SE492 Week 7
kinjalr10
SuccessfulProjectManagementbyJackGidoJamesP.ClementsRoseBaker.pdf
in time so that you have enough money to cover the costs of performing the project (employee payroll, invoices for materials, invoices from subcontractors, and travel expenses, for example). The key to managing cash flow is to ensure that cash comes in faster than it goes out.
QUESTIONS 1. Describe why it is necessary to develop a baseline budget for a project. 2. List and describe items that should be included when estimating activity
costs. 3. What does the term reserve mean? Should a reserve amount be included in a
project proposal? Explain your answer. 4. What is the problem with making cost estimates too conservative or too
aggressive? 5. Describe the project budgeting process. 6. Define the following: TBC, CBC, CAC, CEV, CPI, CV, FCAC, and TCPI.
How is each calculated? 7. Why is it necessary to track actual and committed costs once a project starts? 8. Why is it necessary to calculate the earned value of work performed? How is
this done? 9. Give an example of calculating a cost performance index. What does it mean
when the CPI is below 1.0? What does it mean when the CPI is above 1.0? 10. What does it mean when cost variance is negative? What does it mean when
cost variance is positive? When evaluating a work package with a negative cost variance, on what two types of activities should you focus? Why?
11. What is the key to managing cash flow? How can this goal be accomplished? 12. a. Refer to the table below. What is the cumulative budgeted cost at the end
of week 6?
b. Below is a table of actual costs. What is the cumulative actual cost at the end of week 6? Determine whether there is a cost overrun or underrun. What is causing it?
TBC 1
10
10
2
15
10
25
Week
Task 1
Task 2
Task 3
Task 4
Total
Cumulative
30
70
40
30
170
6 7 8 9 106 7 8 9 106 7 8 9 106 7 8 9 106 7 8 9 104 54 53
5
10
15
10
10
20
5
25
10
5
15
10
25
35
5
5
10
5
5
20
20
Amounts are in thousands of dollars.
Chapter 7 Determining Costs, Budget, and Earned Value 269
Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203
c. Below is a table of the cumulative percentages of work completed by the end of week 6. What is the cumulative earned value of the project at the end of week 6? Is it good?
d. What is the CPI at the end of week 6? What is the CV? e. Calculate the FCAC using the first two methods described in the chapter.
In addition, describe a third FCAC method you could use.
INTERNET EXERCISES For the website addresses of the organizations mentioned in these exercises, go to “Internet Exercises” at the book’s companion website at www.cengagebrain.com. It is suggested that you save this website in your “Favorites” list for easy access in the future. 1. Search the Web for cost analysis tools. Provide a description of what you
find. If possible, download a demo copy of a software package that provides some cost analysis tools.
2. Search the Web for “Cost Forecasting” and discuss how what you find is similar to and/or different from the methods described in the chapter.
3. For Exercises 3 through 5, visit the website of Project Smart. In the Article Categories, click on the “Cost Management” or “Earned Value Management”
1
30
2
80
10
Week
Task 1
Task 2
Task 3
Task 4
64 54 53
100
25 35 5525 35 5525 35 55
10
65
20
Amounts are cumulative percent complete.
1
10
10
2
16
10
26
Week
Task 1
Task 2
Task 3
Task 4
Total
Cumulative
64 54 53
8
10
18
12
12
24
5
29
12
5
17
Amounts are in thousands of dollars.
270 Part 2 Planning, Performing, and Controlling the Project
Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203
