BBA 360
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
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