Estimating Costs: Understanding Organisational Processes

Vocabulary flashcards covering key terms and definitions related to cost estimation and organisational processes from the lecture notes.

Organisational Process Assets

Examples include historical information from past projects, lessons learned, cost estimating policies, and cost estimating templates that help estimate costs.

Fixed Costs

Costs that remain the same regardless of the size or volume of work.

Variable Costs

Costs that vary directly with the volume of use.

Direct Costs

Costs that only occur because of the project and are clearly chargeable to a specific work package.

Direct Labour Costs

Costs associated with workers hired specifically to work on a project.

Other Direct Costs

Direct costs that may include items such as materials, travel consultants, subcontractors, purchased parts, and computer time.

Direct (Project) Overhead Costs

Costs incurred that are directly tied to an identifiable project deliverable or work package, such as salary, rents, supplies, and specialised machinery.

General and Administrative Overhead Cost

Organisational costs indirectly linked to a specific package, apportioned to the project.

Indirect Costs

Costs necessary to keep the organisation running but not associated with one specific project, allocated among all projects that benefit from them.

Activity-Based Costing

A method that has evolved for allocating indirect costs in recent years.

Recurring Costs

Costs that repeat as the project work continues, such as the cost of writing code or laying bricks.

Nonrecurring Costs

Costs that happen only once during a project, such as developing a design.

Regular Costs

Costs incurred when progress can be made by normal work hours and purchasing agreements.

Expedited Costs

Costs incurred when the project must be conducted faster than normal, often involving overtime for workers or extra charges for rapid delivery.

Internal Costs

Costs originating from within the parent organisation.

External Costs

Costs originating from outside the parent organisation.

Estimate (Cost)

A quantified assessment of the likely amount, which should always be included for accuracy.

Reserve (Cost)

A provision in the project management plan to mitigate cost and/or schedule risk.

Accrual Accounting

A method where transactions are recorded for the time period in which the expense occurred.

Cash Accounting

A method where transactions are recorded when money is actually spent.