Project Cost Management

Question 1

What does the Project Cost Management process include?

Answer 1

Planning, estimating, budgeting and controlling costs

Question 2

What is the purpose of the Plan Cost Management process?

Answer 2

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

Question 3

What is the output of the plan cost management process?

Answer 3

Cost management plan

Question 4

What are the inputs needed for the cost management process?

Answer 4

Project charter, project management plan, environmental enterprise factors, organisation process assets

Question 5

What are the Tools and Techniques needed to produce a cost management plan?

Answer 5

Expert judgement, data analysis, meetings

Question 6

What is the outputs from the estimating process?

Answer 6

Cost estimates/Basis of estimates/ updates to assumptions, lessons learned and risk register

Question 7

What is a ROM?

Answer 7

Rough order of magnitude - this is a rough estimate, this is the equivalent to t-shirt sizing in agile terms.
Usually in initiating phase: -25% to 75% accuracy.

Question 8

What is a budget estimate?

Answer 8

Usually done in planning phase - -10% to 25% accuracy

Question 9

How do you work out the (schedule performance index) SPI?

Answer 9

SPI = EV/PV

1 is on schedule, anything above 1 is ahead of schedule, anything below 1 is behind schedule

Question 10

How do you work out the (cost performance index) CPI?

Answer 10

CPI = EV/AC

1 is on budget, anything above 1 is underspend, anything below 1 is overspend

Question 11

How do you work out PV?

Answer 11

This is the planned budgeted value for each day/activity

PV = BAC x planned % complete

Question 12

How do you work out EV?

Answer 12

EV = BAC x actual % complete

Question 13

How do you work out EAC?

Answer 13

Most common formula i.e. if the CPI is going to remain the same for the remainder of the project use EAC = BAC/CPI i.e. if project budget is £12,000 and your CPI is 0.6 it should be £12,000/0.6 = EAC £20,000

If the planned value is expected to remain the same as initially planned then use…
EAC = AC + (BAC - EV)

If the initial plan is no longer valid then use EAC = AC + bottom up ETC.

If SPI also needs to be taken into consideration then you will need to use EAC = AC + (BAC - EV) /CPIxSPI

Question 14

How do you work out schedule variance?

Answer 14

EV-PV

Question 15

How do you work out your cost variance?

Answer 15

EV-AC

Question 16

How do you work out the ETC?

Answer 16

EAC - AC

Question 17

What is to-complete performance index (TCPI)?

Answer 17

To obtain the cost performance factor by taking the value of work remaining and dividing it by the value of funds remaining

Question 18

What does scope baseline include?

Answer 18

Scope statement, WBS and WBS dictionary,

Question 19

What are the inputs for estimating costs?

Answer 19

Project management plan; Scope baseline, schedule management plan,
Project documents; risk register, resource requirements, lessons learned
EEF
OPA,

Question 20

What is the purpose of reserve analysis?

Answer 20

Known-unknown

so you know there is going to be issues/rework etc but you don’t know what the issues and rework is going to be

Question 21

Why would a PM review cumulative cost curves?

Answer 21

To monitor the PV, EV and AC

Question 22

What are the inputs for determining the budget?

Answer 22

Project management plan; Scope baseline, schedule management plan, cost management plan
Project documents; risk register, resource calendar, cost estimates, basis of cost estimates
EEF
OPA
Agreements

Question 23

What are the Tools and Techniques of determining the budgeting?

Answer 23

Aggregation (the process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline.) 
Expert Judgement,
Reserve analysis, 
Historical relationship, 
Funding limit reconciliation

Question 24

When is the cost baseline established?

Answer 24

During the determine budget process.

Question 25

What does the cost budget include?

Answer 25

Cost baseline + management reserve

Question 26

What are the outputs from the determining budget process?

Answer 26

Cost baseline, project funding requirements, updates to cost estimates, project schedule and risk register if required.

Question 27

What is the formula for TCPI?

Answer 27

BAC-EV/BAC-AC or EAC-EV/EAC-AC