Chapter 7 - Cost Management Flashcards
(26 cards)
ROM
Rough Order of Magnitude. Estimates in the range of -25% to + 75%
Definitive estimate range
-5% to +10%
Project Schedule Management Three Point Estimating Calculation
tE = (tO + tM + tP)/3
Where
tM: time most likely
tO: time to complete optimistic view
tP: time to complete pessimistic view
Project Cost Management Three Point Estimating - Triangular Distribution
cE = (cO + cM + cP)/3
Where
cM: cost most likely
cO: cost optimistic view
cP: cost pessimistic view
Project Cost Management Three Point Estimating - Beta Distribution
cE = (cO + 4cM + cP)/6
Where
cM: cost most likely
cO: cost optimistic view
cP: cost pessimistic view
Define EVA
Earned Value Analysis - a comparison of the performance measurement baseline to the actual schedule and cost performance. It develops and monitors three key dimensions for each work package and control account: PV, EV, AC
Define PV
Planned value - the authorized budget assigned to scheduled work
Define EV
earned value - a measure of work performed expressed in terms of the budget authorized for that work
Define AC
Actual cost - the realized cost incurred for the work performed on an activity during a specific time period
Define EVM
earned value management - is a systematic project management process used to find variances in projects based on the comparison of worked performed and work planned. EVM is used on the cost and schedule control and can be very useful in project forecasting
Define ES
earned schedule theory - replaces the schedule variance by calculating ES-AT.
If the amount earned is greater than 0, then the project is considered ahead of schedule.
define and give equation for SPI
schedule performance index indicates the efficiency with which work is being accomplished
equation is ES/AT
define VAC
is the explanation (cause, impact, and corrective actions for cost, and schedule, and variance at completion
CV equation
CV = EV-AC
Where
CV = cost variance
EV = earned value
AC = actual cost
SV equation
SV = EV - PV
Where
SV = schedule variance
EV = earned value
PV = planned value
**NOTE: used with critical path method scheduling and risk management
VAC equation
VAC = BAC - EAC
Where
VAC = variance at completion
BAC = budget at completion
EAC = estimate at completion
SPI
SPI = EV/PV
Where
SPI = schedule performance index
EV = Earned value
PV = planned value
***Note
SPI measures how efficiently the project team is accomplishing the work. SPI value less than 1 indicates less work was completed than was planned. SPI value greater than 1 indicates that more work was completed than was planned
CPI
CPI = EV/AC
WHERE
CPI = cost performance index
EV = earned value
AC = actual cost
***Note
CPI is a measure of the cost efficiency of budgeted resources. A CPI less than 1 indicates a cost overrun for work completed, a value greater than 1 indicates a cost underrun of performance to date
define EAC
estimate at completion (estimated cost of project)
define BAC
budget at completion (actual cost of project)
What is the bottom up EAC equation
EAC = AC + Bottom-up ETC
WHERE
EAC = estimate at completion
AC= actual cost
bottom up ETC = bottom up estimate to complete
equation for… EAC forecast for ETC work performed at the budgeted rate
EAC= AC + (BAC-EV)
WHERE EAC = estimate at completion AC = actual cost BAC = budget at completion EV = earned value
equation for… EAC forecast for ETC work performed at the present CPI
EAC = BAC/CPI
WHERE
EAC = estimate at completion
BAC = budget at completion
CPI = cost performance index
equation for…. EAC forecast for ETC work considering both SPI and CPI factors
EAC = AC + { (BAC-EV) / (CPI x SPI) }
WHERE EAC = estimate at completion AC = actual cost BAC = budget at completion EV = earned value CPI = cost performance index SPI = schedule performance index
