Project Management Cost Estimation Quiz

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the main difference between the cost baseline and the cost budget in project management?

The cost baseline represents the original project cost estimate, while the cost budget includes earned value calculations.

The cost baseline contains actual project costs, while the cost budget includes EAC calculations.

The cost baseline is a snapshot of project costs at a specific point, while the cost budget is an estimate of total project costs.

The cost baseline includes management reserves, while the cost budget includes contingency reserves. (correct)

Which tool or technique is used to come up with the project cost estimate in project management?

Contingency reserves

Reserve analysis (correct)

Estimate at Completion (EAC)

Earned Value Management

What is the primary purpose of Earned Value Management methodology in project management?

Calculate the value provided to the customer

Forecast future performance based on current performance (correct)

Calculate the number of days left in the project

Determine the profitability of the project

In project management, what does Estimate at Completion (EAC) refer to?

The estimated total cost at project completion Signup and view all the answers

When calculating the cost baseline in project management, what are contingency reserves used for?

To account for known risks that may impact project costs Signup and view all the answers

Why is it cautioned that understanding terms like EAC and other similar definitions in Earned Value Management is important?

To avoid confusion between similar terms that may lead to incorrect project cost estimates Signup and view all the answers

What does a Cost Performance Index (CPI) value of 0.84 indicate?

The project is over budget Signup and view all the answers

If Estimate at Completion (EAC) = AC + (BAC – EV), what does BAC represent?

Budgeted at Completion Signup and view all the answers

What does Schedule Performance Index (SPI) value of 0.84 indicate?

The project is progressing behind schedule Signup and view all the answers

What does Estimate To Complete (ETC) = EAC – AC formula calculate?

Total project cost as of today minus what has been spent to date Signup and view all the answers

When using bottom-up forecasting for Estimate at Completion (EAC), what does EAC = AC + bottom-up ETC represent?

Adding actual costs to bottom-up estimated costs Signup and view all the answers

What does a Cost Performance Index (CPI) value greater than 1 indicate?

The project is under budget Signup and view all the answers

What term is used to describe the budgeted cost for the work planned to be completed by a specific point in time?

Budgeted Cost of Work Scheduled Signup and view all the answers

Which formula is used to calculate Estimate at Completion (EAC)?

(EV / BAC) * 100 Signup and view all the answers

What does Schedule Variance (SV) represent?

Difference between earned value and planned value Signup and view all the answers

In project management, what does Cost Variance (CV) indicate?

Difference between planned and actual cost Signup and view all the answers

Which term describes the anticipated total cost of the project at completion?

Budget at Completion Signup and view all the answers

What does ETC (Estimate to Complete) represent in project management?

Outstanding amount needed to complete the project Signup and view all the answers

Study Notes

Earned Value Management

EAC (Estimate At Completion) is the anticipated total cost of the project at completion.
ETC (Estimate To Complete) is the amount of money needed to complete the remaining work on the project.

Cost Baseline and Cost Budget

The cost baseline includes contingency reserves.
The cost budget includes management reserves in addition to the cost baseline.
The difference between the cost baseline and the cost budget is the management reserves.

Earned Value Formulas

CV (Cost Variance) = EV - AC, where negative values indicate over budget and positive values indicate under budget.
SV (Schedule Variance) = EV - PV, where negative values indicate behind schedule and positive values indicate ahead of schedule.
CPI (Cost Performance Index) = EV / AC, where values greater than 1 are good (under budget) and values less than 1 are bad (over budget).
SPI (Schedule Performance Index) = EV / PV, where values greater than 1 are good (ahead of schedule) and values less than 1 are bad (behind schedule).

Estimate At Completion (EAC)

EAC = AC + (BAC - EV), where BAC is the total project budget.
EAC is a forecasted value of the project when completed.
EAC can be calculated using bottom-up manual forecasting for the ETC.

Estimate To Complete (ETC)

ETC = EAC - AC, where EAC is the estimated cost at completion and AC is the actual cost incurred so far.
ETC is the remaining amount of money needed to complete the project.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Test your knowledge on project cost estimation concepts like anticipated total cost at project completion (EAC), estimate at completion (EAC) and earned value. Practice questions to understand the difference between cost baseline, cost budget, management reserves, and contingency reserves.