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Project Cost Management Flashcards

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1
Q

Plan Cost Management

A

The process of defining how the project costs will be estimated, budgeted, managed, monitored, and controlled

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2
Q

Estimate Costs

A

The process of developing an approximation of the monetary resources needed to complete the project work

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3
Q

Determine Budget

A

The process of aggregating the estimated costs of individual activities or work packages to establish a cost baseline

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4
Q

Control Costs

A

The process of monitoring the status of the project to update project costs and manage changes to the cost baseline

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5
Q

What are the inputs to the cost management plan?

A

Project charter, project management plan, EEF, OPAs

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6
Q

What are the tools and techniques to the cost management plan?

A

Expert judgement, data analysis, meetings

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7
Q

What are the outputs to the cost management plan?

A

Cost management plan

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8
Q

What is estimate costs?

A

The approximation of the cost of resources needed to complete the work

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9
Q

What are the inputs to estimate costs?

A

Project management plan, project documents, EEFs, OPAs

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10
Q

What are the tools and techniques for estimate costs?

A

Expert judgement, analogous estimating, parametric estimating, bottom up estimating, three point estimating, data analysis, PMIS, decision making

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11
Q

What is analogous estimating?

A

Using a previous project that is similar to the current project to estimate scope, cost, budget, and duration

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12
Q

What is parametric estimating?

A

Uses historical data and other relevant variables to calculate a cost estimate for project work. More accurate than analogous estimating

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13
Q

What is bottom up estimating?

A

Estimating the cost at a work package level and rolling up to higher levels

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14
Q

What is three point estimating?

A

Uses three estimates, most likely, optimistic, and pessimistic to define an approximate range for the activities cost

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15
Q

cM

A

Most likely

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16
Q

cO

A

Optimistic = best case scenario

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17
Q

cP

A

Pessimistic = worst case scenario

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18
Q

What is the basis of estimates?

A

Supporting documentation to provide a clear understanding of how to estimate was derived

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19
Q

What are the outputs to cost estimate?

A

Cost estimates, basis of estimates, project document updates

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20
Q

What is the rough order of magnitude?

A

-25% to +75%

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21
Q

What is definitive estimate?

A

-5% to +10%

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22
Q

What is +/- 3 sigma?

A

99.73%

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23
Q

What is +/- 2 sigma?

A

95.46%

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24
Q

What is +/- 1 sigma?

