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ITPM-07_Cost_Management_Vocabulary

AB
actual cost (AC)The total of direct and indirect costs incurred in accomplishing work on an activity during a given period
analogous estimatesA cost-estimating technique that uses the actual cost of a previous, similar project as the basis for estimating the cost of the current project, also called top-down estimates
baselineThe original project plan plus approved changes
bottom-up estimatesA cost-estimating technique based on estimating individual work items and summing them to get a project total
budget at completion (BAC)The original total budget for a project
budgetary estimateA cost estimate used to allocate money into an organization's budget
cash flow analysisA method for determining the estimated annual costs and benefits for a project
contingency reservesDollars included in a cost estimate to allow for future situations that may be partially planned for (sometimes called known unknowns) and are included in the project cost baseline
controlling costsControlling changes to the project budget
cost baselineA time-phased budget that project managers use to measure and monitor cost performance
cost management planA document that describes how cost variances will be managed on the project
cost performance index (CPI)The ratio of earned value to actual cost; can be used to estimate the projected cost to complete the project
cost variance (CV)The earned value minus the actual cost
definitive estimateA cost estimate that provides an accurate estimate of project costs
determining the budgetAllocating the overall cost estimate to individual work items to establish a baseline for measuring performance
direct costsCosts that can be directly related to producing the products and services of the project
earned value (EV)An estimate of the value of the physical work actually completed
earned value management (EVM)A project performance measurement technique that integrates scope, time, and cost data
estimate at completion (EAC)An estimate of what it will cost to complete the project based on performance to date
estimating costsDeveloping an approximation or estimate of the costs of the resources needed to complete the project
indirect costsCosts that are not directly related to the products or services of the project, but are indirectly related to performing the project
intangible costs or benefitsCosts or benefits that are difficult to measure in monetary terms
known unknownsDollars included in a cost estimate to allow for future situations that may be partially planned for (sometimes called contingency reserves) and are included in the project cost baseline
learning curve theoryA theory that states that when many items are produced repetitively, the unit cost of those items normally decreases in a regular pattern as more units are produced
life cycle costingConsiders the total cost of ownership, or development plus support costs, for a project
management reservesDollars included in a cost estimate to allow for future situations that are unpredictable (sometimes called unknown unknowns)
overrunThe additional percentage or dollar amount by which actual costs exceed estimates
parametric modelingA cost-estimating technique that uses project characteristics (parameters) in a mathematical model to estimate project costs
planned value (PV)That portion of the approved total cost estimate planned to be spent on an activity during a given period.
profit marginThe ratio between revenues and profits
profitsRevenues minus expenses
project cost managementThe processes required to ensure that the project is completed within the approved budget
rate of performance (RP)The ratio of actual work completed to the percentage of work planned to have been completed at any given time during the life of the project or activity
reservesDollars included in a cost estimate to mitigate cost risk by allowing for future situations that are difficult to predict
rough order of magnitude (ROM) EstimateA cost estimate prepared very early in the life of a project to provide a rough idea of what a project will cost
schedule performance index (SPI)The ratio of earned value to planned value; can be used to estimate the projected time to complete a project
schedule variance (SV)The earned value minus the planned value
sunk costMoney that has been spent in the past
tangible costs or benefitsCosts or benefits that can be easily measured in dollars
top-down estimatesA cost-estimating technique that uses the actual cost of a previous, similar project as the basis for estimating the cost of the current project, also called analogous estimates
unknown unknownsDollars included in a cost estimate to allow for future situations that are unpredictable (sometimes called management reserves)


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