1. Why is it important for a PM to understand financial terms? Define the following financial terms: profit, profit margin, life cycle costing and cash flow analysis.




  1. What are costs? What are benefits? What tangible cost and benefits? What are in intangible cost and benefits? What direct and indirect cost?




  1. What is earned value (EV)? Explain how earned value management can be used to control costs and measure project performance.



  1. Given the following information for a one year (12 months) project:

PV = $23,000

EV = $20,000

AC = $25,000

BAC = $120,000

Answer the following questions:


  1. What is the cost variance (CV), schedule variance (SV), cost performance index (CPI) and schedule performance index (SPI) for the project


  1. How is the project doing? Is it ahead of schedule, on schedule or behind schedule? Is it under budget, on budget or over budget?


  1. Use the CPI to calculate the estimate at completion (EAC) for this project. Is the project performing better than planned, as planned as or worse than planned?


  1. Use the SPI to estimate how long it will take to complete the project.
  2. 5. Using the Excel template (attached below) create a Project Cost Estimate (like the sample below) for your Self-checkout project. Be sure to include the cost for each primary task. Provide summary task totals and percentage of total project cost.

You must copy and paste the Project Cost Estimate worksheet into your word document (make sure it fits page and is readable) and answer the questions below:

Note below is a sample Cost Estimate. Yours should include your WBS items not what is on this sample.

Be sure to include contingency/reserve funds!

Sample project cost estimate

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