16. Budgeting

Question 1

Describe difference in budgeting between linear and iterative

Answer 1

Linear:
- based on fixed scope
- new requirements need funding
- cost overruns common
- scope creep wastes money that doesn’t add value

Iterative:
- fixed cost, fixed time
- funding may be allocated per iteration
- can replace low-priority requirement with new high priority

Question 2

List 3 techniques for cost control

Answer 2

1. AFC - Anticipated final cost
2. Cashflow forecasting
3. Earned Value Analysis - identifies difference between planned spend and what actually spent

Question 3

Define EVA - earned value analysis

Answer 3

Difference between planned spend and what actually spent

Question 4

How to calculate CPI - Cost performance indicator

Answer 4

Earned Value / Actual cost

CPI > 1 underspend
CPI < 1 overspend

Question 5

How to calculate SPI - Schedule performance indicator

Answer 5

Earned Value / Planned Cost

SPI > 1 ahead of schedule
SPI < 1 behind schedule