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Forecast

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An estimate or prediction of conditions and events in the project's future based on information and knowledge available at the time of the forecast. The information is based on the project's past performance and expected future performance, and includes information that could impact the project in the future, such as estimate at completion and estimate to complete.

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Funding Limit Reconciliation

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The process of comparing the planned expenditure of project funds against any limits on the commitment of funds for the project to identify any variances between the funding limits and the planned expenditures.

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Management Reserve

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An amount of the project budget withheld for management control purposes. These are budgets reserved for unforeseen work that is within scope of the project. They are not included in the performance measurement baseline (PMB).

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Monitor

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Collect project performance data with respect to a plan, produce performance measures, and report and disseminate performance information.

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Nominal Group Technique

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A technique that enhances brainstorming with a voting process used to rank the most useful ideas for further brainstorming or for prioritization.

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Parametric Estimating

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An estimating technique in which an algorithm is used to calculate cost or duration based on historical data and project parameters.

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Percent Complete

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An estimate expressed as a percent of the amount of work that has been completed on an activity or a work breakdown structure component.

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Performance Measurement Baseline

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An approved plan for the project work to which the project execution is compared, and deviations are measured for management control. It typically integrates scope, schedule, and cost parameters of a project, but may also include technical and qualty parameters. It includes contingency reserve, but excludes management reserve.

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Performance Reviews

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A technique that is used to measure, compare, and analyze actual performance of work in progress on the project against the baseline.

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Plan Cost Management

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The process that establishes the policies, procedures, and documentation for planning, managing, expending, and controlling project costs.

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Planned Value (PV)

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The authorized budget assigned to scheduled work.

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Process

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A systematic series of activities directed towards causing an end result such that one or more inputs will be acted upon to create one or more outputs.

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Project Cost Management

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Project Cost Management includes the processes involved in planning, estimating, budgeting, financing, funding, managing, and controlling costs so that the project can be completed within the approved budget.

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Project Funding Requirements

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Forecast project costs to be paid that are derived from the cost baseline for total or periodic requirements, including projected expenditures plus anticipated liabilities.

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Reserve

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A provision in the project management plan to mitigate cost and/or schedule risk. Often used with a modifier (e.g., management reserve, contingency reserve) to provide further detail on what types of risk are meant to be mitigated.

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Reserve Analysis

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An analytical technique to determine the essential features and relationships of components in the project management plan to establish a reserve for the schedule duration, budget, estimated cost, or funds for a project.

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Resource Calendar

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A calendar that identifies the working days and shifts on which each specific resource is available.

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Project Schedule

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An output of a schedule model that presents linked activities with planned dates, durations, milestones, and resources. Related term: Schedule Model.

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Three-Point Estimate

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A technique used to estimate cost or duration by applying an average of optimistic, pessimistic, and most likely estimates when there is uncertainty with the individual activity estimates.

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Threshold

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A cost, time, quality, technical, or resource value used as a parameter, and which may be included in product specifications. Crossing the threshold should trigger some action, such as generating an exception report.

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To-Complete Performance Index (TCPI)

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A measure of the cost performance that is required to be achieved with the remaining resources in order to meet a specified management goal, expressed as the ratio of the cost to finish the outstanding work to the remaining budget.

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Trend Analysis

Back 58

An analytical technique that uses mathematical models to forecast future outcomes based on historical results. It is a method of determining the variance from a baseline of a budget, cost, schedule, or scope parameter by using prior progress reporting periods' data and projecting how much that parameter's variance from baseline might be at some future point in the project if no changes are made in executing the project.

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Variance

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A quantifiable deviation, departure, or divergence away from a known baseline or expected value.

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Variance Analysis

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A technique for determining the cause and degree of difference between the baseline and actual performance.

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Variance at Completion (VAC)

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A projection of the amount of budget deficit or surplus, expressed as the difference between the budget at completion and the estimate at completion.

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Velocity

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A measure of a team's productivity rate at which the deliverables are produced, validated, and accepted within a predefined interval. This is a capacity planning approach frequently used to forecast future project work.

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WBS Dictionary

Back 63

A document that provides detailed deliverable, activity, and scheduling information about each component in the work breakdown structure.

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Weighted Milestone Method

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An earned value method that divides a work package into measurable segments, each ending with an observable milestone, and then assigns a weighted value to the achievement of each milestone.

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What-If Scenario Analysis

Back 65

The process of evaluating scenarios in order to predict their effect on project objectives.

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