Cost

Question 0

What is NPV?

Answer 0

NPV compares the value of a dollar today vs the value of the same dollar in the future after taking inflation and discount rate into account.

Question 1

What are 4 types of cost?

Answer 1

Direct cost: Cost directly attributable to the work of the project (salaries of coders)
Indirect cost: Cost indirectly attributable to work of the project (project building security cost)
Fixed cost: Consistent cost throughout the life of the project regardless of activity of project.
Variable cost: Cost that fluctuates with activity on project

Question 2

What is ROI?

Answer 2

Return on Investment - Chose the biggest

Question 3

What is IRR?

Answer 3

Internal rate of return: NPV of all cash flow equal to zero.

Question 4

What is BCR?

Answer 4

Benefit to cost ratio: Compares benefit of project to cost. Usually want 1:1.

Question 5

What is Opportunity cost?

Answer 5

Cost associated with taking another oppty.

Question 6

What is payback period?

Answer 6

Payback period is the amount of time need to earn back the investment.

Question 7

What is future value?

Answer 7

The value of something (cash) at a point in the future - for ex. FV of 1000 invested at 8% for three years 1259.
FV=PV x (1.r) to the n power

Question 8

What is present value? PV

Answer 8

Present value of something today that you need to create a certain amount of investment in the future.

PV= FV/(1+r) to the n power

Question 9

What is sunk cost?

Answer 9

Cost that has been already spent on a project. Do not consider sunk cost when making project decisions.

Question 10

What is depreciation?

Answer 10

The process of devaluing a capital asset in the tax system. (Wear and tear on an asset)

Question 11

How is standard depreciation calculated?

Answer 11

Starting value - Scrape value / timeframe

Question 12

What is accelerated depreciation?

Answer 12

This allows a company / project to realize more depreciation sooner. Two types:
Sum of year digit
Double declining balance

Question 13

What is lifecyle costing (total cost of ownership)?

Answer 13

Process of examining all costs associated with a project.

Question 14

What is fixed formula progress reporting?

Answer 14

aka earned value rules. Technique that creates a consistent status report for project activities. Used for shorter duration not exceeding to reporting periods.

Question 15

What is weighted milestone?

Answer 15

Usu used for activities that are longer than two reporting periods. Work is divided into multiple milestones with a measurable output for each section.

Question 16

What is plan cost management?

Answer 16

Process used to create the cost mgmt plan.

Question 17

What are inputs to Plan Cost Mgmt?

Answer 17

Project mgmt plan
Project charter
EEFs
OPAs

Question 18

What are tools and techs to Plan Cost Mgmt?

Answer 18

Expert judgement

Analytical techs

Question 19

What are inputs to Estimate Cost?

Answer 19

Cost mgmt plan
HR plan
Scope baseline
Proj schedule
Risk register

Question 20

What are tools and techs to Estimate Cost?

Answer 20

Expert judgement
Analogous estimating
Parametric estimating
Bottom up estimating
Three point estimating
Reserve analysis
Cost of quality
Vendor bid analysis
Proj mgmt software

Question 21

What is cost range?

Answer 21

Key principle in any environment is that the less is known earlier in proj the wider tolerance needed for project costs. (could be -25% to +75%)

Question 22

What are inputs to Determine Budget?

Answer 22

Cost mgmt plan
Scope baseline
Activity cost est
Basis of est
Proj schedule
Resource calendars
Risk register
Agreements

Question 23

What are tool and techs to Estimate Cost?

Answer 23

Cost aggregation
Reserve analysis
Expert judgement
Historical relationships
Funding limit reconciliation

Question 24

What are outputs to Estimate Cost?

Answer 24

Cost baseline | Report funding requirements

Question 25

What is chart of accounts?

Answer 25

List of accounts used by accounting to track budgets associated with project

Question 26

What is code of accounts?

Answer 26

Numbering system applied to project mgmt to identify individual pieces of work in the WBS.

Question 27

What are inputs to Control Costs?

Answer 27

Project mgmt plan Proj funding reqs Work performance data OPAs

Question 28

What are tools and techs to Control Costs?

Answer 28

``` Earned Value mgmt Forecasting TCPI (To complete performance index) Performance review PM software Reserve analysis ```

Question 29

What is earned value management?

Answer 29

Technique for measuring the progress of a project by looking at its scope, schedule, and cost in an integrated manner.

Question 30

Types of earned value: | Budget at Completion?

Answer 30

Amount you expect the project to cost.

Question 31

Types of earned value: | What is planned value?

Answer 31

What is budgeted cost of the work scheduled?

Question 32

Types of earned value: What is actual cost? AC

Answer 32

Cost of work completed.

Question 33

Types of earned value: | What is earned value?

Answer 33

Measurement of progress of project including any work started ahead of schedule.

Question 34

Types of earned value: | What is schedule performance index?

Answer 34

EV/PV | An effeciency indicator that denote the amount of work done at a single point in time. If result is 1, work is on track.

Question 35

Types of earned value: What is schedule variance? SV

Answer 35

EV-PV Denotes the difference between the value of the work completed and value of the work that should have been completed.

Question 36

Types of earned value: | Cost performance index (CPI)

Answer 36

EV/AC Denotes the return on each dollar spent at a point in time. Result of 1 means project is on track.

Question 37

Types of earned value: | What is cost variance?

Answer 37

EV-AC Denotes difference btw cost of work completed vs value of work completed. Result of 0 means project is on track.

Question 38

Forecasting: What is Estimate at Completion?

Answer 38

Current projected final cost based on the current spending efficiency. EAC = BAC / CPI

Question 39

Forecasting: What is Estimate to Complete?

Answer 39

Amount needed to finish the project based on the current spending efficiency of the project. ETC = EAC-AC

Question 40

Forecasting: What is Variance at Completion?

Answer 40

Difference between the budget at completion and estimate at completion. VAC = BAC - EAC

Question 41

Forecasting: What is to complete performance index?

Answer 41

Effeciency needed from the remaining resources to meet the cost goals and finish on time. TCPI = (BAC - EV) / (BAC - AC)

Question 42

What is S-Curve?

Answer 42

Graphic representation of interaction between cost, scope, and time over life of project.