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Cost Mgmt Flashcards

1
Q

Cost management

A

Scope first, schedule second, cost third
Estimates from the bottom up
Budget is constructed from applying rates and dates against those resources and activities to creat activity cost estimates and a cost baseline, as prescribed in the cost mgmt plan

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2
Q

Cost management processes

A

Initiating - none
Planning - plan cost mgmt, estimate costs, determine budget
Executing - none
Monitoring & controlling - control costs
Closing - none

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3
Q

Plan cost mgmt output

A

Cost management plan

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4
Q

Estimate cost output

A

Cost estimates

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5
Q

Determine budget outputs

A

Cost baseline, project funding requirements

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6
Q

Control cost outputs

A

Work performance info, cost forecasts

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7
Q

Life cycle costing

A

Total cost of ownership from purchase/creation, through operations and finally to disposal

Encourages making decisions based on the bigger picture

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8
Q

Value engineering

A

Trying to get more out of the project in every possible way

Increase bottom line, decrease costs, improve quality, shorten schedule

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9
Q

Plan cost mgmt

A

Process that creates the plan that will guide and direct the three other cost mgmt processes

Overall budget could’ve been planned in advance but not the details

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10
Q

Cost mgmt plan

A

Plan that describes how the process of estimate costs, determine budgets and control costs will be carried out

Units of measure, levels of precision/accuracy, approval thresholds, reporting

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11
Q

Estimate costs

A

Each schedule activity is analyzed to evaluate the activity time estimate and the resource estimates associated with them, and a cost estimate is produced

The more you understand an activity, the more precise you want it to be

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12
Q

Estimate cost tools

A 
Analogous estimating 
Parametric estimating 
Three point estimating 
Bottom up estimating 
Data analysis - alternatives analysis, reserve analysis, cost of quality
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13
Q

Analogous estimating

A

Actual results of a project from estimates

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14
Q

Parametric estimating

A

Good historical info, linear/scalable

$9m for 1 mile, 8 would be $72m

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15
Q

Bottom up estimating

A

Separate estimate for each activity

Accurate but time consuming and labor intensive

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16
Q

Three point estimating

A

Beta and triangular distributions

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17
Q

Reserve analysis

A

Contingencies = reserve amounts, buffer

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18
Q

Cost of quality

A

costs associated with achieving quality

Also cost of poor quality = non conformant quality costs

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19
Q

Cost estimates

A

How much it would cost to complete each schedule activity along with a contingency/reserve amount

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20
Q

Basis of estimates

A

Never too much detail, how you derived the costs

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21
Q

Budget

A

Takes the estimated project expenditures and maps them back to dates on the calendar

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22
Q

Determine budget

A

Time phases the cost estimates so that the performing org will know how to plan for cash flow and likely expenditures

23
Q

Determine budget inputs

A

Agreements

24
Q

Agreements

A

Agreements and contracts can provide info on what costs the project is contractually obliged to occur as well as when

25
Determine budget tools
Cost aggregation Funding limit reconciliation Financing
26
Cost aggregation
Even though costs are estimated at the activity level, these costs estimates should be rolled up to the work package level where they will be measured, managed, and controlled during the project
27
Funding limit reconciliation
Normal for a project to receive funding limit, but important for the project to reconcile planned spending with limits Ex: 200k first month, 400k second month
28
Financing
Acquiring capital from outside sources may be necessary
29
Cost baseline
Cost estimates for all activities plus contingencies What costs and when Traditional projects have s curve - costs slow at first, accelerate throughout construction and then slow down during testing and closure
30
Project funding requirements
Cost baseline plus management reserves Almost always related to planned expenditures but not identical Ex: may require higher earlier for stuff like equipment
31
Control costs
Concerned with cost variance Positive is good, negative is bad Ensures costs stay on track and that change is detected whenever it occurs
32
Control costs tools
Data analysis - earned value analysis, reserve analysis, variance analysis, trend analysis TCPI - to complete performance index - performance needed in order to achieve your earned value targets
33
Control costs work performance information
CV, SV, CPI, SPI, TCPI and AC
34
Control costs cost forecasts
Estimate at completion, estimate to complete
35
Budgeted at completion
BAC - how much was originally planned for the project to cost
36
Planned value
AKA budgeted cost of work scheduled PV / BCWS How much work should have been completed at a point in time based on the plan. Derived by measuring planned work completed at a point in time PV = planned / complete x bac
37
Earned value
AKA budgeted cost of work performed - EV / BCWP How much work was actually completed during a given period of time. Derived by measuring actual work completed at a point in the schedule EV = actual / complete x bac
38
Actual cost
AKA actual cost of work performed - AC / ACWP The money spend during a period of time
39
Cost variance
CV The difference between what we expected to spend and what was actually spent CV = EV - AC Positive is better on cost than expected
40
Schedule variance
SV - difference between where we planned to be in the schedule and where we are SV = EV - PV Positive means project is ahead of schedule
41
Cost performance index
CPI - the rate at which the project performance is meeting cost expectations during a period of time CPI = EV / AC 1 indicates directly on track, better than 1 is good
42
Cumulative CPI
CPIc - the rate at which project performance is meeting cost expectations from the beginning up to a point in time. Used to forecast the project cost at completion CPIc = EVc / ACc
43
Schedule performance index
SPI - the rate at which project performance is meeting schedule expectations up to a point in time SPI = EV / PV Better than 1 is good
44
Estimate at completion
EAC - project the total cost at completion based on project performance up to a time EAC = BAC / CPIc
45
Estimate to completion
ETC - project how much more will be spent on a project based on past performance ETC = EAC - AC
46
Variance at completion
VAC - the difference between what was budgeted and what was actually spent VAC = BAC - EAC Positive indicates doing better than projected
47
To complete performance index
TCPI - performance that must be achieved in order to meet financial or schedule goals TCPI = (BAC - EV) / remaining funds Greater than 1 is bad
48
Fixed costs
Stay the same throughout the life of the project Ex: heavy equipment, renting a bulldozer
49
Variable costs
May vary Example: hourly labor, fueled
50
Direct cost
Billed directly to the project Ex: materials used to construct a building
51
Indirect cost
Shared and allocated amount several or all projects Example: manager’s salary
52
Sunk cost
Invested into or expended, unrecoverable
53
Opportunity cost
Cost of the loss of potential benefit from alternatives

PMP (14 decks)

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