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### 20 Cards in this Set

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 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.