AACE CCP key terms

AACE framework that groups estimates into five classes, from Class 5 (little project definition, widest accuracy range) to Class 1 (full definition, narrowest range), linking definition maturity to the estimating method used.

Written record of how an estimate was developed: scope covered, assumptions, exclusions, pricing sources, method, and expected accuracy range, so reviewers can judge its reliability and later updates can be traced.

Money included in the estimate and budget to cover known risks and uncertainties inside the approved scope; it is drawn down as those risks are resolved and is not intended for scope changes.

Provision in an estimate for expected rises in labor, material, and equipment prices between the estimate basis date and the time the cost will actually be incurred.

Estimating method that derives cost from statistical relationships between historical cost and design parameters such as capacity, weight, or floor area, instead of pricing each work item individually.

Systematic measurement of the materials and work items shown on drawings and specifications, producing the quantities to which unit costs are later applied.

Building an estimate by multiplying measured quantities by unit costs for labor, material, and equipment, then adding indirect costs, markups, and contingency to reach total cost.

Model in which labor hours per unit fall by a constant percentage each time cumulative production doubles, used to price repetitive work without overstating the cost of later units.

Network scheduling technique that calculates early and late dates for every activity and identifies the longest path through the network, which determines the shortest possible project duration.

Time an activity can slip from its early dates without delaying project completion or violating a constraint; activities whose total float is zero lie on the critical path.

Two CPM calculations: the forward pass moves left to right assigning early start and finish dates; the backward pass moves right to left assigning late finish and start dates.

Network technique in which activities are drawn as nodes and connected by arrows representing finish-to-start, start-to-start, finish-to-finish, or start-to-finish relationships, sometimes carrying lags.

Lag is a required waiting period inserted between a predecessor and its successor; lead is the opposite, allowing a successor to start before its predecessor finishes.

The approved, time-phased plan against which actual progress and schedule performance are compared; it changes only through formal change control.

Adjusting activity start and finish dates, often lengthening the schedule, so that demand for a limited resource never exceeds the supply available in any period.

Quantitative method, usually Monte Carlo simulation of activity durations and risks, that produces a probability distribution of completion dates instead of one deterministic finish date.

Method that integrates scope, schedule, and cost by comparing the budgeted value of work performed with the value planned and the money actually spent, all at a status date.

The authorized budget assigned to the work scheduled to be completed by the status date; it is the baseline against which earned value is compared.

The budgeted cost of work actually accomplished by the status date, usually calculated as physical percent complete multiplied by the budget for that work.

The total money actually incurred in accomplishing the work performed by the status date, including direct and indirect charges but not commitments for work not yet done.

Earned value divided by actual cost; a result below 1.0 means more has been spent than the work earned, so cost performance is unfavorable.

Earned value divided by planned value; a result below 1.0 means less work has been earned than was scheduled for the status date.

Forecast of total project cost, usually actual cost to date plus an estimate to complete; common formulas divide the budget at completion by the cost performance index.

The cost efficiency, earned value divided by cost, that all remaining work must achieve to finish within a stated budget target such as the original budget or the current forecast.

Budget held outside the project cost baseline for unanticipated work within scope but beyond the estimate's contingency; it is released only with management approval.

Hierarchical breakdown of project scope into deliverables and work packages, providing the framework for estimating, scheduling, assigning responsibility, and measuring performance.

A WBS management point where scope, budget, actual cost, and schedule are integrated and performance is measured, normally owned by a single accountable manager.

The need to balance scope, schedule, cost, quality, and risk; changing any one of them normally requires adjusting at least one of the others.

Formal process for documenting, evaluating, approving or rejecting, and communicating changes to baselines so that modifications are authorized rather than absorbed silently.

Uncontrolled growth of project scope without matching adjustments to time, cost, or resources, typically caused by unmanaged or informal change requests.

Log of identified risks recording causes, probability, impact, response plans, owners, and current status, reviewed and updated throughout the life of the project.

Sum of a project's future cash flows discounted to present value at a chosen rate, less the initial investment; a positive result means the project adds value at that rate.

Discount rate at which a project's net present value equals zero; it is compared with the organization's required rate of return to judge whether the investment is worthwhile.

Rate used to convert future cash flows into present value, often set at the minimum acceptable rate of return the organization requires for investments of similar risk.

Time needed for cumulative cash inflows to equal the initial investment; simple to apply but it ignores the time value of money and everything that happens after payback.

Total cost of acquiring, operating, maintaining, and disposing of an asset over its whole life, used to compare alternatives instead of looking only at capital cost.

Money already spent that cannot be recovered; it should be excluded from decisions about continuing, because only future costs and benefits are relevant.