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Ch 7 Project Cost Management
Unix The Textbook 2nd Edition
35
Management
Undergraduate 2
11/24/2014

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Cards

Term
Actual cost (AC)
Definition
The total of direct and indirect costs incurred in accomplishing work on an activity during a given period
Term
Analogous estimates
Definition
A cost-estimating technique that uses the actual cost of a previous, similar project as the basis for estimating the cost of the current project
Term
Baseline
Definition
The approved project management plan plus approved changes.
Term
Bottom-up estimates
Definition
A cost-estimating technique based on estimating individual work items and summing them to get a project total.
Term
Budget at completion (BAC)
Definition
The original total budget for a project.
Term
Budgetary estimate
Definition
A cost estimate used to allocate money into an organization’s budget.
Term
Cash flow analysis
Definition
A method for determining the estimated annual costs and benefits for a project.
Term
Contingency reserves
Definition
Dollar amounts included in a cost estimate to allow for future situations that may be partially planned for (sometimes called known unknowns) and that are included in the project cost baseline. Provisions held by the project sponsor or organization to reduce the risk of cost or schedule overruns to an acceptable level
Term
Cost baseline
Definition
A time-phased budget that project managers use to measure and monitor cost performance.
Term
Cost performance index (CPI)
Definition
The ratio of earned value to actual cost; can be used to estimate the projected cost to complete the project.
Term
Definitive estimate
Definition
A cost estimate that provides an accurate estimate of project costs.
Term
Direct costs
Definition
Costs that can be directly related to creating the products and services of the project.
Term
Earned value (EV)
Definition
An estimate of the value of the physical work actually completed.
Term
Earned value management (EVM)
Definition
A project performance measurement technique that integrates scope, time, and cost data.
Term
Estimate at completion (EAC)
Definition
An estimate of what it will cost to complete the project based on performance to date.
Term
Indirect costs
Definition
Costs that are not directly related to the products or services of the project, but are indirectly related to performing the project.
Term
Intangible costs or benefits
Definition
Costs or benefits that are difficult to measure in monetary terms.
Term
Known unknowns
Definition
Dollar amounts included in a cost estimate to allow for future situations that may be partially planned for (sometimes called contingency reserves) and that are included in the project cost baseline.
Term
Learning curve theory
Definition
A theory that when many items are produced repetitively, the unit cost of those items normally decreases in a regular pattern as more units are produced.
Term
Life cycle costing
Definition
The total cost of ownership, or development plus support costs, for a project.
Term
Management reserves
Definition
Dollar amounts included in a cost estimate to allow for future situations that are unpredictable (sometimes called unknown unknowns). Funds held for unknown risks.
Term
Overrun
Definition
The additional percentage or dollar amount by which actual costs exceed estimates.
Term
Parametric estimating
Definition
A cost-estimating technique that uses project characteristics (parameters) in a mathematical model to estimate project costs.
Term
Planned value (PV)
Definition
The portion of the approved total cost estimate planned to be spent on an activity during a given period.
Term
Profit margin
Definition
The ratio between revenues and profits
Term
Profits
Definition
Revenues minus expenses.
Term
Project cost management
Definition
The processes required to ensure that the project is completed within the approved budget.
Term
Rate of performance (RP)
Definition
The ratio of actual work completed to the percentage of work planned to have been completed at any given time during the life of the project or activity.
Term
Reserves
Definition
Dollar amounts included in a cost estimate to mitigate cost risk by allowing for future situations that are difficult to predict.
Term
Rough order of magnitude (ROM) estimate
Definition
A cost estimate prepared very early in the life of a project to provide a rough idea of what a project will cost.
Term
Schedule performance index (SPI)
Definition
The ratio of earned value to planned value; can be used to estimate the projected time to complete a project.
Term
Sunk cost
Definition
Money that has been spent in the past.
Term
Tangible costs or benefits
Definition
Costs or benefits that can be easily measured in dollars.
Term
Top-down estimates
Definition
A cost-estimating technique that uses the actual cost of a previous, similar project as the basis for estimating the cost of the current project
Term
Unknown unknowns
Definition
Dollar amounts included in a cost estimate to allow for future situations that are unpredictable (sometimes called management reserves).
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