   # BBA 360

Topics: Project management / Pages: 9 (1876 words) / Published: Apr 20th, 2014
BBA 360 Study Guide
Exam III
Fall 2013

Project Management Budgets and Costs; Managing Risks
Determining the project budget involves two steps; what are they?
1. Determine the budget for each work package
2. Spread the budget for each work package over the expected time span /activities will be performed to determine how much of the budget should be spent at any one time

What are committed costs?
-where dollar amounts are expended for materials- services etc. /used over a period longer than one cost reporting period.
-also referred to as commitments/obligated costs/encumbered costs

Why is the EV important in watching a project budget?
-it helps determine if the work being performed is on track

-calculating EV= Paint 10 rooms for \$2000
If 3 rooms were completed/ it is safe to say that 30 percent of the work has been performed EV=.30 x \$2000 = \$600

Will you be able to analyze a project cost performance if given the TBC, the CBC, the CAC and the CEV?
TBC ( Total Budgeted Cost) =sum of estimated costs for all the specific activities of the work package
CBC (Cumulative Budgeted Cost) = the amount that was budgeted to accomplish the work scheduled to be performed up to that point in time
CAC (Cumulative Actual Cost )
CEV ( Cumulative Earned Cost)

What does the Cost Performance Index indicate?
-measure of cost efficiency/ lets you know where you stand at any point of project
CPI = CEV/CAC
CPI= \$54000/\$68000 =.79
******For every \$1 actually expended only \$.79 of earned value was received
****When CPI below 1 or gradually decreases take corrective action

Can you estimate the cost at completion of the project using Method 1 and Method 2 if given the data?

-FCAC (Forecasted Cost at Completion)
-
Method 1= Assumes the work remaining will be done at the same rate as the work performed so far.
FCAC= TBC/CPI FCAC =\$100,000/.79 =\$126,582
** If the remainder of the project continues at this