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

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CIS 5800 – QUIZ 2Project Cost Management:Processes to plan, budget estimate, control cost for project to be completedwithin approved budgetCost (For project):Resources exchanged or given up for product or serviceoUsually measured in monetary unitsProject Cost Overrun:Amount of percentage by which actual project cost EXCEEDS estimatesProject Cost Estimate + Project Cost Overrrun = Actual Project CostWhy 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 cost2.Estimate Costs (Planning):Approximating cost for the resources needed to complete a project3.Determine Budget (Planning):Aggregating estimated cost of individual projects activities orwork packages to determine authorized cost baseline4.Control Cost (Monitoring & Controlling):Monitoring status for project, and managing changesto 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) orNon-IT (Labor, Equipment,Materials)EX:Cost to purchasedevelopment software-Expenses manufacturingsupplies-Wages for production stafIndirect Cost-Not directly related to creatingproduct or service-Not controlled by projectmanagerEX:Costs of utilities, rent, officesuppliesFixed Cost-Consistent cost independent ofamount used/produced(Constant)EX:Rent for staf space does notchange due to # of stafVariable Cost-Varies with amountused/produced (Changes)EX:Wages increased w/ morestafTangible Cost-Project costs or benefits easilymeasured-Lower cost to produce product-increased efficiency and highervolume of salesEX:Cost- developer salary of$20,000Benefits- $5,000 savings onhardware-Expenses of new facilities,personnel trainingIntangible CostProject costs or benefits difficultto quantify or measureEX:Cost- Develop a mobile appfor freeeBenefit- Recognized fordeveloping free app-Knowledge of old employeetakes when they leave.Sunk Cost-Cost already spend, should notbe used for future estimatesEX:Project budget= $100,000,already spent $120,000 (Sunkencost)-Cost that has been incurredand cannot be avoided,purchase price of equipmentLife Cycle Costing-All costs throughout project &product Life cycleEX:Cost to createproduct/service, ,move intoproduction and ownership(Operation support costs)

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