Chapter 7 Project Cost Management Flashcards Preview

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Flashcards in Chapter 7 Project Cost Management Deck (49):
1

What are the 8 parameters normally established by the cost management plan?

1. Units of measure
2. Level of precision
3. Level of accuracy
4. Organizational procedure links
5. Control thresholds
6. Rules of performance measurements
7. Reporting formats
8. Process description

2

What is the 3-point estimate name PERT?

A technique for estimating that applies a weighted average of optimistic, pessimistic, and most likely estimates when there is uncertainty with the individual activity estimates.

3

What are the 4 EVM status measures?

1. SV - schedule variance
2. CV - cost variance
3. SPI - schedule performance index
4. CPI - cost performance index

4

What are some resources for which cost estimates should be developed on a project?

Labor
Materials
Equipment
Services
Facilities
Inflation allowance
Contingency
Cost of financing

5

What are the 2 main categories of cost in cost of quality?

Conformance
Nonconformance

6

What are the 5 tools and techniques for the Determine Budget process?

1. Cost aggregation
2. Reserve analysis
3. Expert judgement
4. Historical relationships
5. Funding limit reconciliation

7

What are the 6 tools and techniques for the Control Costs process?

1. Earned value management
2. Forecasting
3. To-complete performance index (TCPI)
4. Performance reviews
5. Project management software
6. Reserve analysis

8

What is the Estimate Costs process?

The process of developing an approximation of the monetary resources needed to complete project activities.

9

What is analogous estimating?

A technique for estimating the duration or cost of an activity or a project using historical data from a similar activity or project.

10

What are the 3 PERT estimates?

1. Most likely (Cm)
2. Optimistic (Co)
3. Pessimistic (Cp)

11

What are the 4 of the different ways to determine Earned Value (EV)?

1. Fixed formula rate
2. Weighted milestone
3. Apportioned effort
4. Percent complete

12

In the Initiation phase, what is the cost estimate called? What is its range?

ROM (rough order of magnitude)
Range = -25% to +75%

13

What are the 7 inputs to the Estimate Costs process?

1. Cost management plan
2. Human resouce management plan
3. Scope baseline
4. Project schedule
5. Risk register
6. Enterprise enviornmental factors
7. Organizational process assets

14

What are the 3 outputs of the Determine Budget process?

1. Cost baseline
2. Project funding requirements
3. Project document updates

15

What are the 10 tools and techniques for Estimate Costs?

1. Expert judgement
2. Analogous estimating
3. Parametric estimating
4. Bottom-up estimating
5. Three-point estimating
6. Reserve analysis
7. Cost of quality
8. Project management software
9. Vendor bid analysis
10. Group decision-making techniques

16

What is PV (planned value)?

The authorized budget assigned to scheduled work.

17

What does the term ETC mean?

Estimate to complete

18

What are the formulas for SV (scheduled variance) and CV (cost variance)?

SV = EV-PV
CV = EV-AC

19

What is the general form of the EAC formula?

EAC = AC + ETC

20

What is the TCPI (to-complete performance index) formula when the BAC is still achievable?

TCPI = BAC - EV / BAC - AC

21

What are the 4 processes of Project Cost Management?

1. Plan Cost Management
2. Estimate Cost
3. Determine Budget
4. Control Costs

22

What is bottom-up estimating?

A method of estimating project duration or cost by aggregating the estimates of the lower-level components of the work breakdown structure (WBS).

23

What are the 3 earned value data points?

1. PV (planned value)
2. EV (earned value)
3. AC (actual cost)

24

What are the 4 constraints that might affect your cost estimates?

1. Limited budget
2. Required delivery dates
3. Availability of skilled resources
4. Organizational policies

25

What is the usual method of showing the cost baseline and expenditures?

An S-curve

26

What are the 9 inputs to Determine Budget process?

1. Cost management plan
2. Scope baseline
3. Activity cost estimates
4. Basis of estimates
5. Project schedule
6. Resource calendars
7. Risk register
8. Agreements
9. Organizational process assets

27

What are the 6 outputs of the Control Costs process?

1. Work performance information
2. Cost forecasts
3. Change requests
4. Project management plan updates
5. Project documents updates
6. Operational process assets updates

28

What is EV (earned value)?

The measure of work performed expressed in terms of the budget authorized for that work.

29

On the perfect project (executed on schedule and on budget), what will be true relative to EVM at completion?

PV = EV = AC = BAC

30

What are the 4 inputs to the Control Costs process?

1. Project management plan
2. Project funding requirements
3. Work performance data
4. Organizational process assets

31

What is the EAC forecast for a project that has experienced a one-time anomaly, but the remaining work is expected to go as originally planned?

EAC = AC + (BAC -EV)/CPI

32

What is the PERT formula for the mean cost?

Mean Cost = Co+4Cm + Cp/6

33

What is the determine budget process?

The process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline.

34

What is parametric estimating?

An estimating technique in which an algorithm is used to calculate cost or duration based on historical data or project parameters.

35

What is AC (Actual Cost)?

The realized cost incurred for the work performed on an activity during a specific time period.

36

What does the scope baseline consist of?

Scope Statement
WBS
WBS dictionary

37

Later in the planning phase, what is the cost estimate called? What is the range?

Definitive estimate
Range = -5% to +10%

38

What are the 3 outputs of the Estimate Cost process?

1. Activity cost estimates
2. Basis of estimates
3. Project documents updates

39

What is the function of the reserve analysis tool in Estimate Cost?

* Establish the contingency reserve, which is an allowance for unplanned, not initially identified but potentially required changes (known unknowns)
* To make sure that adequate reserves remain as the project progresses.

40

What is the total planned value for a project also known as?

BAC (Budget at Completion)

41

What does forecasting mean?

An estimate or prediction of conditions and events in the project's future based on information and knowledge available at the time of the forecast. The information is based on the project's past performance and expected future performance, and includes information that could impact the project in the future, such as estimate at completion and estimate to complete.

42

What are the formulas for SPI (schedule performance index) and CPI (cost performance index)?

SPI = EV / PV
CPI = EV / AC

43

What is the EAC forecast for a project that is expected to accomplish the ETC work at the current CPI rate?

EAC = [BAC / Cumulative CPI]

44

What is the TCPI (to-complete performance index) formula when the original BAC is no longer achievable and the project is rebaselined to the new EAC?

TCPI = BAC - EV / EAC - AC

45

What is the most accurate EAC formula that works in every project case and must be used when the original estimates are fundamentally flawed?

EAC = AC + a new bottom-up ETC

46

What is the EAC forecast for ETC work considering both SPI and CPI factors?

EAC = AC + [BAC - EV / Cumulative CPI x Cumulative SPI]

47

What is the standard deviation formula for the PERT equation?

o = (Cp - Co) / 6

48

What does the term EAC mean?

Estimate at completion

49

What are some resources for which cost estimates should be developed on a project?

Labor
Materials
Equipment
Services
Facilities
Inflation allowance
Contingency
Cost of financing