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Questions and Answers
What is the primary purpose of a Rough Order of Magnitude (ROM) estimate?
What is the primary purpose of a Rough Order of Magnitude (ROM) estimate?
What is the range of accuracy for a budgetary estimate?
What is the range of accuracy for a budgetary estimate?
When is a definitive estimate typically prepared?
When is a definitive estimate typically prepared?
What is the advantage of parametric models, according to Barry Boehm?
What is the advantage of parametric models, according to Barry Boehm?
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What is the primary benefit of using a bottom-up estimate?
What is the primary benefit of using a bottom-up estimate?
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What is the purpose of a cost baseline?
What is the purpose of a cost baseline?
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What is the role of cost estimation in project budgeting?
What is the role of cost estimation in project budgeting?
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What is the benefit of using cost estimation tools and techniques?
What is the benefit of using cost estimation tools and techniques?
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What is the purpose of COCOMO II?
What is the purpose of COCOMO II?
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What is the advantage of using analogous estimates?
What is the advantage of using analogous estimates?
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Study Notes
Project Cost Management
- Project cost management involves ensuring a project is completed within an approved budget.
- It includes processes for cost estimation, budgeting, and cost control.
Importance of Project Cost Management
- IT/SW projects have a poor track record of meeting budget goals, with average cost overruns ranging from 180% to 43%.
- Accurate cost estimates are crucial to avoid cost overruns.
Reasons for Cost Overruns
- Unrealistic project cost estimates from the outset.
- Lack of emphasis on realistic estimates.
- Involvement of new, untested technologies.
- Biased estimation due to lack of experience.
Basic Principles of Cost Management
- Profits are revenues minus expenses.
- Life cycle costing estimates the cost of a project over its entire life.
- Cash flow analysis determines estimated annual costs and benefits for a project.
Typical Problems with Cost Estimates
- Developing estimates for large software projects is complex and requires significant effort.
- Estimates are often done at various stages of the project.
- Lack of experience among estimators.
- Bias towards underestimation.
- Unrealistic estimation due to management pressure.
Cost Budgeting
- Cost budgeting allocates project cost estimates to individual work items and provides a cost baseline for performance measures.
Cost Control
- Cost control involves controlling changes to the project budget.
- It includes monitoring project costs and managing changes to the project cost baseline.
Earned Value Management (EVM)
- EVM is a technique that integrates scope, time, and cost data to measure project performance.
- It determines how well a project is meeting its goals based on a baseline (original plan plus approved changes).
Types of Cost Estimates
- Rough Order of Magnitude (ROM) estimates: done very early in the project life cycle, provides a rough ballpark of cost for selection decisions, accurate to -25%, +75%.
- Budgetary estimates: done early, provides a more detailed estimate for budget plans, accurate to -10%, +25%.
- Definitive estimates: done later, provides detailed estimates for purchases and actual costs, accurate to -5%, +10%.
Cost Estimation Tools and Techniques
- Analogous or top-down estimation: uses the actual cost of a previous, similar project as the basis for the new estimate.
- Bottom-up estimation: estimates individual work items and sums them to get a total estimate.
- Parametric estimation: uses project characteristics to estimate costs.
Constructive Cost Model (COCOMO)
- COCOMO is a model for estimating software development costs, developed by Barry Boehm.
- Parameters include source lines of code or function points.
- COCOMO II is a computerized model available on the web.
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Description
This quiz covers the basics of project cost management, including the definition of cost, cost measurement, and the importance of accurate cost estimates in project management.
