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PM432
UE3
| Question | Answer |
|---|---|
| includes the processes involved in planning, estimating, budgeting, financing, funding, managing, and controlling costs so the project can be completed within the approved budget. | Project cost management |
| -practice of estimation of the monetary resources required to complete tasks and project activities. -uses almost the same tools in estimate activity duration but you make forecasts for the costs (not for the durations) | Estimate costs process in project management |
| Cost Management Process | 1. Resource planning 2. Cost estimation 3. Budgeting 4. Cost control |
| -process of allocating tasks to team members based on their capacity & skill sets -maximizes efficiency by helping teams to manage their utilization rates, track capacity, and monitor progress, to keep projects on budget and work on track. | Resource planning |
| Techniques in Cost Estimation | 1. Analogous Estimating 2. Bottom-up Estimating 3. Parametric Estimating 4. Expert Judgment 5. Three-Point Estimating |
| -Can be used for both duration of activities and cost of activities -refers to the comparison of upcoming projects with data on the progress and results of previously delivered similar projects. | Analogous Estimating |
| -one of the fastest and easiest ways to estimate resources -low accuracy and entails a high risk of erroneous conclusions. -best for typical projects with similar work scopes. -used at early stages to get a ballpark estimate of resources required | Analogous Estimating |
| -technique for estimating the costs or duration of projects and parts of a project -forecast the duration and cost of the project based on the analysis of small tasks it comprises. -applied at later stages when all the details are available. | Bottom-up Estimating |
| -technique that involves estimations on a granular level for parts of a project. -High result accuracy and relatively low variance in estimated and actual resources -time-consuming and requires a lot of effort and expertise. | Bottom-up estimating |
| -quantitative approach to determine the expected cost based on historic or market data -Estimate based on statistical or assumed correlation between a parameter and cost/time value. Then scaled to the size of the current project | Parametric Estimation |
| -maximum accuracy but sophisticated data collection procedure -most suitable for projects with uniform work packages and repeatable tasks, in the fields characterized by a lower level of creativity | Parametric Estimation |
| -technique involves three different estimates usually obtained from subject matter experts (Optimistic, Pessimistic, Most Likely) -originated from the PERT (Program Evaluation and Review Technique). | Three-point Estimating |
| -more thorough than the majority of estimation techniques and risk oriented -attention to detail are required -utilize in complex projects and by teams with enough resources at their disposal to perform right away | Three-point Estimating |
| -refers to making a judgment based on skill, expertise, or specialized knowledge in a particular area -can help when forming strategies around threat and risk response and identify project opportunities -allows for taking unique factors into account | Expert Judgment |
| -calls for personal opinions, result is often subject to human bias. -best suitable for complex projects where quantitative estimation alone is not sufficient and is particularly advantageous for those managers who lack experience themselves. | Expert Judgment |
| -determining the total amount of money that is allocated for the project to use (estimate of all the costs that should be required to complete the project) | Project budgeting (Budget) |
| -Process of aggregating the estimated costs of individual activities to establish an authorized cost baseline -baseline includes all authorized budgets, but excludes management (contingency) reserves. -constitute the funds authorized to execute the proj | Cost budgeting |
| -creates a cost baseline for the project cost performance. If not, the total estimated cost would remain an abstract figure and would be difficult to measure midway -Evaluation gives an opportunity to assess how much needs to be released | Budgeting |
| -will provide a guide on how far the actual cost is from the planned cost | Baseline (Project S-Curve) |
| -graphical display of cumulative man-hours, cost, progress, or other quantities plotted against time -aims to represent the utilization of resources over the proposed time of the project | S-Curve |
| 1] Estimate cost of activities in the project. 2] Schedule the use of resources. 3] Divide the timeline into periods. 4] Compute the cumulative cost per period. 5] Plot and draw the cumulative cost curve. | Constructing the S-Curve |
| -process of collecting actual costs and collating them in a format to allow comparison with project budgets -necessary to keep a record of monetary expenditure for purposes such as: minimizing cost where possible & revealing areas of cost overspend. | Cost Control |
| Process of monitoring the status of the proj to update the costs and manage changes to cost baseline (Cost control info is fundamental to LESSONS LEARNED PROCESS as it provide database of actual costs against activities) | Control costs |
| -measure the amount of work actually performed beyond the basic review of cost and sched reports -measure progress achieved & make forecast on the proj’s total cost and date of completion based on trend analysis/application of the proj’s “burn rate” | Earned Value Analysis (EVA) |
| -authorized budget assigned to scheduled work -defines physical work that should have been accomplished -it's total is sometimes referred to as the performance measurement baseline (PMB) -also known as budget at completion (BAC) | Planned Value |
