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What is Project Cost Management?

Project Cost Management includes the processes involved in planning, estimating, budgeting, financing, funding, managing, and controlling costs so that the project can be completed within the approved budget.

What are the Project Cost Management processes?

"7.1 Plan Cost Management 7.2 Estimate Costs 7.3 Determine Budget 7.4 Control Costs"

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Project Cost Management is primarily concerned with …

the cost of the resources needed to complete project activities

What is Plan Cost Management process?

Plan Cost Management is the process of defining how the project costs will be estimated, budgeted, managed, monitored, and controlled.

 

What are the key benefits of Plan Cost Management process?

The key benefit of this process is that it provides guidance and direction on how the project costs will be managed throughout the project.

What are the inputs of Plan Cost Management?

.1 Project charter .2 Project management plan • Schedule management plan • Risk management plan .3 Enterprise environmental factors .4 Organizational process assets

 

What are the tools & techniques of Plan Cost Management?

.1 Expert judgment .2 Data analysis .3 Meetings

What are the outputs of Plan Cost Management?

.1 Cost management plan

 

What is the cost management plan?

The cost management plan is a component of the project management plan and describes how the project costs will be planned, structured, and controlled.

Cost Management Plan is part of …

Project Management Plan

 

Cost Management Plan Includes:

Units of measure; Levels of precision; Control thresholds; Rules of performance measurement, Reporting formats, additional details

What is "Estimate Costs" process?

Estimate Costs is the process of developing an approximation of the cost of resources needed to complete project work.

 

What are the key benefits of "Estimate Costs" process?

The key benefit of this process is that it determines the monetary resources required for the project.

What are the inputs of "Estimate Costs" process?

.1 Project management plan .2 Project documents .3 Enterprise environmental factors .4 Organizational process assets

 

What are the tools & techniques of "Estimate Costs" process?

.1 Expert judgment .2 Analogous estimating .3 Parametric estimating .4 Bottom-up estimating .5 Three-point estimating .6 Data analysis .7 Project management information system .8 Decision making

What are the outputs of "Estimate Costs" process?

.1 Cost estimates .2 Basis of estimates .3 Project documents updates

 

What components of project management plan is used for estimating costs?

Cost management plan, Quality Management Plan, WBS, WBS Dictionary, scope statement

Which techniques can be used for Cost Estimation?

Analogous Estimating; Parametric Estimating; Bottom-Up Estimating; Three-Point Estimating

 

What is cost of quality evaluation?

Evaluates the cost impact of additional investment in conformance versus the cost of nonconformance, looking at short-term cost reductions versus the implication of more frequent problems later on in the product life cycle

What is cost estimate?

Cost estimate is quantitative assessments of the probable costs required to complete project work, plus contingency and management reserves

 

What is cost baseline?

The cost baseline is the approved version of the time-phased project budget that includes contingency reserves, but excludes management reserves.

Who is responsible for meeting the agreed-upon estimates?

Who is responsible for meeting the agreed-upon estimates? Project Manager

 

What is Plan Cost Management process?

Determine Budget is the process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline

What are the key benefits of Plan Cost Management process?

The key benefit of this process is that it determines the cost baseline against which project performance can be monitored and controlled

 

A project budget includes …

… all the funds authorized to execute the project.

What are the inputs of Plan Cost Management process?

.1 Project management plan .2 Project documents .3 Business documents .4 Agreements .5 Enterprise environmental factors .6 Organizational process assets

 

What are the tools & techniques of Plan Cost Management process?

.1 Expert judgment .2 Cost aggregation .3 Data analysis .4 Historical information review .5 Funding limit reconciliation .6 Financing

What are the outputs of Plan Cost Management process?

1 Cost baseline 2 Project funding requirements 3 Project documents updates

 

What is cost aggregation?

Cost estimates are aggregated by work packages, then aggregated for the higher component levels of the WBS (such as control accounts) and, ultimately, for the entire project.

…. is not included in the cost baseline but is part of the overall project budget.

Management reserve is not included in the cost baseline but is part of the overall project budget.

 

… are intended to address the unknown unknowns that can affect a project

Management reserves are intended to address the unknown unknowns that can affect a project

When an amount of management reserves is used to fund unforeseen work, …

the amount of management reserve used is added to the cost baseline

 

When are analogous and parametric estimation models accurate?

Accurate historical information, parameters used are quantifiable, models are scalable

Cost estimates for the various project activities, along with any contingency reserves for these activities, are aggregated into their associated ….. costs.

Cost estimates for the various project activities, along with any contingency reserves for these activities, are aggregated into their associated work package costs.

