Guide to Actual Cost in Earned Value Management According to PMBOK Guide Seventh Edition
What is Actual Cost: Actual Cost (AC), also known as actual cost of work performed (ACWP), is a concept in Earned Value Management used in Project Management. It represents the total cost actually incurred and recorded for the work performed within a specified time period.
Importance of Actual Cost: Actual Cost is important because it helps in measuring the budget spent on project activities. It aids in project budget management, as it indicates any overspending or under-spending in the project related to the planned cost. It plays a crucial role in forecasting the project's future financial status.
How Actual Cost Works: Actual cost is calculated by simply adding all costs directly related to the task during the specified period. This includes labor, material costs, equipment, subcontractor costs, and other direct costs.
Answering Questions on Actual Cost in an Exam: For a PMP exam, understanding AC goes beyond knowing the definition. You need to be able to solve problems using this concept, identify correct and incorrect scenarios related to AC, and understand its relation to other project management variables.
Exam Tips - Answering Questions on Actual Cost:- Understand the concept of Actual Cost, its formula, and where it is used in the broader Project Management scope- Get familiar with real-life scenarios where you can apply Actual Cost- Practice numerical problems where you have to calculate Actual Cost- Understand the relationship and difference between Actual Cost (AC), Planned Value (PV) and Earned Value (EV)- Questions related to Actual Cost in the PMP exam usually contain indirect hints and require a strong conceptual understanding.
Go Premium
Project Management Professional Preparation Package (2024)
- Earn 35 PDUs needed for your PMP certification
- 8199 Superior-grade Project Management Professional practice questions.
- Accelerated Mastery: Deep dive into critical topics to fast-track your mastery.
- Unlock Effortless PMP preparation: 5 full exams.
- 100% Satisfaction Guaranteed: Full refund with no questions if unsatisfied.
- bonus: If you upgrade now you get upgraded access to all courses
Actual Cost practice test
Actual Cost (AC), also known as Actual Cost of Work Performed (ACWP), is the total cost incurred for a specific activity or work done during the project. It includes direct costs such as labor and materials, and indirect costs such as overheads and equipment rental. In EVM, AC is compared with EV and PV to determine project performance and identify cost overruns or underruns. Tracking AC accurately and regularly is essential to maintain effective cost control and risk management processes in a project.
Time: 5 minutes Questions: 5
Practice more Actual Cost questions
Go Premium
Project Management Professional Preparation Package (2024)
- Earn 35 PDUs needed for your PMP certification
- 8199 Superior-grade Project Management Professional practice questions.
- Accelerated Mastery: Deep dive into critical topics to fast-track your mastery.
- Unlock Effortless PMP preparation: 5 full exams.
- 100% Satisfaction Guaranteed: Full refund with no questions if unsatisfied.
- bonus: If you upgrade now you get upgraded access to all courses