Known unknown An event that will likely happen within the project, but when it will happen and to what degree is unknown. These events, such as delays, are usually risk-related.

Learning curve An approach that assumes the cost per unit decreases the more units workers complete because workers learn as they complete the required work.

Oligopoly A market condition where the market is so tight that the actions of one vendor affect the actions of all the others.

Opportunity cost The total cost of the opportunity that is refused to realize an opposing opportunity.

Parametric estimating An approach using a parametric model to extrapolate what costs will be for a project (for example, cost per hour and cost per unit). It can include variables and points based on conditions.

Parametric estimating Uses a mathematical model based on known parameters to predict the cost of a project.

Planned value (PV) Planned value is the work scheduled and the budget authorized to accomplish that work. It is the percentage of the BAC that reflects where the project should be at this point in time.

Project variance The final variance, which is discovered only at the project's completion. The formula is VAR = BAC-AC.

Regression analysis This is a statistical approach to predicting what future values may be, based on historical values. Regression analysis creates quantitative predictions based on variables within one value to predict variables in another. This form of estimating relies solely on pure statistical math to reveal relationships between variables and to predict future values.

Reserve analysis Cost reserves are for unknown unknowns within a project. The contingency reserve is not part of the project's cost baseline, but is included as part of the project budget.

Rough order of magnitude This rough estimate is used during the initiating processes and in top-down estimates. The range of variance for the estimate can be from -25 percent to +75 percent.

Schedule performance index (SPI) Measures the project based on its schedule performance. The formula is SPI = EV/PV.

Schedule variance (SV) The difference between the earned value and the planned value. The formulas is SV = EV-PV.

Single source Many vendors can provide what your project needs to purchase, but you prefer to work with a specific vendor.

Sole source Only one vendor can provide what your project needs to purchase. Examples include a specific consultant, specialized service, or unique type of material.

Sunk costs Monies that have already been invested in a project.

Variable costs Costs that change based on the conditions applied in the project (the number of meeting participants, the supply and demand of materials, and so on).

Variance A variance is the difference between what was expected and what was experienced.

Variance at completion (VAC) A forecasting formula that predicts how much of a variance the project will likely have based on current conditions within the project. The formula is VAC = BAC-EAC.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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