ISMN 5370 Ex2 S7

Cost estimate: analogous

Uses similar past projects; used at initiation; accuracy −25% to +75%

Cost estimate: parametric

Uses a statistical rate such as $/sq ft; used in planning; accuracy −10% to +25%

Cost estimate: bottom-up

Estimate each work package, then roll up; detailed planning; accuracy −5% to +10%

Contingency reserve

Covers known unknowns (identified risks); controlled by the PM; included in the cost baseline

Management reserve

Covers unknown unknowns; controlled by senior management/sponsor; excluded from cost baseline but included in total project budget

Cost aggregation sequence

Work package estimates → control accounts → project estimate → + contingency = cost baseline → + management reserve = total project budget

Funding-limit reconciliation

Rescheduling work so planned spending fits within the tranches in which funds are released

PV (BCWS)

Budget for work scheduled to be done by now ("what should be done?")

EV (BCWP)

Budget for work actually completed ("what was done?")

AC (ACWP)

Actual cost of the work completed

Reading EVM variances and indices

Variances (CV, SV) negative = bad; indices (CPI, SPI) below 1.0 = bad; SV is in dollars, not days

Quality vs. grade

Meeting requirements (low is always a problem) vs. a category of features (low can be fine; a budget hotel can be high on the first)

Prevention costs

Training, quality planning, design reviews; usually the best return

Appraisal costs

Testing, inspections, audits; finds defects but doesn't stop them from occurring

Internal failure costs

Rework and scrap found before delivery

External failure costs

Warranty claims and returns after delivery; the most expensive cost-of-quality category

Plan Quality

Sets standards and metrics; outputs are the management plan for meeting requirements and the measures used to judge it

Manage Quality

Process-focused and proactive; audits how work is done

Control Quality

Product-focused and reactive; inspects deliverables; output feeds Validate Scope

Fishbone (Ishikawa) diagram

Root-cause tool organized by Man, Machine, Method, Material, Measurement, Mother Nature

Quality checklist

Standardizes required steps using lessons learned

Control chart

Plots process data against limits set at ±3σ from the mean

Rule of seven

7+ consecutive points on one side of the mean signal an assignable cause to investigate

Control limits vs. specification limits

Process behavior vs. customer requirements

Pareto chart

Descending bars plus a cumulative % line; shows the vital few causes (80/20)

PDCA

Plan-Do-Check-Act cycle (Deming); the improvement method

Kaizen

"Change for the better"; small daily gains by everyone; the improvement mindset

Verification

Building the product right: internal check against specs

Validation

Building the right product: done with the customer (e.g., UAT)

Acceptance criteria

Measurable conditions agreed on during planning, before work begins