PMP - Cost Management

  1. In earned value how is a cost variance calculated?
    CV = EV - AC or BCWP - ACWP
  2. In earned value how is CPI calculated?
    EV / AC or BCWP / ACWP
  3. What is the EAC and how is it calculated?
    Estimate at Completion

    • EAC = BAC / CPI
    • assumes current performance will continue

    • EAC = AC + (BAC-EV)
    • assumes remaining work will be done at original budget rate

    • EAC = AC + [(BAC-EV) / (CPI x SPI)]
    • needed if you also have to consider effect of the schedule if you have an imposed firm deadline
  4. Name two methods of accelerated depreciation
    • 1. Double Declining Balance
    • 2. Sum of the years digits
  5. What is working capital
    Current assets minus current liabilities
  6. What is the purpose of a management reserve?
    to reduce the chance of a cost overrun
  7. What is value analysis and how does the process work?
    • A cost reduction tool composed of four major steps
    • 1. Analyze a proposed design
    • 2. Determine relative cost of each function
    • 3. Assess whether each function is really needed
    • 4. Assess how to provide the necessary functions at the lowest cost without compromising quality or performance
  8. IRR is ?
    Internal Rate of Return - an estimate of a project's profitability expressed as a percentage - the higher the better
  9. What is an approximate range of accuracy for a bottom up estimate?
    -5 to +10%
  10. What is cost control?
    • 1. Influencing factors which create changes
    • 2. Ensuring requested changes are agreed upon
    • 3. Managing the actual changes as they occur
    • 4. Determining that the cost baseline has changed
  11. What is the learning curve theory?
    The learning curve theory holds that costs will decrease as you get better at doing a repetitive task.

    Unit costs will decrease in a regular pattern each time the number of units produced is doubled
Card Set
PMP - Cost Management
PMP Cost Management Review