| -measure of work performed in terms of budget authorized -used to calculate percent complete of proj -determine current status & cumulatively for long- term performance trends -EV cannot be greater than the authorized PV budget for a component | Earned Value |
| -realized cost incurred for the work performed on an activity during a specific time period -total cost incurred in accomplishing the work that the EV measured -will have no upper limit; whatever is spent to achieve the EV will be measured. | Actual Cost |
| Measure of cost performance. Value computed indicates cost overrun CV = EV - AC | Cost Variance |
| Measure of value of the work completed. Value less than 1 indicate cost overrun. CPI = EV / AC | Cost Performance Index |
| Measure of cost performance to be achieved on remaining work to meet project objectives -Remaining work/remaining funds TCPI = (BAC-EV)/(BAC-AC) | To Complete Performance Index |
| Estimated cost of remaining work EAC = (BAC/CPI) or EAC = (AC + BAC - EV) | Estimate at complete |
| 1. Plan and Identify risks 2. Perform risk analysis 3. Plan risk response – take action 4. Monitor risks 5. Control risks | Risk Management Process |
| -uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives. | Individual Project Risk |
| effect of uncertainty on the project as a whole, arising from all sources of uncertainty including individual risks, representing the exposure of stakeholders to the implications of variations in project outcome, both positive and negative. | Overall Project Risk |
| -measure of the probability and consequence of not achieving a defined project goal -exists because of uncertainty | Risk |
| includes the processes of conducting risk management planning, identification, analysis, response planning, response implementation, and monitoring risk on a project. | Project Risk Management |
| 1) to increase the probability and/or impact of positive risks and; 2) to decrease the probability and/or impact of negative risks, in order to optimize the chances of project success. | Objectives of Project Risk Management |
| Even if the type of project you are working on is different than before, it is likely the organization has already done something remotely similar. The purpose of this step is to identify what could go wrong and what is the consequence of it occurring. | Identify risks |
| All identified risk should be documented. This consists of all Identified risks list of the identified risks, their root causes, categories, and responses. | Risk Register |
| Categorization of risks by area of project affected, sources of risk or other useful category. | Risk Category |
| The likelihood that a risk or opportunity will occur (A risk is an event that “may’ occur. The probability of it occurring can range anywhere from just above 0 to just below 100 percent) (Likelihood) | Probability |
| The impact of the risk on the project if the risk occurs (A risk, by nature, always have a negative impact. However, the size of the impact varies in terms of cost and impact on health, human life, or some other critical factor) (Consequence) | Impact |
| Determined by multiplying probability and impact | Risk score |
| General category of risk responses ( both for negative and positive risks) | Risk strategy |
| The action which is to be taken if this risk occurs. | Risk response |
| The person who the project manager assigns to watch for triggers, and manage the risk response if the risk occurs | Risk owner |
| Something which indicates that a risk is about to occur or has already occurred. | Trigger |
| process determines each risk from the risk register in terms of its probability and impact on the project if it were to occur. | Risk Analysis |
| also called “Probability-Impact Matrix” (PMI) – is one of the most important tools for risk evaluation and analysis. It provides a useful framework that helps project managers to decide which risks need their attention | Risk Matrix |
| Every risk needs to be eliminated or contained. It is important that responses are appropriate to the significance of the risk, cost effective in meeting the challenge, realistic within the project context... | Treat risks (action) |
| used when the risk is outside the proj’s scope and/or the proposed response would exceed the authority of the project manager. Manage at program level, portfolio level but not at project level. (Ex: External sources such as economic risks) | Escalate |
| Strategy where the project team takes an action to reduce the probability of the risk occurring. This does not eliminate risk or potential impact, but rather reduces the likelihood of it becoming real. “Risk Reduction” (Ex: Rehearsals) | Mitigate |
| involves shifting or transferring the risk threat and impact to a third party. Transferring of responsibility and ownership “Risk Sharing” Examples: Hiring a subcontractor | Transfer |
| In this risk response strategy, the project team tries to eliminate the risk or protect the project from its negative effects. | Avoid |
| Most common strategy: establish a contingency reserve (time, money, resources to handle the risks) Usually chosen because the risk is low in terms of impact/probability, or cost & effort of taking a different action are out of proportion to the risk | Accept |
| Not all risks can be eliminated - some risks are always present. Risk management is an ongoing process. Clear communication among the project team and stakeholders is essential for continuous improvement | Monitor risks |
| -involves executing the risk mgmt process & risk mgmnt plan to respond to risk events -Risks must be monitored based on decisions regarding risks & mitigation strategies -Unplanned responses to risk events are needed when no contingency | Control risks |
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