Scribd
Upload
60 views

Questions - Task 2

The document contains questions about project cost management. It addresses topics like work breakdown structures, budgeting processes, cost estimation tools, earned value management formulas, and cost change control procedures. The overall purpose is to assess understanding of key aspects of planning, monitoring, and controlling costs over the lifecycle of a project.

Uploaded by

Alessandro Fonseca
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
60 views

Questions - Task 2

The document contains questions about project cost management. It addresses topics like work breakdown structures, budgeting processes, cost estimation tools, earned value management formulas, and cost change control procedures. The overall purpose is to assess understanding of key aspects of planning, monitoring, and controlling costs over the lifecycle of a project.

Uploaded by

Alessandro Fonseca
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 5

Questions

1. What are at least six (6) major resources required for tasks identified in a
work breakdown structure?

The main features required for the identified tasks of a work breakdown
structure are as follows:

 Human Resources
 Equipments
 Materials
 services
 Costs
 Fees and charges
 installations

2. What are the main steps in the budgeting process for a project?

The budgeting process for a project is based on a set of steps to


estimate, allocate and control the expenses of a project. Among the
steps we can highlight the following:

 Cost estimation;
 Budget determination;
 Control and monitoring of expenses.

3. List at least (3) three environmental enterprise factors that can influence
a cost management process.

The environmental factors that can influence a cost management


process are as follows:

 Resource availability.
 Geographic distribution of facilities and resources.
 The infrastructure.
 Employee capability.

4. List (4) four organisational process assets that can influence the cost
management plan of a project.

The four organizational process assets that can influence a project's cost
management plan are as follows:

 Policies and procedures;


 Work analytic structure models;
 Change procedures;
 Lessons Learned and Historical Databases.
5. Outline (4) four tools and techniques used in the process of estimating
cost.

There are several tools and techniques to estimate costs, among which
we can highlight the following:

Analogous Estimate

 Analogous estimating is based on work packages and similar


activities from previous projects to estimate the duration or costs
of current project work packages and/or activities.

Bottom-up estimates

 This technique involves estimating the individual cost of activities


or work packages, then summarizing or aggregating them to
obtain the total project estimate. The cost and accuracy of bottom-
up estimates is driven by the size and complexity of individual
activities or work packages: more detailed work activities increase
both the cost and accuracy of an estimate.

Computerized tools.

 Computer tools such as project management software,


spreadsheets and simulation/statistical tools are widely used to
support cost estimation.

Stadium Estimate

 Also known as approximate order of magnitude (ROM). It is based


on the high-level objectives of the project. It provides an overview
of project results. This type of estimate gives some leeway for
flexibility

6. Describe the ‘Estimated Costs’ process and the key benefit of the
process.

The “estimated costs” process initially takes into account a list of project
costs. Cost estimates detail each component of the work required to
bring the project to life, describing the assumptions underlying each cost,
inclusions and exclusions, and associated risks. Then, an estimation
technique and/or tool is applied depending on the complexity of the
project.

The main benefit of the process is to ensure that no stage of the project
is forgotten and to provide a budget that is closer to reality.
7. Describe the ‘Determine Budget’ process and the key benefit of the
process.

The Determine Budget process aggregates the estimated costs of


individual activities or work packages to establish an authorized cost
baseline.

The main benefit of this process is the determination of baseline costs for
monitoring and controlling project performance. This process is carried
out once or at predefined points in the project.

8. List (5) five inputs that are used to determine a budget.

Five inputs that are used to determine a budget are as follows:

 direct costs
 Indirect costs
 human resources cost
 project costs
 Risk assessment

9. What is a Cost Management Plan and what is its purpose?

The Cost Management Plan describes how project costs will be planned,
structured and controlled by providing details of the processes and tools
used, and is intended to guide the team throughout the project to cost-
related issues to ensure that the project be delivered within the approved
budget.

10. What is Earned Value Management (EVM)?

Earned Value Management (EVM) is a project management


methodology that integrates schedule, costs, and scope to measure
project performance. Based on planned and actual values, EVM predicts
the future and allows project managers to adjust accordingly. In turn,
Earned Value Management Systems (EVMS) refers to the software,
processes, tools and templates used for EVM.

11. What is Cost Performance Index (CPI) and the formula used to calculate
it?

The Cost Performance Index (CPI) is a method for calculating the cost
efficiency and financial effectiveness of a specific project through the
following formula:

CPI = earned value (EV) / actual cost (AC).

A CPI ratio with a value higher than 1 indicates that a project is


performing well budget-wise. A CPI value of 1 indicates that a project is
performing on budget. A CPI value that is less than 1 indicates that a
project is over budget.

12. What is Schedule Performance Index (SPI) and the formula used to
calculate it?

The Schedule Performance Index, usually abbreviated as SPI, is one of


the fundamental outputs of Earned Value Management. It tells the
project manager how far ahead or behind the project is at the point of
analysis (usually right now).

Formula: SPI=EV/PV

13. If a cost estimate is $50 000 +/- 20%, what is the range?

The range woud be $40,000 - $60,000

14. A project has an Earned Value (EV) of $10 000, Actual Cost (AC) of
$8000 and Planned Value (PV) of $8000. Using the correct formula, what
is the Schedule Variance (SV)?

SV=EV-PV

SV=10,000 - 8,000

SV=2,000

15. You are working on a project to be completed in 14 months. The cost of


the project is $1,000,000. After 7 months, $620,000 has been spent and
only 40% of the work has been completed.
a. Using the correct formula, find the Cost Performance Index (CPI).
b. Is the project currently over or under budget?

16. You discover you cannot meet your current project cost baseline due to
fluctuating international exchange rates. You calculate a bottom-up
estimate of remaining work at $2.5 million. The project’s current actual
cost (AC) is $3.5 million. Using the correct forecasting formula, calculate
the project estimate at completion. (You must show formula and
breakdown).
17. Imagine you need to make changes to existing time frames in order for
project tasks to be completed by a specific time and to maintain financial
objectives. Describe how you would implement an agreed action and
provide timely financial reporting.
18. Outline the procedures of a cost change process for a project.
19. In the role of project manager, what six (6) activities would you conduct
on financial completion of a project? 
20. When completing cost management processes, what four (4) records
could you review to determine the outcomes reached?
21. Briefly explain the process of reviewing cost management issues and
documenting improvements.

You might also like