Cost Terminology Flashcards

1
Q

Actual Cost (AC)

A

Represents the total costs that have actually been accrued up to a particular point in time; also known as actual cost of work performed

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2
Q

Analogous Estimates (Technique)

A

Process of using a previous project of similar characteristic (size, cost, scope) to estimate a new project

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3
Q

Baseline

A

Estimate/plan that the project tries to achieve (cost, scope, time, etc.)

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4
Q

Bottom-Up Estimating

A

A detailed estimating approach that usually involves team input- As the team builds the pieces of the estimate, they build the total estimate from the bottom up.

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5
Q

Budget

A

The total amount of money expected to be spent on a project based on the original cost estimates plus any approved changes

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6
Q

Budget at Completion (BAC)

A

Total project budget; amount of money planned to be spent by the time the project is complete; sum of all planned value (PV)

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7
Q

Budgetary Estimate

A

An estimate used to put money into a company’s (or project’s) budget

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8
Q

Chart of Accounts (Tool)

A

A structure used to monitor project cost that usually aligns with a company’s accounting system and WBS of the project or program

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9
Q

Code of Accounts (Tool)

A

A numbering system used in project management to identify pieces of the work breakdown structure

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10
Q

Control Account (Tool)

A

A point where scope, time, budgeted cost, and actual cost come together to measure performance on a project - The control account is used at multiple interface points on the project.

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11
Q

Control Costs

A

The process of controlling changes to the budget and monitoring project spending

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12
Q

Cost Management Plan

A

The document that explains how to handle cost estimations, budgeting , variances, and other cost-related items on the project

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13
Q

Cost Performance Baseline

A

A budget version for a specific time period that is used as the basis for expenditure comparison

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14
Q

Cost Performance Index (CPI)

A

A ratio that shows the current efficiency of money being spent on the project; Formula: EV/AC - A value of one means you are getting out what you put in (which is good); less than one is bad; greater than one is good.

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15
Q

Cost Variance (CV)

A

The difference between what has been built (EV) and what the cost was to build it (AC); Formula: EV-AC -A value of zero (0) means the project is creating what it should for the cost as planned . A negative value means you are over budget; a positive value means you are under budget.

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16
Q

Definitive Estimate

A

A cost estimate that provides the accurate estimation of the project cost; the final estimate to be used on the project before implementation begins; Tolerance range: -10 to +10%

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17
Q

Determine Budget

A

The process of applying the overall cost estimates to the individual work elements to allow for a baseline cost measurement

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18
Q

Direct Cost

A

Cost that is directly applicable to the project (Ex: test computer for software being created on the project, IC chips, or labor used on the project)

19
Q

Earned Value (EV)

A

Represents the value of the work that has actually been accomplished or completed up to a particular point in time; the percent complete of each activity multiplied by the planned value; also known as budgeted cost of work performed (BCWP)

20
Q

Earned Value Management (EVM)

A

Earned value management technique that factors in cost (AC) and time (PV) along with what has actually been accomplished (EV) to show the state of the project; produces a quantifiable status of the project instead of a “gut feel” estimate which can be inaccurate and inconsistent

21
Q

Earned Value Technique (EVT) (Technique)

A

The technique associated with measuring the amount of completion of a work breakdown structure component, control account or project

22
Q

Estimate at Completion (EAC)

A

Represents the projected total estimate, based on the current efficiency (CPI) with which you are spending money on the project; One version of the formula: BAC/CPI

23
Q

Estimate Costs

A

The process of estimating (educated consistent process) the cost of people and other resources to complete the project activities

24
Q

Estimate to Complete (ETC)

A

Represents the projected total estimate remaining to be spent, based on the current efficiency (CPI) with which you are spending money on the project; Formula : EAC-AC

25
Q

Indirect Cost

A

Cost that is not directly accrued on the project (Ex: electricity, taxes, rent)

26
Q

Internal Rate of Return (IRR)

A

A project comparison value; represents the discounted rate that zeroes out the net present value (NPV)

27
Q

Learning Curve Theory

A

A theory which states that the more of something that is produced, the lower the unit cost of it becomes due to an improvement in efficiency

28
Q

Life Cycle Costing

A

Consideration of not just project cost, but total ownership (operations and support) cost of the item created by the project

29
Q

Management Reserves

A

Money set aside to account for unpredictable items (unknown unknowns)

30
Q

Net Present Value (NPV)

A

A value used in capital budgeting , in which the present value of cash inflow is subtracted from the present value of cash outflows; compares the value of a dollar today versus the value of that same dollar in the future, after taking inflation and return into account

31
Q

Opportunity Cost

A

The cost associated with giving up one opportunity for another (Ex: Project A $50K, Project B $75K. If you select Project B, it has an opportunity cost of the total of Project A, which is $50K.)

32
Q

Parametric Modeling

A

Application of a mathematical model used to estimate project components (time, cost, scope) by having other variables entered into the application

33
Q

Planned Value (PV)

A

Represents the total costs that should have been spent up to a particular point in time; also known as budgeted cost of work scheduled (BCWS)

34
Q

Profit

A

Money made after expenses have been subtracted from revenue

35
Q

Profit Margin

A

Ratio between revenues and profit on a project, product, or initiative

36
Q

Project Cost Management

A

Processes used to complete the project within the approved budget

37
Q

Reserves

A

Money set aside in a budget used for items that are difficult to predict; also known as contingency reserves

38
Q

Rough Order of Magnitude (ROM) Estimate

A

Very early cost estimate used to give a rough estimate of what the project will cost to complete: Tolerance range: -50% to +50%.

39
Q

Schedule Performance Index (SIP)

A

Ratio of earned value and planned value that can be used to calculate how a project is progressing

40
Q

Schedule Variance (SV)

A

The difference between what has been built (EV) and the time it should take to build it (PV); Formula: EV-PV- A value of zero (0) means the project is creating what it should in the planned timeframe. A negative value means that it is taking longer than planned on the project to complete activities.

41
Q

S-Curve

A

Graphic representation of costs, work, and other quantities over time so that the planned value, earned value, and actual cost of the work can be seen

42
Q

Sunk Cost

A

Money that has already been spent on a project; should not be considered when selecting or evaluating a project

43
Q

Tangible Cost/Benefit

A

Easily measurable cost or benefit of a project; measured in dollars

44
Q

To-Complete-Performance Index (TCPI)

A

The ratio of remaining work to remaining funds.