A

68.26%

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25
What is the formula for triangular distribution?
cE=(cO + cM + cP)/3
26
What is the formula for beta distribution?
cE = (cO + 4cM + cP)/6
27
What is determine budget?
The process of collecting all the estimated costs of individual activities to establish a cost baseline. Includes all the funds authorized to execute a project
28
What are the inputs to determine budget?
Project management plan, project documents, business documents, agreements, EEFs, and OPAs
29
What is reserve analysis?
Establishes the management reserves for the project
30
What are the tools and techniques of determine budget?
Expert judgement, cost aggregation, data analysis, historical information review, funding limit reconciliation, financing
31
What are management reserves?
Are an amount of the project budget withheld for management control purposes and are reserved for unforeseen work that is within the project scope
32
What is management reserve intended to do?
Address the unknown unknowns that can affect a project
33
Is management reserve part of the cost baseline?
No
34
What is cost aggregation?
A collection of the cost estimates
35
What is the output to determine budget?
cost baseline, project funding requirements, project document updates
36
What two things make up the aggregated activity costs?
Activity cost estimates & Activity Contingency Reserves
37
What two things make up the aggregated work package costs?
Work package cost estimates & Contingency Reserves
38
What two things make up control accounts?
Work package cost estimates & Contingency Reserves
39
What makes up the cost baseline?
The summation of control accounts
40
What makes up the project budget?
Cost baseline & management reserves
41
The total funding required includes:
The cost baseline plus management reserves
42
What is control costs?
Process of monitoring the status of the project to update costs and manage changes to the cost baseline
43
What is the key benefit of controlling costs?
The cost baseline is maintained throughout the project
44
What relationship does control cost look at?
The relationship between the consumption of project funds and the work being accomplished for such expenditures.
45
What are the inputs to control costs?
Project management plan, project documents, project funding requirements, work performance data, OPAs
46
What are the tools and techniques to control costs?
Expert judgment, data analysis, PMIS (project management information system)
47
What is earned value analysis (EVA)?
Compares the performance measurement baseline to the actual schedule and cost performance
48
What does EVM stand for?
Earned value management
49
EVM develops and monitors which 3 things?
Planned value (PV), earned value (EV), and actual cost (AC)
50
What is planned value (PV)?
Is the authorized budget assigned to the schedule work. Does not include management reserve
51
What is the total of PV defined as?
The performance measurement baseline (PMB) or Budget at Completion (BAC)
52
What is earned value (EV)?
The budget associated with the authorized work that has been completed
53
Can the EV be greater than the authorized PV?
No
54
What is used to calculate the percent complete of a project?
EV
55
What is actual cost (AC)?
Is the total cost incurred in accomplishing the work that the EV measured
56
What is variance analysis?
Is the explanation (cause, impact, and corrective actions) for cost, schedule, and variance at completion
57
What is the formula for cost variance analysis?
CV = EV -AC
58
What is the formula for schedule variance analysis?
SV = EV - PV
59
What is the formula for variance at completion analysis?
VAC = BAC - EAC
60
What is schedule variance (SV)?
It is the amount by which the project is ahead or behind the planned delivery date
61
SV is best used in conjunction with which other method?
Critical path method
62
What is cost variance (CV)?
Is the amount of budget deficit or surplus
63
What does BAC stand for?
Budget at completion
64
What is schedule performance index (SPI)?
Measures how efficiently the team is accomplishing the project work
65
A SPI > 1.0 means?
More work was completed than planned
66
A SPI < 1.0 means?
Less work was completed than planned
67
What is the formula for SPI?
SPI = EV/PV
68
What is cost performance index (CPI)?
The measure of the cost efficiency of budgeted resources
69
What is the most critical EVA measurement?
CPI (cost performance index)
70
A CPI > 1.0 means?
Indicates a cost under run of performance to date
71
A CPI < 1.0 means?
Indicates a cost overrun of performance to date
72
What is the formula for CPI?
CPI = EV/AC
73
What does EAC stand for?
Estimate at completion
74
Why is forecasting used in control costs?
It is used when the BAC is no longer viable and the EAC must be used to forecast what the project costs will be in the future based on current performance information
75
What does ETC stand for?
Estimate to complete
76
What is the most common EAC forecasting approach?
Bottom up summation
77
What is the formula for a EAC bottom up summation?
EAC = AC + Bottom-up ETC
78
What does the EAC forecast for ETC work performed at the budgeted rate do?
It accepts the actual project performance to date as represented by actual costs and predicts all the future ETC work that will be accomplished at a budgeted rate
79
What is the equation of EAC forecast for ETC work performed at the budgeted rate?
EAC = AC + (BAC - EV)
80
What does the EAC forecast for ETC work performed at the present CPI do?
Assumes what the project has experienced to date can be expected to continue in the future
81
What is the equation for EAC forecast for ETC work performed at the present CPI?
EAC = BAC/CPI
82
What does the EAC forecast for ETC work considering SPI and CPI factors do?
ETC work will be performed at an efficiency rate that considers both the cost and schedule performance indices
83
What is the equation EAC forecast for ETC work considering SPI and CPI factors?
EAC = AC + [(BAC - EV) / (CPI x SPI)]
84
What is the to-complete performance index (TCPI)?
The cost performance that is required to be achieved with the remaining resources in order to meet a specified measurement goal
85
What is the equation for TCPI based on BAC?
TCPI = (BAC - EV) / (BAC - AC)
86
What is the equation for TCPI based on EAC?
TCPI = (BAC - EV) / (EAC - AC)
87
What are the outputs to control costs?
Work performance information, cost forecasts, change requests, project management plan updates, project document updates

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