ACTUAL COST (AC)
cost of the work that has been completed at a specific point int time, including any work started ahead of schedule; also known as actual cost of work performed
Use for relatively quick, high level estimating. Process of using a previous program or project of similar characteristics (size, cost, scope) to estimate a new program or project. Requires expert judgment by a group. Quantitatively based duration estimates are used also and can include PERT estimations.
Estimate that the program or project tries to achieve; e.g., cost, scope, time, etc.
A detailed estimating approach that usually involves team input; as the team builds the pieces of the estimate, they build the total estimate from the bottom up.
The total amount of money expected to be spent on a program or project based on the original cost estimates plus any approved changes
BUDGET AT COMPLETION (BAC)
Total program or project budget; amount of money planned to be spent by the time the program or project is complete; sum of all planned value (PV)
BUDGET PROGRAM COSTS
The process of evolving detailed program and project budgets that are based on project estimates
CHART OF ACCOUNTS
A list of accounts used by the accounting or Pg Mgmt System. Track budgets, work packages, projects, etc that have a baseline cost and actual cost to report. A structure used to monitor cost that usually aligns with a company's accounting system and the work breakdown structure of the program or project. The Budget Program Cost processes uses the chart to show where the funds are allocated.
COST PERFORMANCE INDEX (CPI)
A ratio that shows the current efficiency of money being spent on the program or project; CPI = EV/AC, a value of one means you are getting out what you put in (which is good), less than one is bad, and greater than one is good
COST VARIANCE (CV)
The difference between the value of what has been built (EV) and the cost of what has been built (AC); CV = EV-AC, a value of zero (0) means theprogram or project is creating what it should for the planned cost, a negative value means the program or project is over budget, and a positive value means the program or project is under budget
A cost estimate that provides an accurate estimation of the program or project cost; the final estimate that will be used before impelmentatioin of the program or project begins; the tolerance range is +/- 10%
DEVELOP PROGRAM FINANCIAL PLAN
The process of determining development and management procedures for the program budget and component pay schedules
Cost that is directly applicable to the porgram or project; e.g., test computer for SW being created on the program or project, IC chips, or labor used on the project
EARNED VALUE (EV)
work that has actually been accomplished or completed up to a particular point in time; the percent complete of each activity multiplied by the planned value; also known as budgeted cost of work performed (BCWP)
EARNED VALUE MANAGEMENT (EVM)
Show the status of the program or project for scope, time, and cost. Produces a quantifiable status of the program or project instead of a "gut feel" estimate.
ESTABLISH PROGRAM FINANCIAL FRAMEWORK
The process of determining the program's financial climate and the milestones for funding availability
ESTIMATE TO COMPLETE (ETC)
Represents the projected total estimate remaining to be spent, based on the current efficiency (CPI) with which you are spending money on the program or project; ETC = EAC-AC
Cost that is not directly accrued on the program cost; e.g., electricity, taxes, rent
LIFE CYCLE COSTING
Consideration of not just program or project cost, but total ownership (operations and support) cost of the item created by the program or project
MONITOR AND CONTROL PROGRAM FINANCIALS
The process of tracking and regulating cost variances at the program level and closing out finances for the program and its components
PLANNED VALUE (PV)
Represents the total costs that should have been spent up to a particular point in time (excluding any work started ahead of schedule); also known as budgeted cost of work scheduled (BCWS)
PROGRAM FINANCIAL FRAMEWORK
configuration for determining and managing program funding sources. Defines the flow of money into and out of a program in the most efficient and effective manner possible with the focus on elimination of waste.
PROGRAM FINANCIAL PLAN
Component of the program management plan that details the budget baseline, contract schedules and payments, funding milestones and schedules, processes for measuring and reporting financial information, processes for subcontractor payments, and all financial efforts
A techniquein "Estimate Pg Costs". Done to determine the amount of reserves needed for a program or project.
budget money set aside for difficult to predict items; also known as contingency reserves
A part of the payment that the buyer retains per the terms of the contract until the program or project is complete; used to ensure that the seller completes the work per the terms of the contract
ROUGH ORDER OF MAGNITUDE (ROM) ESTIMATE
Very early cost estimate used to give a rough projection of what the program or project will cost to complete; the tolerance range is +/- 50%
SCHEDULE PERFORMANCE INDEX (SPI)
efficiency indicator showing the amount of work done at a point in time. Less than 1 means behind. Greater than 1 means ahead of schedule. SPI = EV/PV
SCHEDULE VARIANCE (SV)
The difference between the value of what has been built (EV) and the time is should take to build it (PV); SV = EV-PV, a value of zero (0) means the program or project is creating what it should in the planned timeframe, a negative value means that it is taking long than planned to complete activities, and a positive value means that it is taking less time than planned to complete activities
Graphic representation of costs, work, and other quantities over time to illustrate the planned value, earned value, and actual cost of the work (ONE LINE PER EACH METRIC)
Money that has already been spent on a program or project; should not be considered when selecting or evaluating a program or project
Efficiency indicator showing efficiency needed from the remaining resources to meet the cost goals and finish on budget. The ratio of remaining work to remaining funds. TCPI = (BAC - EV) / (BAC - AC)
WORK BREAKDOWN STRUCTURE COMPONENT
A unnit of work that makes up the work breakdown structure
PROGRAM FINANCIAL ANALYSIS
Technique used in "Establish Program Financial Framework" to identify the funding source and schedules, the financial climate, contract expenses, labor and material treands, then performs finance-related analysis, such as treoffs between cost and quality
Cost that is consistent regardless of volume. Pay once no matter how many times something is used. (cost of creating art work for book cover)
Cost that fluctuates based on volume. (the cost of printing the book - pay per volume)
Process of devaluing a capital asset in the tax system.
