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10 Cards in this Set
- Front
- Back
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What is Project Cost Management?
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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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What is a cost management plan?
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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.
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What does the Cost Management Plan address?
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- Level of accuracy - what rounding is used in cost estimating
- Units of measure - days, weeks, dollars, Euros - Organizational procedure links, particularly through the specification of control accounts in the WBS - Control thresholds, to set an agreed-upon level of variance before triggering response. - Rules of performance measurement, including choices affecting use of Earned Value Management - Reporting formats for cost reports - Process descriptions of the three cost management processes. |
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What types of costs should be identified?
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- Variable vs. Fixed
- Direct vs. Indirect - Recurring vs. Non-recurring - "Allowed" costs for contract projects - Price, if the project is done under contract for an external customer |
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What are the Project Selection Cost Measures?
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- 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 duration - Opportunity Cost: the cost of projects not selected for execution |
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What is Future Value?
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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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What is Present Value?
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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 |
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What is depreciation?
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Depreciation is devaluing an asset in the tax system. There are two kinds:
- Standard depreciation, where the difference between start value and scrap value is divided by the number of periods. - 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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What is the Process - 7.1 Estimate Costs?
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- Develop an approximation of the costs of resources required for project activities
- 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 during initiation in the +/- 50% range, to a later definitive or control estimate within a range of +/- 10%. - Costs estimated include labor, materials, equipment, services, facilities, and special categories like inflation. |
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What are the INPUTS of the process - Estimate Costs?
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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 |
