Flashcards in PMBOK Chapter 7 - Project Cost Management Deck (27):
Project Cost Management (knowledge area)
includes the processes involved managing the costs so that the project can be completed within the approved budget
Plan Cost Management (process)
the process that establishes the policies, procedures, and documentation for managing and controlling project costs
Estimate costs (process)
the process of developing an approximation of the monetary resources needed to complete project activities
Determine Budget (process)
the process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline
Control Costs (process)
the process of monitoring the status of the project to update the project costs and managing changes to the cost baseline
What is the cost management plan?
component of the project management plan and describes how the project costs will be planned, structured, and controlled.
What is the human resource management plan?
provides project staffing attributes, personnel rates and related rewards/recognition which are necessary components for developing the project cost estimates
What is the Cost of Quality (COQ)?
assumptions about costs of quality may be used to prepare the activity cost estimate
What is Vendor Bid Analysis?
cost estimating methods may include analysis of what the project should cost, based on the responsive bids from qualified vendors
What are Activity Cost Estimates?
quantitative assessments of the probable costs required to complete project work, can be in summary form or in detail
What is the Basis of Estimates?
supporting documentation that should provide a clear and complete understanding of how the cost estimate was delivered
What is cost aggregation?
cost estimates are aggregated by work packages in accordance with the WBS, the work package cost estimates are then aggregated for the higher component levels of the WBS and ultimately for the entire project
What are historical relationships?
any historical relationships that result in parametric estimates or analogous estimates involve the use of project characteristics to develop mathematical models to predict total project costs
What is a funding limit reconciliation?
the expenditure of funds should be reconciled with any funding limits on the commitment of funds for the project
What is a cost baseline?
the approved version of the time-phased project budget, excluding any management reserves, which can only be changed through formal change control procedures
What are project funding requirements?
total funding requirements and periodic funding requirements are derived from the cost baseline
What is Earned Value Management (EVM)?
methodology that combines scope, schedule and resource measurements to assess project performance and progress. It integrates the three baselines to create the performance measurement baseline
What is Planned Value (PV)?
the authorized budget assigned to scheduled work
What is Earned Value (EV)?
a measure of work performed expressed in terms of the budget authorized for that work
What is Actual Cost (AC)?
the realized cost incurred for the work performed on an activity during a specific time period
What is Schedule Variance (SV)?
a measure of schedule performance expressed as the difference between the earned value and the planned value
SV = EV - PV
What is Cost Variance (CV)?
the amount of budget deficit or surplus at a given point in time; expressed as the difference between earned value and actual cost
CV = EV - AC
What is Schedule Performance Index (SPI)?
a measure of schedule efficiency expressed as the ratio of earned value to planned value
SPI = EV / PV
What is Cost Performance Index (CPI)?
a measure of the cost efficiency of budgeted resources, expressed as a ratio of earned value to actual cost
CPI = EV / AC
What is forecasting?
the project team may develop a forecast for the estimate at completion (EAC) that may differ from the budget at completion (BAC) based on the project performance
Three common ways to develop EACs:
1) EAC forecast for ETC work performed at the budgeted rate: EAC = AC + (BAC - EV)
2) EAC forecast for ETC work performed at the present CPI: EAC = BAC / CPI
3) EAC forecast for ETC work considering both SPI and CPI factors: EAC = AC + [(BAC - EV) / ( CPI * SPI)]