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Friday, July 8, 2011

Important Terms and Definitions - Monitoring & Controlling the Golden Triangle

Let us wrap up this section by covering the important terms we learnt as part of this section on managing and controlling the golden triangle.
• Actual cost (AC) - The total cost actually incurred until a specific point on the timescale in performing the work for a project or a project activity.
• Budget at completion (BAC) - The total budget authorized for performing the project work. This is the planned budget for the project, the cost that you originally estimated for the project.
• Change control system - A collection of formal documented procedures that specifies how the project deliverables and documents will be changed, controlled, and approved.
• Cost baseline - The planned budget for the project over a time period, used as a basis against which to monitor, control, and measure the cost performance of the project. The cost performance is measured by comparing the actual cost to the planned cost over a time period.
• Cost performance index (CPI) - A measure of the cost efficiency of a project calculated by dividing earned value (EV) by actual cost (AC).
• Cost variance (CV) - A measure of cost performance obtained by subtracting actual value (AC) from earned value (EV). A positive result indicates good performance, whereas a negative result indicates bad performance.
• Earned value (EV) or budgeted cost of work performed (BCWP) - The value of the actually performed work expressed in terms of the approved budget for a project or a project activity for a given time period.
• Earned value management (EVM) or earned value technique (EVT) - A management methodology and a technique to measure project progress by comparing integrated measures of scope, schedule, and cost with the planned performance baseline.
• Estimate at completion (EAC) at budgeted rate - The estimate from the current point in time of how much it will cost to complete the entire project or an entire project activity for which the BAC is given. The value of EAC is obtained by adding the value of ETC at the budgeted rate to AC.
• Estimate at completion (EAC) at current CPI - The estimate from the current point in time of how much it will cost to complete the entire project or an entire project activity for which the BAC is given. The value of EAC is obtained by adding the value of ETC at the current CPI to AC.
• Estimate to complete (ETC) at budgeted rate - The expected cost, estimated by assuming the future performance will be at the budgeted rate, to complete the remaining work for the project or for a project activity.
• Estimate to complete (ETC) at present CPI - The expected cost, estimated by assuming the future performance will be at the current CPI, to complete the remaining work for the project or for a project activity.
• Performance measurement baseline - An approved integrated plan for scope, schedule, and cost for the project, against which the project execution is compared to measure the project performance.
• Project scope creep - Changes applied to the project scope without going through the approval process, such as the integrated change control process.
• Schedule baseline - A specific version of the project schedule developed from the schedule network analysis and the schedule model data. This is the approved version of the schedule with a start date and an end date, and it is used as a basis against which the project schedule performance is measured.
• Schedule performance index (SPI) - A measure of the schedule efficiency of a project calculated by dividing earned value (EV) by planned value (PV).
• Schedule revision - An update to the project schedule that includes changing the project start date, end date, or both.
• Scope baseline - The approved project scope, which includes the approved project scope statement, the WBS based on the approved project scope statement, and the corresponding WBS dictionary.
• Variance - A measurable deviation in the value of a project variable, such as cost from a known baseline or expected value.
• Variance analysis - A technique used to assess the magnitude of variation in the value of a variable (such as cost from the baseline or expected value), determine the cause of the variance, and decide whether a corrective action is required.

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Next: Introduction to Closing a Project

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