A
Actual Cost (AC)
The real expenses incurred for the work performed on a project, including labor and non-labor costs.
Actual Labor Billing
The amount billed for completed billable labor tasks, calculated using billable hours and billing rates, plus any flat fees.
Actual Labor Cost
The total labor expense incurred so far, calculated as: Actual Hours × Internal Hourly Rate
Actual Project Cost
The total of actual labor and actual non-labor expenses incurred to date.
Analogous Estimation
A top-down cost estimation method using data from past, similar projects as a benchmark.
B
BAC (Budget at Completion)
The total approved budget for a project.
Billable Hours
Hours worked that are eligible to be billed to a client.
Billing Rate
The hourly rate charged to a client for billable work.
Bottom-Up Estimation
A detailed cost estimation method where each project task is individually estimated and aggregated for a total budget.
Budget
The planned financial resources allocated for a project, including costs and contingency reserves.
Budget/Cost Variance
The difference between the planned budget and the Estimate at Completion (EAC); used to evaluate if the project is on budget.
C
Contingency Cost
Funds set aside for known project risks that might affect the budget, often calculated as a percentage of total costs.
CPI (Cost Performance Index)
A ratio showing cost efficiency of a project: CPI = EV / AC
D
Direct Costs
Costs directly tied to specific project tasks or deliverables, such as labor, materials, and equipment.
E
EAC (Estimate at Completion)
The forecasted total cost of the project at completion, based on current performance: EAC = BAC / CPI
EAC Expenses
The projected total expenses at project completion, combining actual and estimated-to-complete expenses.
EAC Labor Cost
Forecasted labor cost at project completion, combining actual and remaining labor costs.
EAC Project Cost
The projected total cost of the project, including labor and expenses, at completion.
ETC (Estimate to Complete)
The expected remaining cost required to finish the project: ETC = EAC – AC
EVA (Earned Value Analysis)
A method of measuring project performance based on cost and schedule metrics, using EV, AC, and PV.
EV (Earned Value)
The budgeted value of work actually completed at a given point in time.
F
Flat Fee Activities
Billable tasks with a predetermined fixed cost rather than being billed by the hour.
I
Indirect Costs
Overhead or shared costs that support project execution but are not tied to specific tasks, such as rent or software subscriptions.
IRR (Internal Rate of Return)
The interest rate at which the Net Present Value (NPV) of all project cash flows equals zero.
M
Monte Carlo Simulation
A probabilistic technique that simulates a wide range of possible outcomes to assess uncertainty in project cost estimates.
N
NPV (Net Present Value)
The current value of future cash flows from a project, used to evaluate financial viability.
P
Parametric Estimation
A cost estimation method using statistical relationships between historical data and project variables (e.g., cost per hour or per square meter).
Planned Expenses
Expected non-labor costs for a project, such as software licenses, travel, or equipment rentals.
Planned Labor Cost
Forecasted labor costs before the project starts: Estimated Hours × Internal Hourly Rate
Planned Project Cost
The initial total estimated cost of a project, combining labor and non-labor costs.
Profit / Net Profit
The financial gain from a project after all costs are subtracted from total revenue: Profit = Revenue – Cost
Project Budget
The financial limit or cap set for project spending, typically equivalent to the planned total project cost with added contingency.
Project Margin
The profitability of a project, shown as a percentage: Profit / Revenue × 100%
R
Realization Rate
The percentage of billable hours that are actually billed: Billed Hours / Billable Hours × 100%
Realized Rate
The effective hourly billing rate after accounting for realization: Realization Rate × Billing Rate
Reserve Costs (Management Reserve)
Funds set aside for unforeseen or completely unexpected risks outside the known scope of the project.
Revenue
The total income generated from a project, including sales, fixed fees, and billable time.
Risk Reserve
A budget specifically allocated to manage known project risks (see also Contingency Costs).
ROI (Return on Investment)
A performance measure that evaluates profitability: ROI = (Net Profit / Investment Cost) × 100%
S
Schedule Performance Index (SPI)
Measures how well the project is progressing against the planned schedule: SPI = EV / PV
T
Three-Point Estimation
A method that averages optimistic, pessimistic, and most likely cost estimates to better reflect uncertainty.
Time and Materials (T&M)
A billing model where the client pays for actual time and materials used during the project.
Top-Down Estimation
A cost estimation approach that starts with a high-level budget and breaks it down into smaller components.
Total Project Budgeted Cost
The total budgeted threshold for a project, including planned costs and contingencies.
U
Utilization Rate
A metric showing how effectively resources are used: Billable Hours / Total Available Hours × 100%
V
VAC (Variance at Completion)
Forecasted difference between the original budget and the total estimated cost at completion: VAC = BAC – EAC
W
Work Breakdown Structure (WBS)
A hierarchical breakdown of project tasks used to define scope and estimate costs.
Work in Progress (WIP)
The value of completed work that hasn‘t yet been billed to the client: WIP = (1 – (Total Billed / Total Billing)) × 100%
