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Project Cost Management Terms 2022 PMP Exam Prep 7 Of 15 Actual Solutions
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Project Cost Management Terms 2022 PMP ExamPrep 7 Of 15 Actual Solutions
Actual cost (AC) Correct Answers: The actual amount of monies the project has spent to date.
Analogous estimating Correct Answers: An approach that relies on historical information to predict
the cost of the current project. It is also known as top- down estimating and is the least reliable of all
the cost-estimating approaches.
Bottom-up estimating Correct Answers: An estimating approach that starts from zero, accounts for
each component of the WBS, and arrives at a sum for the project. It is completed with the project
team and can be one of the most time- consuming and most reliable methods to predict project costs.
Budget estimate Correct Answers: This estimate is also somewhat broad and is used early in the
planning processes and also in top-down estimates. The range of variance for the estimate can be
from -10 percent to +25 percent.
Commercial database Correct Answers: A cost-estimating approach that uses a database, typically
software-driven, to create the cost estimate for a project.
Contingency reserve Correct Answers: A contingency allowance to account for overruns in costs.
Contingency allowances are used at the project manager's discretion and with management's
approval to counteract cost overruns for scheduled activities and risk events.
Cost aggregation Correct Answers: Costs are parallel to each WBS work package. The costs of each
work package are aggregated to their corresponding control accounts. Each control account then is
aggregated to the sum of the project costs.
Cost baseline Correct Answers: A time-lapse exposure of when the project monies are to be spent in
relation to cumulative values of the work completed in the project.
Cost budgeting Correct Answers: The cost aggregation achieved by assigning specific dollar amounts
for each of the scheduled activities or, more likely, for each of the work packages in the WBS. Cost
budgeting applies the cost estimates over time.
Cost change control system Correct Answers: A system that examines any changes associated with
scope changes, the cost of materials, and the cost of any other resources, and the associated impact
on the overall project cost.
Cost management plan Correct Answers: The cost management plan dictates how cost variances will
be managed.
Cost of poor quality Correct Answers: The monies spent to recover from not adhering to the expected
level of quality. Examples may include rework, defect repair, loss of life or limb because safety
precautions were not taken, loss of sales, and loss of customers. This is also known as the cost of
nonconformance to quality.
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