Module 6: Project cost management

Question 1

Cost management main documents

Answer 1

Cost management plan, an activity cost estimate, and a cost baseline.

Question 2

Components of cost management plan

Answer 2

• Units of measure (time for human resources in days, weeks, months)
• Acceptable level of accuracy for the cost estimates
• control thresholds that monitor cost deviations from baseline
• rules of performance measurement
• earned valued management rules of performance msmt.
• reporting formats and frequency

Question 3

Steps for Cost budgeting

Answer 3

1) make estimates.
2) Use WBS dictionary, project scope statements, activity cost estimates, schedule and anything else.
3) Create baseline and gives PM a guideline for managing costs.

Question 4

Documents used to estimate costs

Answer 4

• Cost management plan
• HR management plan
• scope baseline
• project schedule
• risk register
  Refine estimates as time goes on.
  Define rules and how assumptions were applied.

Question 5

Major costs in a project

Answer 5

• Human (base salary, benefits, overhead)
• Materials
• Services
• Facilities
• Financing costs/fees

Question 6

Cost estimation techniques

Answer 6

Analogue, bottom-up, parametric, three-point estimate

Question 7

Analogue

Answer 7

Or ‘top-down’, based on another similar project. Looks from broader perspective. Not very accurate but less expensive.

Question 8

Bottom-up

Answer 8

Estimating individual activities and summing them up. More accurate, very time consuming and costly.

Question 9

Parametric

Answer 9

uses mathematical variables to estimate. Use correct historical information that can be extrapolated. Ex: $1000/sq foot to build a house. Simplistic example, projects are much more complex and require multiple variables.

Question 10

3-point estimate

Answer 10

AKA triangular distribution. Most likely (realistic work effort), optimistic (best-case scenario), and pessimistic (worst case scenario). Add and divide by 3

Question 11

Relative cost management

Answer 11

Instead of using a range of numbers for estimates, agile projects use. Example is T-shirt sizing.

Question 12

Cost baseline

Answer 12

Is a time based budget that is used to measure and monitor cost performance throughout the project.

Question 13

Project roadman

Answer 13

Agile projects, helps in creating the product backlog.

Question 14

Planning poker

Answer 14

Used to estimate activity/story difficulty.

Question 15

Affinity estimates

Answer 15

use sticky notes to determine effort within a group (XS, S, M, L, XL)

Question 16

Agile costing

Answer 16

Usually top-down. More uncertainty, change change from one sprint to another. Makes short-term predictions. Based on immediate past project performance.