 

The work package cost estimates, along with any contingency reserves estimated for the work packages, are aggregated into ……

The work package cost estimates, along with any contingency reserves estimated for the work packages, are aggregated into control accounts

The summation of the control accounts make up …...

The summation of the control accounts make up the cost baseline

 

Management reserves are added to the cost baseline to produce ….

Management reserves are added to the cost baseline to produce The Project Budget

Contingency reserve is for ….... risks

known / identified

 

Management reserve is for …… risks

unknown / unidentified

What are known-unknowns and unknown-unknowns?

known-unknowns: known risks (identified in Risk Management) unknown-unknowns: unknown risks (not identified in Risk Management)

 

In initiating, a rough order of magnitude (ROM) estimate is in the range of ……

In initiating, a rough order of magnitude (ROM) estimate is in the range of −25% to +75%.

Definitive estimates could narrow the range of accuracy to …

Definitive estimates could narrow the range of accuracy to −5% to +10%.

 

Budget estimate is usually made in planning, in the range of ……

Budget estimate is usually made in planning, in the range of −10% to +25%

What is the function of "Control Costs" process?

Control Costs is the process of monitoring the status of the project to update the project costs and managing changes to the cost baseline.

 

What are the key benefits of "Control Costs" process?

The key benefit of this process is that the cost baseline is maintained throughout the project. This process is performed throughout the project.

What are the inputs of "Control Costs" process?

.1 Project management plan .2 Project documents .3 Project funding requirements .4 Work performance data .5 Organizational process assets

 

What are the tools and techniques of "Control Costs" process?

.1 Expert judgment .2 Data analysis .3 To-complete performance index .4 Project management information system

What are the outputs of "Control Costs" process?

.1 Work performance information .2 Cost forecasts .3 Change requests .4 Project management plan updates .5 Project documents updates

 

The key to effective cost control is the management of …

the approved cost baseline.

"Influencing the factors that create changes to the authorized cost baseline" is an activity of which process?

"Influencing the factors that create changes to the authorized cost baseline" is an activity of which process? Control Costs process

 

"Ensuring that all change requests are acted on in a timely manner" is an activity of which process?

"Ensuring that all change requests are acted on in a timely manner" is an activity of which process? Control Costs process

"Managing the actual changes when and as they occur" is an activity of which process?

"Managing the actual changes when and as they occur" is an activity of which process? Control Costs process

 

"Ensuring that cost expenditures do not exceed the authorized funding by period" is an activity of which process?

"Ensuring that cost expenditures do not exceed the authorized funding by period" is an activity of which process? Control Costs process

"Monitoring cost performance to isolate and understand variances from the approved cost baseline" is an activity of which process?

"Monitoring cost performance to isolate and understand variances from the approved cost baseline" is an activity of which process? Control Costs process

 

"Monitoring work performance against funds expended" is an activity of which process?

"Monitoring work performance against funds expended" is an activity of which process? Control Costs process

"Preventing unapproved changes from being included in the reported cost or resource usage" is an activity of which process?

"Preventing unapproved changes from being included in the reported cost or resource usage" is an activity of which process? Control Costs process

 

"Informing appropriate stakeholders of all approved changes and associated cost" is an activity of which process?

"Informing appropriate stakeholders of all approved changes and associated cost" is an activity of which process? Control Costs process

"Bringing expected cost overruns within acceptable limits" is an activity of which process?

"Bringing expected cost overruns within acceptable limits" is an activity of which process? Control Costs process

 

Which Project management plan components may influence Control Costs process?

Cost management plan; Cost baseline; Performance measurement baseline

How performance measurement baseline may influence Control Costs process?

When using earned value analysis, the performance measurement baseline is compared to actual results to determine if a change, corrective action, or preventive action is necessary.

 

Which costs have been authorized, incurred, invoiced, and paid is stored in …

Which costs have been authorized, incurred, invoiced, and paid is stored in Work Performance Data

Earned value analysis compares …

the performance measurement baseline to the actual schedule and cost performance

 

EVM integrates the scope baseline with the cost baseline and schedule baseline to form …

the performance measurement baseline

What is Planned Value (PV)?

It is the authorized budget planned for scheduled work/activity/WBS component, not including management reserve.

 

The total planned value for the project is also known as …

budget at completion (BAC).

What is Earned value (EV)?

Earned value (EV) is a measure of work performed, expressed in terms of the budget authorized for that work.

 

….. is often used to calculate the percent complete of a project.

The Earned Value (EV) is often used to calculate the percent complete of a project.

Project managers monitor EV, incrementally to determine ….

Project managers monitor EV, incrementally to determine the current status

 

Project managers monitor EV, cumulatively to determine …

the longterm performance trends.

