Exam 7: Determining Costs, Budget, and Earned Value

Consider a project that involves painting five similar houses over ten weeks one house every two weeks) for a total budgeted cost of $20,000.The budget is $4,000 per house.At of the end of week 5, you determine that $10,000 has actually been spent and three houses have been painted completely.What is the earned value of the project?

When evaluating work packages that have a negative cost variance, you should focus on taking corrective actions to reduce the costs of:

Calculate the forecasted cost at completion if the cumulative actual cost is $10,000 and the re-estimate of remaining work to be performed is $5,000.

If the cumulative earned value is $10 and the cumulative actual costs are $20, then the CPI is

Costs related to are for outsourced work when the project teams or contractors do not have the expertise or resources to do certain project tasks.

A second method for determining the forecasted cost at completion assumes that, regardless of the efficiency rate the project or work package has experienced in the past, the work to be performed on the remaining portion of the project or work package will be done according to budget.If the cumulative actual cost is greater than the cumulative earned value, then

Earned value, the value of , is a key parameter that must be determined throughout the project.

A third method for determining the forecasted cost at completion is to re-estimate the costs for all the remaining work to be performed and then add this re-estimate to the cumulative actual cost.If the amount of cumulated actual costs is less than difference between the total budgeted cost and the re-estimate, then

The key to effective cost control is to analyze cost performance on a regular and timely basis.

Allocating total project costs for the various elements to the appropriate work packages will establish

The contractor's outflow of cash can be controlled by

To keep track of , it's necessary to set up a system to collect, on a regular and timely basis, data on funds actually expended.

Labor costs in the project costs estimate are the estimated costs for the various types or classifications of and are based on the estimated work time not necessarily the same as the activity estimated duration) and the dollar labor rate for each.

When evaluating work packages that have a negative cost variance, you should focus on taking corrective actions to reduce the costs of:

The key to managing cash flow is to ensure that cash comes in faster than it goes out.

The cost performance index CPI) is a measure of the cost efficiency with which the project is being performed.If the cumulative earned value is greater than the cumulative actual costs, then

The worst scenario from the contractor's point of view is to have the customer make only one payment at the end of the project.

Historical data can be used as a guide on the current project.

A method for calculating the forecasted cost at completion assumes that the work to be performed on the remaining portion of the project or work package will be done at the same rate of efficiency as the work performed so far.If the cost performance index is greater than 1.0, then

The for the entire project or each work package provides a baseline against which actual cost and work performance can be compared at any time during the project.