PMP - Cost Management

CV = EV - AC or BCWP - ACWP

EV / AC or BCWP / ACWP

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

• 1. Double Declining Balance
• 2. Sum of the years digits

Current assets minus current liabilities

to reduce the chance of a cost overrun

• 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

Internal Rate of Return - an estimate of a project's profitability expressed as a percentage - the higher the better

-5 to +10%

• 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

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