CIS 5800 QUIZ 3 STUDYSHEET.docx - CIS 5800 – QUIZ 2 Project...

CIS 5800 – QUIZ 2
Project Cost Management : Processes to plan, budget estimate, control cost for project to be completed
within approved budget
 Cost (For project): Resources exchanged or given up for product or service
o Usually measured in monetary units
 Project Cost Overrun: Amount of percentage by which actual project cost EXCEEDS estimates
Project Cost Estimate + Project Cost Overrrun = Actual Project Cost
Why is PROJECT COST MANAGEMENT important?
What are some PROJECT RISKS that might create cost problems?
Types of Processes:
1. Plan Cost Management (Planning): Setting, policies, procedures, & documentation to plan,
manage and control cost
2. Estimate Costs (Planning): Approximating cost for the resources needed to complete a project
3. Determine Budget (Planning): Aggregating estimated cost of individual projects activities or
work packages to determine authorized cost baseline
4. Control Cost (Monitoring & Controlling): Monitoring status for project, and managing changes
to cost baseline

Key Input Tools/ Techniques Output

Types of Cost: (Processes)
Direct Cost -Controlled by project manager
-3 main IT Project Direct Costs
(Labor, Hardware, Software) or
Non-IT (Labor, Equipment,
Materials)
EX: Cost to purchase
development software
-Expenses manufacturing
supplies
-Wages for production staf
Indirect Cost -Not directly related to creating
product or service
-Not controlled by project
manager
EX: Costs of utilities, rent, office
supplies
Fixed Cost -Consistent cost independent of
amount used/produced
(Constant)
EX: Rent for staf space does not
change due to # of staf
Variable Cost -Varies with amount
used/produced (Changes)
EX: Wages increased w/ more
staf
Tangible Cost -Project costs or benefits easily
measured
-Lower cost to produce product
-increased efficiency and higher
volume of sales
EX: Cost- developer salary of
$20,000
Benefits- $5,000 savings on
hardware
-Expenses of new facilities,
personnel training
Intangible Cost Project costs or benefits difficult
to quantify or measure
EX: Cost- Develop a mobile app
for freee
Benefit- Recognized for
developing free app
-Knowledge of old employee
takes when they leave.
Sunk Cost -Cost already spend, should not
be used for future estimates
EX: Project budget= $100,000,
already spent $120,000 (Sunken
cost)
-Cost that has been incurred
and cannot be avoided,
purchase price of equipment
Life Cycle Costing - All costs throughout project &
product Life cycle
EX: Cost to create
product/service, ,move into
production and ownership
(Operation support costs)