Budgeting and Cost Control

Question 1

How should strict budget management and reporting to stakeholders be handled?

Answer 1

By categorising all costs, outlining the cost type of the various elements of process, allowing for a more efficient analysis.

Question 2

What does earned value represent?

Answer 2

Committed costs and work achieved to date or value of the work done.

Question 3

What is an appropriate course of action for managing surplus funds?

Answer 3

Inform stakeholders of financial performance using a routine budget report.

Question 4

What activities make up finance closure?

Answer 4

1. Project closure report
2. Reassigning resources
3. Formally closing contracts
4. Updating accounting and management systems
5. Returning surplus funding

Question 5

What is a cost breakdown structure?

Answer 5

A CBS identifies all activity within a project that has costs associated to it.

Question 6

What are the elements of a CBS?

Answer 6

1. Fixed cost (resource supplied at a fixed price)
2. Variable cost (costs vary according to resource)
3. Recurring cost (event driven costs that recur at set periods)
4. Direct cost (directly related to production of project outputs)
5. Indirect costs (business costs not specific to the project)

Question 7

When is it appropriate to report on project finances?

Answer 7

At all review points.

E.g.
1. Decision gates
2. Benefit reviews
3. Audits