What is Actual Cost(AC)?

Actual cost (AC) is the realized cost incurred for the work performed on an activity during a specific time period.

 

What is the Formula for Planned Value?

Planned Value = (Planned % Complete) X (BAC)

What is the Formula for Earned Value?

Earned Value = % of completed work X BAC (Budget at Completion).

 

... is the value of the work completed to date, ... is the value that you should have earned as per the schedule, and …. is the amount spent on the project to date.

Earned Value; Planned Value; Actual Cost is the value of the work completed to date, ... is the value that you should have earned as per the schedule, and …. is the amount spent on the project to date.

What is Schedule Variance (SV)?

Schedule variance (SV) is a measure of schedule performance expressed as the difference between the earned value and the planned value.

 

What is Schedule Variance (SV) equation?

SV=EV-PV Positive = Ahead of Schedule Neutral = On schedule Negative = Behind Schedule

What is Cost Variance (CV)?

Cost variance (CV) is the amount of budget deficit or surplus at a given point in time, expressed as the difference between earned value and the actual cost.

 

What is Cost Variance (CV) equation?

CV = EV – AC Positive = Under planned cost Neutral = On planned cost Negative = Over planned cost

….. is a measure of cost performance on a project

Cost Variance (CV) is a measure of cost performance on a project

 

What is schedule performance index (SPI)?

The schedule performance index (SPI) is a measure of schedule efficiency expressed as the ratio of earned value to planned value.

…… measures how efficiently the project team is accomplishing the work.

schedule performance index (SPI)

 

What is Schedule Performace Index (SPI) equation?

SPI = EV/PV Greater than 1.0 = Ahead of schedule Exactly 1.0 = On schedule Less than 1.0 = Behind schedule

What is Cost performance index (CPI)?

The cost performance index (CPI) is a measure of the cost efficiency of budgeted resources, expressed as a ratio of earned value to actual cost.

 

…… measures the cost efficiency for the work completed.

Cost Performace Index (CPI) measures the cost efficiency for the work completed.

What is Cost Performace Index (CPI) equation?

CPI = EV/AC Greater than 1.0 = Under planned cost Exactly 1.0 = On planned cost Less than 1.0 = Over planned cost

 

Forecasts are generated, updated, and reissued based on ….

Forecasts are generated, updated, and reissued based on work performance data

Who may develop a forecast for the estimate at completion (EAC)?

Who may develop a forecast for the estimate at completion (EAC)? The project team

 

Estimate at Completion (EAC) is based on ………

Estimate at Completion (EAC) is based on the actual costs incurred, plus an estimate to complete (ETC) the remaining work. If the initial plan is no longer valid, use: EAC = AC + Bottom-up ETC

What is "EAC forecast for ETC work performed at the budgeted rate" equation?

If future work will be accomplished at the planned rate, use: EAC = AC + (BAC – EV)

 

What is "EAC forecast for ETC work performed at the present CPI" equation?

What is "EAC forecast for ETC work performed at the present CPI" equation? EAC = BAC / CPI

What is "EAC forecast for ETC work considering both SPI and CPI factors" equation?

EAC = AC + [(BAC – EV) / (CPI ×SPI)]

 

What is the to-complete performance index (TCPI)?

It is a measure of the cost performance, expressed as the ratio of the cost to finish the remaining work to the remaining budget.

What is the equation for the TCPI based on the BAC?

The equation for the TCPI based on the BAC: (BAC – EV) / (BAC – AC)

 

What is the equation for the TCPI is based on the EAC?

The equation for the TCPI is based on the EAC: (BAC – EV) / (EAC – AC)

What is Budget at Completion (BAC)?

The sum of all budgets established for the work to be performed.

 

What is the Variance at Completion (VAC)?

A projection of the amount of budget deficit or surplus, expressed as the difference between the budget at completion and the estimate at completion.

What is the Variance at Completion (VAC) formula?

VAC = BAC – EAC Positive = Under planned cost Neutral = On planned cost Negative = Over planned cost

 

What is the Estimate to Complete (ETC)?

The expected cost to finish all the remaining project work.

What is the Estimate to Complete (ETC) formula?

ETC = EAC – AC ETC = Reestimate

 

What is "To Complete Performance Index (TCPI)"?

A measure of the cost performance that must be achieved with the remaining resources in order to meet a specified management goal. TCPI is remaining work ratio to remaining funds.

What is "To Complete Performance Index (TCPI)" formula?

TCPI = (BAC – EV)/(BAC – AC) Greater than 1.0 = Harder to complete Exactly 1.0 = Same to complete Less than 1.0 = Easier to complete