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Questions and Answers
What is the most widely used performance measurement method?
What is the most widely used performance measurement method?
Earned value
What is a sunk cost?
What is a sunk cost?
An expense that cannot be recovered.
What are the two types of costs?
What are the two types of costs?
Fixed and variable costs
What is the purpose of resource leveling?
What is the purpose of resource leveling?
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What is the purpose of quality control?
What is the purpose of quality control?
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What are the 8 distinct steps of Quality Assurance & Control (QPA)?
What are the 8 distinct steps of Quality Assurance & Control (QPA)?
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What is the goal of quality management?
What is the goal of quality management?
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What is the purpose of ISO (International Organization for Standardization)?
What is the purpose of ISO (International Organization for Standardization)?
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What is the primary purpose of statistical sampling?
What is the primary purpose of statistical sampling?
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Which of the following is an example of a fixed cost in organizing an event?
Which of the following is an example of a fixed cost in organizing an event?
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A project that stays within budget is usually an exception, not the rule.
A project that stays within budget is usually an exception, not the rule.
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What are the three indicators used to manage a project in the earned value method?
What are the three indicators used to manage a project in the earned value method?
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What does 'PV' stand for in the earned value method?
What does 'PV' stand for in the earned value method?
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Study Notes
Cost Management: Tools and Techniques
- Cost management plans involve precision levels and acceptable error degrees (e.g., ±10%).
- Control thresholds define variation levels requiring corrective actions.
- Predefined cost management templates and frequencies are used.
- Cost management process descriptions detail the associated costs.
Cost Management: Global Approach
- Input elements include scoping letters, work breakdown structures, risk management plans, project environmental factors, and human resource management.
- Cost estimates are based on the work breakdown structure and project schedule.
- Tools and techniques include expert judgment, estimation by analogy, parametric estimation, bottom-up estimation, three-point estimating, reserves analysis, and cost of quality.
Cost Estimates (Outputs)
- Estimated activity costs quantify costs to complete project tasks.
- Cost estimations employ various bases, which should be documented to understand potential inaccuracies.
- Project documents should be regularly updated.
Determining the Final Budget
- Cost aggregation follows the work breakdown structure.
- Reserves analysis considers estimation, management, and risk-related factors.
- Employee expertise is essential.
- Budget components include total management reserves, base costs, controls, and contingent reserves.
Definitions and Concepts
- Fixed costs: Independent of production quantities, like event room rentals.
- Variable costs: Vary proportionally with production level—e.g., performance bonuses.
- Direct costs: Clearly attributable to a specific project—e.g., employee salary.
- Indirect costs: Resources allocated to multiple projects.
Sunk Costs
- Sunk costs are unrecoverable expenses—renting an unusable machine is a sunk cost.
Cost Control
- Earned value is the widely used performance measurement method.
Sources of Financing
- Internal financing sources include cash flow operations and voluntary contributions.
- External financing sources include state funding, grants, donations, sponsorships, and crowd funding.
Quality and Performance
- Quality can be categorized by performance, specific features, reliability, conformance, durability, serviceability, and aesthetics.
Quality Management
- Quality management encompasses quality planning, quality assurance, and quality control.
- Quality entails meeting or exceeding customer expectations.
- Key components consist of customer satisfaction.
Standard and Quality ISO
- ISO (International Organization for Standardization) is a non-governmental organization coordinating international standards.
- Different ISO versions define quality management systems' fundamental principles, requirements, and models.
Developing a Project Quality Plan
- The plan comprises eight stages: establish mission statement, prioritize accountabilities, analyze processes, identify customer requirements, develop in-built customer requirements, and document processes.
Quality Control (QC)
- Quality control verifies if project outcomes meet quality standards and stakeholder requirements.
- Tools include cause-and-effect diagrams, run charts, scatter diagrams, and histograms.
Process Maps and Flowcharts
- Process maps/flowcharts visually represent project processes.
Control Charts (X-bar Charts)
- X-bar charts track process variation.
- Crucial for determining a process' reliability and predictability within acceptable parameters.
Statistical Sampling
- Statistical sampling involves selecting a subset of a population for quality assessment and prediction.
- A "population" represents the total quantity and a "sample" represents a subset extracted for analysis.
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Description
Explore the essential tools and techniques used in cost management. This quiz covers cost management plans, control thresholds, and various estimation methods employed during project management. Test your understanding of how these elements contribute to effective project cost control.
