Project Cost Management Notes PMBOK6 -Part 1

Free PMP Flashcards and Notes on Project Cost Management of PMBOK6-Part 1

Card : 1

Explain Plan Cost Management ?
It is the process of establishing the policies, procedures and documentation for planning ,managing,spending and controlling project cost

 

Card : 2

The Ability to influence is greatest at which stage of project?

 

The Early Stage

 

Card : 3

Define term “Estimate Cost”

 Developing an approximation of the monetary resources needed to complete project activities.

 

Card : 4

Define term “Determine Budget”

 Aggregating the estimated cost of individual activities or work packages to establish an authorized cost     base line.

 

Card : 5

Define term “Control Cost”

 Monitoring the status of the project to update the project cost and managing changes to cost baseline.

 

Card : 6

Define term “Plan cost management

Providing guidance and direction on how the project cost will be managed throughout the project.

 

Card : 7

Define “Basis of Estimate “

 Supporting documentation that provides a clear and complete understanding of how the cost estimate was derived.

 

Card : 8

Give an Example of “known-unknowns”?

 You know you may have to rework on some part of the project, or project deliverable later, but the amount for this is unknown for you at this stage

 

Card : 9

What is “Contingency reserves “?

The part of Budget intended to address the “known-unknowns” works that can affect the project

 

Card : 10

What is “Management Reserve”?

The part of Budget intended to address the “unknown-unknowns” or unforeseen work   that can affect the project

 

Card : 11

What is “cost control”

Cost Control involves analyzing the relationship between consumption of project fund and the value of the work accomplished

 

Card : 12

What are Types of Estimation:
  1. Analogous Estimating(Top Down)
  2. Parametric Estimating
  3. Bottom-up Estimating

 

Card : 13

Explain Analogous Estimating(Top Down)
  •  use historical activity cost data of similar projects to determine 
  • Relies of expert judgment
  • Use this technique when limited information available

 

Card : 14

Explain Parametric Estimating 
  •  use mathematical calculations or models to determine activity costs
  •  generally more accurate
  •  E.g. it costs $100 to install 20m of wires, thus, it will cost $1000 to install 200m.

 

Card : 15

Explain Bottom-up Estimating
  • detailed estimating is done for each activity or work package
  • the estimates are then rolled up into control accounts and finally into an over project estimate, 

 

Card : 16

Define Activity cost estimate 

 an estimation of what the activity will cost upon completion based on information known to date.

 

Card : 17

What are Supporting details for activity cost estimates ?
  • Basis of estimation
  • Assumptions
  • Constraints
  • Range of possible estimates
  • Confidence level of final estimate

 

Card : 18

What are Types of costs ?
  • Variable costs
  • Fixed costs 
  • Direct costs 
  • Indirect cost

 

Card : 19

What is Variable costs 

  these costs change with the amount of production or the amount of work

  Examples: cost of material, supplies, and wages

 

Card : 20

What is Fixed costs 

these costs do not change as production changes

Examples: rent, equipment, etc.

 

Card : 21

What is Direct costs 

these costs are directly attributable to the work on the project

Examples are team travel, team wages, recognition, and costs of material used on the project

 

Card : 22

What is Indirect costs 

indirect costs are overhead items or costs incurred for the benefit of more than one project

Examples include taxes, fringe benefits, and janitorial servicesCost of quality – The total cost of all efforts related to quality

 

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