assets that are purchased and depreciated over time
STANDARD DEPRECIATION (STRAIGHT LINE DEPRECIATION)
depreciates at a standard rate from purchase to final value over specified period of time
APPRECIATED DEPRECIATION - 2 types
Depreciates faster than standard depreciation. 1) Sum of the year's digits 2) Double declining balance (DDB)
TOTAL COST OF OWNERSHIP (aka LIFE CYCLE COSTING)
The process of examining all costs associated with a project and its product once it goes into production.
FIXED FORMULA PROGRESS REPORTING
Typically used on activities with 2 or less reporting periods in duration. Uses a partial credit approach (e.g. 50/50). Provides for consistent reporting on progress from projects when detailed time/cost tracking not done.
approach used for activities with duration of more than two reporting periods. The work is divided into multiple milestones with a measurable output for each section of work.
ANALYSIS OF PROGRAM OPERATIONAL COSTS
Technique used in "Develop Pg Financial Plan process". Assessment of both operating and framework costs that occur as a result of managing the progra; framework costs include personnel, resource, and PMO costs; the framework to manage the program should be depicted and aggregated into the program baseline budget
PROGRAM FINANCIAL METRICS
Output of "Develop Program Financial Plan process". Measurements used for program benefits; measurement against metrics engendered by program scope and cost changes. Are conducted to determine if the program should be modified, continued, or canceled.
Estimating technique used in "Estimate Pg Costs" which uses a quantitative approach based on the quantity of work and the productivity per unit of work
COMPUTERIZED TOOLS ESTIMATING
Estimating tool used in "Estimate Pg Costs". computerized tools such as scheduling, cost, or estimating software to organize all the pieces feeding into the estimate
ARCHITECTURE/COST TRADEOFF ANALYSIS
technique used in "Estimatiing Pg Costs". Comparison of considered architectural approaches with and emphasis on the cost of each approach
technique used in "Estimatiing Pg Costs". Assesses the cost of each program
technique used in "Budget Pg Costs". Assessment of the cost framework for each program component completed to provide details money flow (timing and mechanics of the application of funds vs payments)
PROGRAM BUDGET BASELINE
Output of "Budget Pg Costs" process. Original budget estimate highlighting money flow plus any approved changes and the basis for measurement of income and expenditure; Basis for measuring program financials.
PROGRAM PAYMENT SCHEDULES
Output of "budget Pg Costs" process. Distinguish the points where the funding org receives funding
COMPONENT PAYMENT SCHEDULES
Output of "Budget Pg Costs" process. Distinguish the milestone points when funds are due contractors
tolerance range associated with an estimate of costs. Key principle is that as the program progresses, the range moves from the initial ROM +/- 50% to Definitive or Control Estimate of +/- 10%
PROGRAM OPERATIONAL COST ANALYSIS
Technique of "M/C Pg Financials" process. Process to montior and control the costs of managing the program and the framework. NOT the costs of the components themselves.
ESTIMATE AT COMPLETION
Represents the current projected final cost based on the current spending efficiency (CPI). EAC = BAC/CPI
VARIANCE AT COMPLETION (VAC)
difference between the budget at completion and the estimate at completion which tells how much over or under budget the project finished. VAC = BAC - EAC
Budgeted Cost Work Scheduled. Same thing as the Planned Value
Actual cost Work Performed. Same thing as the Actual Cost
Budgeted Cost Work Peformed. Same thing as Earned Value
How to determine Planned Value from activities
Add the planned values of activities that should have occurred as of the date. But do NOT include if the work was started early. If work was scheduled to start but not scheduled to be complete, take percentage as stated.
How to determine Actual Cost from activities
Add all "Actual Costs" whether the activity was schedule to start or not
How to determine the EV (or BCWP) from activities
List the Planned Value for all activities. Determine the % complete for each activity. Multiply Planned Value by the % complete. Add up all the EV.
Role of Funding Org in Pg
Not passive like projects might be. Due to larger amounts needed for program, funding org has large inputs into setting the funding model.
3 FUNDING MODELS
1. Entirely within a single org (such as with IT programs) 2. Mg within single org but funded separately 3. funded and managed from outside the parent org (such as public works programs - bridges, highways, etc)
Tool used in M/C Pg financials - review components on regular basis to compare to baseline in cost and schedule.
Focuses on future activities of the project.