Liam Smith · Robert Caldwell · Five lectures, September 16–30, 2026 · Workbook v8.0
Version 1.1 · 5 October 2026. Includes the supplied Modules 1/2, 3 and 4 reviews. References below are PDF-viewer pages; lecture times are recording positions. Use the complete guide for explanations and the source index for corrections.
The course in one pass
Financial management: plan → estimate → budget → control. Procurement: plan → conduct → control. Control setup: factors/thresholds → actual-data collection → change process → responsibilities → document/communicate. Ongoing control: collect → compare/analyze → act → make authorized revisions → report. (Workbook, PDF pp. 19, 139, 141, 179.)
Strategic objectives concern future organizational position; financial objectives concern financial performance. Use both. Numeric does not automatically mean financial. Project outcomes and benefits can continue after delivery. WACC represents financing cost/required return, not actual project ROI. (Workbook, PDF pp. 21–28.) (Sep 16, 01:06:04–01:46:33; segments 90–116.)
Formula card
| Topic | Formula | Remember |
|---|---|---|
| WACC | w_Dk_D(1-T)+w_Ek_E | Financing proportions sum to 1 |
| Capital charge | Capital × WACC | Specify the period |
| Present value | F/(1+r)^t | Discounted future amount |
| NPV | -C_0+\sum C_t/(1+r)^t | Includes initial outflow |
| Triangular estimate | (O+M+P)/3 | Equal weighting |
| PERT estimate | (O+4M+P)/6 | Four weights on most likely |
| PERT spread approximation | (P-O)/6 | Same units as estimate |
| Risk expected value | Probability × impact | Use a decimal probability |
| Course contingency | Sum of residual risk expected costs | Expected amount, not worst-case loss |
| Cost baseline | Work budget + contingency | Management reserve excluded |
| Total project budget | Baseline + management reserve | Separate authorization |
(Workbook, PDF pp. 28–29, 61–63, 76, 79–81.)
Estimates and quality costs
| Estimate class | Course range |
|---|---|
| ROM | −50% / +100% |
| Budgetary | −10% / +25% |
| Definitive | −5% / +10% |
Analogous = compare similar previous work. Parametric = quantity/rate or calibrated historical model. Bottom-up = detailed estimates rolled upward. Modified Delphi = independent expert estimates, discussion and revision toward consensus. Method and estimate class are different ideas. (Workbook, PDF pp. 60–61, 76–77.)
Conformance: prevention (training/planning) and appraisal (testing/inspection). Nonconformance: internal failure (scrap/rework before delivery) and external failure (returns/warranty after delivery). Extra precision is not extra accuracy. Check overhead bases and avoid counting the same contingency twice. (Sep 21, 01:13:49–03:00:51; segments 128–150, 192–203.)
Earned-value card — highest recall priority
PV = budget for scheduled work. EV = budget value of performed work. AC = actual cost. BAC = total approved baseline budget; BD = total baseline duration. Compare all three at the same status date. Financial PV means present value; EVM PV means planned value. Risk expected value is not earned value. (Workbook, PDF pp. 89–91.) (Sep 23, 01:13:50–01:22:00; segments 90–97.)
| Schedule | Cost |
|---|---|
| SV = EV − PV | CV = EV − AC |
| SPI = EV / PV | CPI = EV / AC |
| RTD = BD / SPI | EAC = BAC / CPI |
EV first in variances and indices. Positive variance or index >1 is favorable on that dimension; negative or <1 unfavorable. SV/CV are currency, indices are ratios, RTD is time, EAC currency. RTD/EAC are total forecasts, not amounts remaining. Use unrounded indices. Their continuation assumptions need checking. (Workbook, PDF pp. 111–113.)
| SPI | CPI | Meaning |
|---|---|---|
| >1 | >1 | Ahead; favorable cost efficiency |
| <1 | >1 | Behind; favorable cost efficiency |
| >1 | <1 | Ahead; unfavorable cost efficiency |
| <1 | <1 | Behind; unfavorable cost efficiency |
For graphs: EV versus PV gives schedule; EV versus AC gives cost. Actual spending versus planned spending without EV is insufficient for CPI/SPI. (Workbook, PDF pp. 107–113, 213.)
Checked anchor examples
- Widgets: PV=$5,000, EV=$3,000, AC=$7,000; BAC=$10,000, BD=10 weeks. SV=−$2,000; SPI=.60; CV=−$4,000; CPI=3/7; EAC=$23,333.33; RTD=16.67 weeks.
- Workbook Practice 5: EV65/PV50/AC45, in $m; BAC100m, BD100 weeks. SPI=1.30, RTD=76.92 weeks, CPI=65/45, EAC=$69.23m. The printed SPI denominator 40 is wrong.
- Workbook Practice 6: EV45/PV50/AC55; SPI=.90, CPI=45/55, EAC=$122.22m, RTD=111.11 weeks.
(Sep 23, 00:10:35–01:10:22; segments 41–89.) (Workbook, PDF pp. 105–106.)
