You are on page 1of 2

PMP Cost Management

Study online at


Actual Cost Means? Aka actual cost of work performed (ACWP) Budget to Completion means? Determining Earned Value Includes? Earned Value (EV) Means? Aka budgeted cost of work performed (BCWP) Earned Value Forecast Table Earned Value Rules (Fixed Formula Progress Reporting) Earned Value Table

The cost of the work that has been completed at a specific point in time, including any work started ahead of schedule The amount you expect the project to cost Budget to completion (BAC), Planned Value (PV), Actual Cost (AC), Earned Value (EV) A measurement of the progress of a project and the basis of cost analysis, including any work started ahead of schedule. EAC = BAC / CPI ETC = EAC - AC VAC = BAD - EAC Typically used on shorter duration not exceeding two reporting periods. E.G. 25% Cost Start Here Time AC (ACWP) EV (BCWP) PV (BCWS) CPI = / <---- ----> / = SPI CV $ = - <---- ----> - = SV $ Estimate on what is needed to finish the project based on the current spending ETC = Estimate at Completion (EAC) - Actual Cost (AV) $ * Probability


How do you calculate Planned Value (PV or BCWC)? How do you calculate Present Value (PV)? Planned Value means? Aka budgeted cost of work scheduled (BCWS) Present Value Formula Schedule Performance Index (SPI) formula and what does it mean

Add up the planned value amounts of each activities up to the time period.







The value of the work that should be completed at a specific point of time, excluding any work started ahead of schedule PV=FV/(1+r)^n EV/PV - indicator that shows the amount of work done at single point in time 1.0 = On track >1.0 = better then expected <1.0 = Less then expected EV- PV - indicator the shows the difference between value of work completed and value of what should have been completed 0 = on track > 0 = Project under budget < 0 = project over budget Already spent. Do not consider sunk cost when making future project decisions Effiency indicator that shows how much effiency is needed from remaining resources to meet cost goals and finish on budget TCPI = (Budget at Completion (BAC) Earned Value (EV)) / (Budget at Completion (BAC) - Actual Cost (AC)) Difference of the Budget to Completion (BAC) and the Estimate at Completion (EAC). Will show how much projected over or under budget VAC = BAC - EAC Typically used for activities longer then two reporting periods. Each measurable output for each section of work. Rough Order of Magnitude: -50% to 50% or -25% to 75% Initiating (Start) Budget Est: -10 to 25% Early Planning Definitive (or Control) -10% to 10% or -5% to 10% End Planning (End)







Schedule Variance (SV) formula and what does it mean


Estimate to Complete (ETC)


Sunk Cost


Expected Present Value Future Value Formula How do you calculate Actual Costs (AC)? How do you calculate Budget at Completion (BAC)? How do you calculate cost variance (CV) and what does it mean?


10. 11.

FV=PV*(1+r)^n Total what you has been spent to date. Total the amounts of all planned activities.

To Complete Performance Index (TCPI)



EV - AC - shows the differece in value of work completed and actual cost of that work 0 = project on track > 1.0 = project under budget < 1.0 = project is over budget Total the EV amount multiplied by the completion amount of all activities even the ones that have not been started. FV= PV * (1+r)^n

Variance at Completion (VAC)


Weighted Milestone


How do you calculate Earned Value (EV)?


What are the 3 cost estimate ranges?


How do you calculate Future Value (FV)?


What are the 3 processes involved in Cost Management? What are the 4 different types of costs? What are the ittos for Control Costs?

1. Estimate Costs 2. Determine budget 3. Control costs


What are the ittos for Estimate Costs?

Inputs: Scope baseline, project schedule, human resource plan, risk register, enterprise environmental factos, organizational process assets TT: Expert Judgement, Analogous estimating, Parametric estimating, Bottomup estimating, Three-point estimating, Reserve Analysis, Cost of quality, Project management estimating software, Vendor bid analysis Output: Activity cost estimates, Basis of estimates, Project document updates


Direct Cost, Indirect Cost, Fixed Cost, Variable cost


Inputs: Project management plan, project funding requirements, work performance information TT: Earned Value Measurement, Forecasting, T0-Complete Performance Index (TCPI), Performance reviews, Variance analysis, PM Software Outputs: Work Performance Measurement, Budget Forecasts, Change Requests, Project Managment Plan updates, Organizational Process Assets Updates, Project Document Updates What is EAC (Estimate at Completion) and what does it mean? What is the 3point Estimation Formula (Triangulation) What is the Cost Performance Index (CPI) formula and what does it mean? What is the difference between Chart of Accounts and Code of Accounts? What is the difference between the 4 types of costs?


Projected final cost on current current spending efficency (CPI) EAC = Budget at Completion (BAC)/ Cost Performance Index (CPI) (P+O+ML)/3



What are the ittos for Determine Budget?

Inputs: Activity Cost Estimates, Basis of Est., Scope Baseline, Project Schedule, Resource Calendars, Contracts, Organizational Process Assets. TT: Cost Aggregation, Reserve Analysis, Historical Relationships, Funding limit Reconciliation, Expert Judgement Outputs: Cost Performance Baseline, Project Funding Requirements, Project Document Updates


EV/AC - indicator that shows how much was returned for every dollar spent at a current point in time 1.0 = On track or dollar for dollar > 1.0 = Under budget and getting more for ever dollar spent < 1.0 = Over budget and getting less for every dollar spent Chart of accounts is used by accounting and PM system to establish and track budgets Code of accounts is a numbering system that identifies pieces of work to the WBS. Direct costs are spent only on project work Indirect Costs are needed for the project but not restricted to it Fixed Costs is consistent on a project regardless of how many are used Variable Costs fluctuates with what is produced.



what are the ittos for Estimate Cost?

Inputs: Scope baseline, project schedule, human resource plan, risk register TT: Expert judgement, Parametric Est., 3point Est, Analogous Est. Bottom-up Est, Reserve Analysis, Vendor Bid Analysis, Cost of Quality, PM Estimate Software Outputs: Activity cost est., Basis of est.



What is the purpose of Cost Management?

Completing the project within the approve budget.