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Chapter 7 Terms Cost Management
Terms in this set (46)
The total approved, expected cost of the project created in the planning process. It's used as a comparison to actual project expenses throughout the remainder of the project.
a cost that rises or falls depending on how much is produced
Fixed Cost (FC)
cost that does not vary with the quantity produced
Costs that can be specifically identified with a particular project or activity.
costs that are the result of a firm's general operations and are not directly tied to any specific cost object
Value Analysis/Value Engineering
analysis with the purpose of simplifying products and processes by achieving equivalent or better performance at a lower cost
Determine Budget - Outputs
1 Cost baseline
2 Project funding requirements
3 Project documents updates
The process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline.
Determine Budget Inputs
1. Project Management Plan
5.Enterprise environmental Factors
Summing the lower-level cost estimates associated with the various work packages for a given level within the project's WBS or for a given cost control account.
Funding Limit Reconciliation
The process of comparing the planned expenditure of project funds against any limits on the commitment of funds for the project to identify any variances between the funding limits and the planned expenditures.
Historical Informational Review
Helps in the creating of Parametric and analogous estimates.
Acquiring funds for projects.
straight line depreciation
(cost - residual value) / useful life = salvage value
Current Asset Value - (Units Produced * ( (cost - residual value)/estimated units of useful life (production)) )
Double Declining Balance
(cost-accumulated depreciation) x 2/useful life. Reduce until it get to salvage value
5 Year schedule
Example ($100,000 *40%)=$60,000
Sum of Years Digits Depreciation(SYD)
Useful Life + (Useful Life - 1) + (Useful Life - 2) + etc.
Example 5 year schedule
expected selling price of an asset at the end of its useful life
The length of service of a productive asset
Example is 5 years for widget machine
A decrease or loss in value
Control Costs - Outputs
1. Work Performance measurements (CV,CPI,SV,SPI)/QC,Rep Perf
2. Budget Forecasts (calculated or bottom-up EAC)/Report Performance
3. Change Requests/ICC
4. OPA updates
5. PMP updates (Cost perf baseline, CMP)
6. Project documents updates (ACE,BOE)
Control Costs - Inputs
1. Project management plan/Dev PMP
2. Project funding requirements/Determine Budget
3. Work performance information /D&M Project Executioon
The process of monitoring the status of the project to update the project costs and managing changes to the cost baseline.
Cumulative Cost Curve
Displays the cost and schedule variance.
Earned Value (EV)
An estimate of the value of the physical work actually completed
getting behind schedule
Budget at Completion (BAC)
The sum of all budgets established for the work to be performed.
Estimated at Completion (EAC)
Forcast for when the project will be completed.
Planned Value (PV)
The cost of work that's been budgeted for an activity during a certain time period.
Actual Cost (AC)
The realized cost incurred for the work performed on an activity during a specific time period.
To-Complete Performance Index
A measure of the cost performance that is required to be achieved with the remaining resources in order to meet a specified management goal, expressed as the ratio of the cost to finish the outstanding work to the remaining budget.
To-Complete Performance Index Formula
TCPI = (BAC - EV) / (BAC - AC) Based on BAC can use EAC instead.
Work Remaining/Funds Remaining
How to read index
Look at the index numbers as a percent.
Remaining Work Formula
critical ratio formula
Variance at Completion (VAC)
BAC - EAC
Cost Performance Index (CPI)
Schedule Performance Index (SPI)
Estimate to Complete (ETC)
EAC - AC
The expected cost to finish all of the remaining project work.
Schedule at Completion (SAC)
This is the original planned completion duration of the project.
Earned schedule (ES)
The duration from the beginning of the project to the date the planned value is supposed to equal to the BAC.
Actual Time (AT)
This is the duration from the beginning of the project to status date.
An analytical technique to determine the essential features and relationships of components in the project management plan to establish a reserve for the schedule duration, budget, estimated cost, or funds for a project.
Time Variance (TV)
A measure of schedule performance in time units rather than cost units and is defined by the formula.
Time Estimate at Completion (TEAC)
The forecast of time at completion and is similar to EAC. It uses the same formula as EAC but replaces cost with schedule.
Time Variance at Completion (TVAC)
The estimated amount of time either ahead or behind schedule the project is.
OTHER SETS BY THIS CREATOR
Chapter 3 Basics of Project Management
Chapter 14 Professional Responsibility
Chapter 13 Identify Stakeholders Management
Chapter 12 Procurement Management
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