# Shared Flashcard Set

## Details

7. Cost Management
Terms and Definitions
37
Computer Networking
Professional
10/24/2015

## Cards Return to Set Details

Term
 Actual Cost (AC)
Definition
 Also known as an actual cost of work performed (ACWP); represents the total costs that have actually been accrued up to a particular point in time.
Term
 Baseline
Definition
 Estimate or plan that the project will try to achieve (cost, scope, time, etc.)
Term
 Bottom-Up Estimate
Definition
 Detailed estimate that usually involves team input. As the team builds the pieces of the estimate, they build the total estimate from the bottom up.
Term
 Budget
Definition
 The total amount of money expected to be spent on a project based on the original cost estimates plus any approved changes.
Term
 Budgetary Estimate
Definition
 An estimate used to put money in a company's (or project) budget.
Term
 Code of Accounts (Tool)
Definition
 A numbering system in project management used to identify pieces of the work breakdown structure.
Term
 Contingency Reserves
Definition
 Money included in an estimate that accounts for events which may be somewhat predicted (known unknown.)
Term
 Control Account (Tool)
Definition
 A point where scope, time, budgeted cost, and actual cost come together to measure performance on a project.
Term
 Cost Estimating
Definition
 Estimating (educated consistent process) the cost of people and other resources to complete the project.
Term
 Definitive Estimate
Definition
 A cost estimate that provides the accurate estimation of the project cost; the finaal estimate to be used on the project before implementation begins; Tolerance range: -10 to +15%
Term
 Direct Cost
Definition
 Cost that is directly applicable to the project (Ex: Test computer for software being created on the project, IC chips, or labor used on the project.)
Term
 Estimate at Completion (EAC)
Definition
 Represents the projected total estimate, based on the current efficiency (CPI) with which you are spending money on the project; Formula: BAC/CPI
Term
 Indirect Cost
Definition
 Cost that is not directly accrued on the project (Ex: electricity, taxes, rent.)
Term
 Learning Curve Theory
Definition
 A theory which states that the more of something that is produced, the lower the unit cost of it becomes due to an improvement in efficiency.
Term
 Parametric Modeling
Definition
 Application of a mathematical model used to estimate project components (time, cost, scope) by having other variables entered into the application.
Term
 Project Cost Management
Definition
 Process used to complete the project within the approved budget.
Term
 Resource Planning
Definition
 Determination of resources (people, material, equipment) needed for a project including the determination of when (or how much of) the resources are needed.
Term
 Schedule Performance Index (SPI)
Definition
 ratio of earned value and planned value that can be used to calculate how a project is progressing.
Term
 Sunk Cost
Definition
 Money that has already been spent on a project; should not be considered when selecting or evaluating a project.
Term
 Tangible Cost/Benefit
Definition
 Easily measurable cost or benefits of a project, measured in dollars.
Term
 Analogous Estimates (Technique)
Definition
 Process of using a previous project of similar characteristics (size, cost, scope) to estimate a new project.
Term
 Budget at Completion (BAC)
Definition
 Total project budget, amount of money planned to be spent by the time the project is complete.
Term
 Chart of Accounts (Tool)
Definition
 A structure used to monitor project cost that usually aligns with a company's accounting system.
Term
 Cost Budgeting
Definition
 Applying the overall cost estimates to the individual work elements to allow for a baseline cost measurement.
Term
 Cost Control
Definition
 The process of controlling changes to the budget.
Term
 Cost Management Plan
Definition
 The document that explains how to handle cost estimations, budgeting, variances, and other cost related items on the project.
Term
 Cost Performance Index (CPI)
Definition
 A ratio that shows the current efficiency of money being spent on the project, Formula: EV/ACA value of one means you are getting out what you put (which is good), less than one is bad, greater than one is good.
Term
 Cost Variance (CV)
Definition
 The difference between what has been built (EV) and what the cost was to build it (AC).Formula: EV-ACA value of zero means the project is creating what it should for the cost as planned. A negative value means you are over budget, a positive value means you are under budget.
Term
 Earned Value (EV)
Definition
 Also known as budgeted cost of work performed (BCWP); represents the value of the work that has actually been accomplished or completed up to a particular point in time.
Term
 Earned Value Technique (EVI) (Technique)
Definition
 The technique associated with measuring the amount of completion of a work breakdown structure component, control account or project.
Term
 Internal Rate of Return (IRR)
Definition
 A project comparison value, represents the discounted rate that zeros out the net present value (NPV.)
Term
 Life Cycle Costing
Definition
 Consideration of not just project cost, but total ownership (operations and support) cost of the item created by the project.
Term
 Net Present Value (NPV)
Definition
 A value used in capital budgeting, in which the present value of cash inflow is subtracted from the present value of cash outflows; compares the value of a dollar today versus the value of the same dollar in the future, after taking inflation and return into account.
Term
 Opportunity Cost
Definition
 The cost associated with giving up one opportunity for another (Ex: Project A \$50K, Project B \$75K. If you select Project B, it has an opportunity cost of the total of Project A, which is \$50K.)
Term
 Planned Value
Definition
 Represents the total cost that should have been spent up to a particular point in time.
Term
 Profit
Definition
 Money made after expenses have been subtracted from revenue.
Term
 Reserves
Definition
 Money set aside in a budget used for items that are difficult to predict.
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