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PROJAMN - L6
Project Cost Management
| Question | Answer |
|---|---|
| resource sacrificed or foregone to achieve a specific objective something given up in exchange | Cost |
| are required to understand project cost management since project costs money and consumes resources. | Project managers |
| re revenues minus expenses | Profits |
| s the ratio of the revenues to profits | Profit margin |
| allows you to take a big picture view of the cost of a project over its entire life. | Life cycle costing |
| s is a method for determining the estimated annual costs and benefits for a project and the resulting annual cash flow | Cash flow analysis |
| is the discount rate that makes NPV equal to zero. | Internal rate of return (IRR) |
| are those costs or benefits that can be easily measured in pesos. | Tangible costs or benefits |
| are the costs or benefits that are difficult to measure in monetary terms. | Intangible costs |
| Are costs directly related to producing the products and services of a project. | Direct costs |
| are costs not directly related to a project’s products or services, but are indirectly related to performing the project | Indirect costs |
| is the money that has been spent in the past or considered gone | Sunk cost |
| states that when many items are produced repetitively, the unit cost of those items decreases in a regular pattern as more units are produced. | Learning curve theory |
| are the currencies included in a cost estimate to mitigate cost risk by allowing for future situations that are difficult to predict | Reserves |
| are the amounts needed above the estimate which are for future situations that may be partially planned for and are included in the project cost baseline. | Contingency reserves |
| are designated amounts which account for future situations that are unpredictable. | Management reserves |
| involves developing an approximation (estimate) of the costs of the resources needed to complete project activities | Estimating Costs |
| gives an estimation of the project’s costs | Rough Order of Magnitude (ROM) |
| used to allocate money into the budget of an organization | Budgetary Estimate |
| provides an accurate estimate of the project costs | Definitive Estimate |
| uses historical data from similar projects as a basis for the cost estimate | Analogous estimates |
| sometimes referred to as Activity Based Costing • uses the estimates of individual work packages which are then summarized or"rolled up" to determine an overall cost estimate for the project | Bottom-up estimates |
| uses statistical modeling to develop a cost estimate | Parametric modeling |
| used for estimating software development costs based on parameters such as the source lines of code or function points | Constructive Cost Model or COCOMO |
| project performance measurement technique that integrates scope, time and cost data | Earned Value Management |
| portion of the approved total cost estimate planned to be spent on an activity during a given period | Planned Value (PV) or the budge |
| total direct and indirect costs incurred in accomplishing work on an activity during a given period | Actual Cost (AC) |
| percentage of work actually completed multiplied by the planned value (Measures the value of work actually completed) | Earned Value (EV) |
| is the earned value minus the actual cost (Shows whether the project is under or over budget.) | Cost variance (CV |
| Is the earned value minus the planned value. (Shows whether the project is ahead or behind schedule) | Schedule variance (SV) |
| is the ratio of earned value to actual cost and can be used to estimate the projected cost of completing the project. (Efficiency of cost utilization) | Cost performance index (CPI) |
| Is the ratio of earned value to planned value and can be used to estimate the projected time to complete the project. (Efficiency of schedule performance) | Schedule performance index (SPI) |
| is an estimate of what it will cost to complete the project based on performance to date | Estimate at completion (EAC) |
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