Percentage trap: SPI=.60 means 60% of planned budgeted work achieved; a BD/SPI projection is 66.67% longer, not 40% longer. CPI=.428571 means 42.86 cents earned per dollar spent. 1−CPI is a shortfall measured against AC; spending above EV is 1/CPI-1, here 133.33%. Specify the denominator.
Controls and decisions
A factor states what to measure; a threshold states acceptable deviation. “Cost” alone is not a metric. Define measurement point, comparator, units, owner, data source and cadence. Measurable effort has a tangible result and completion schedule. Levels mean activities, deliverables, milestones and phases, not severity tiers. (Workbook, PDF pp. 128–130, 139–142.) (Sep 28, 00:18:09–01:16:58; segments 37–77.)
At ±5%, +7% is 2 percentage points beyond the band. “40% complete ±5 percentage points” means 35–45%. Numeric thresholds are project-specific. Workbook reserve ranges and CPI alert levels are illustrations, not mandatory rules. (Workbook, PDF pp. 63, 79, 92, 114.)
Executing: do work. Monitoring: collect, measure, report. Controlling: compare, analyze, decide and take authorized action. A forecast update does not automatically change the baseline. (Workbook, PDF pp. 150, 157.)
Change: document/log → evaluate need → analyze effects → accept/reject/defer → notify → integrate approved change → implement/verify/close. CCB = authorized decision maker(s). Defer = postpone; escalation = refer for authority. Configuration control keeps product characteristics, versions and records aligned. Scope creep and gold plating are warning signs. (Workbook, PDF pp. 132–134, 144–146.)
Corrective action must respect scope, time, cost, quality, resources, risk and current stakeholder priorities. Review the critical path before moving people or crashing. Preserve essential acceptance testing; if priorities are unclear, get stakeholder agreement. “Cheapest” and “fastest” are not self-sufficient justifications. (Workbook, PDF pp. 161–164, 217–220, 247.)
Procurement card
Buyer = purchaser/client; seller = vendor/contractor. Make/buy compares internal and external options. SOW describes clear, measurable work; it may be part of a contract. (Workbook, PDF pp. 168–170, 181–183.)
| Type | Recall |
|---|---|
| FFP | Fixed agreed price for defined scope; seller bears more cost-overrun risk |
| FPIF | Fixed-price incentive structure |
| FP-EPA | Defined economic price adjustment; workbook addition |
| CPFF | Reimbursed allowable costs plus fixed fee; total price is not fixed |
| CPIF | Reimbursed allowable costs with formula/objective incentive fee |
| CPAF | Reimbursed allowable costs with evaluated performance award |
| CPP/CPPC | Fee as percentage of costs; US federal FAR prohibition |
| T&M | Fixed labor rates, variable hours/materials; manage quantities and ceilings |
Risk allocation follows actual terms; “all risk” or “no risk” is too absolute. The federal prohibition is for cost-plus-percentage, not all cost reimbursement. (Workbook, PDF pp. 171–172, 185–186.) See FAR 16.102.
IFB = comparable specified work, commonly price driven. RFP = proposed solutions evaluated across criteria. RFQ = quotation. RFI = information. Bidder conference = buyer-led clarification before bid submission, not seller pitches. Validate bids before consistent evaluation; establish criteria in advance. (Workbook, PDF pp. 173–174, 188–191.)
BATNA = best alternative to a negotiated agreement, your best option if no deal occurs. Prepare interests, limits and alternatives; seek a fair relationship. Privity identifies contractual parties. Recognize pressure tactics without assuming deception is good practice. (Workbook, PDF pp. 192, 197.)
Contract control tracks performance and authorized amendments. Closeout = verify acceptance, settle financial obligations, complete records/reports, review and retain lessons. (Workbook, PDF pp. 176, 194–196.)
New module-review recall
Cost-management benefits: expectations, efficient resources, profit, capacity for further projects, learning. Implementation costs: infrastructure, training, time. CBA: identify → monetize costs → monetize benefits → discount as appropriate → evaluate. (Module review: Finance M1 M2 Review MASTER.docx, body blocks 44–53, 151–156.)
| Review case | Answer to remember |
|---|---|
| $100,000 estimate | ROM $50k–$200k; budgetary $90k–$125k; definitive $95k–$110k |
| Gym: minimum 2, most likely 3, maximum 5 | Triangular 3.33; PERT 3.17 visits/week |
| $200m headquarters, five listed risks | Contingency $15.9m; baseline $215.9m if work excludes reserve |
| Three risks: 10%/$200k, 20%/$100k, 35%/$40k | Contingency $54k |
(Module review: Finance M3 Review MASTER.docx, body blocks 50–81.)
The Module 4 answer key is incorrect for several terms: performed budget = EV; incurred cost = AC; scheduled budget = PV; completion budget = BAC. Its EAC expression should be BAC/CPI when current efficiency continues. A definitive estimate is still a forecast, and EVM means Earned Value Management. (Module review: Finance M4 Review MASTER.docx, body blocks 20–22, 29.) (Module review: Finance M3 Review MASTER.docx, body blocks 5, 18.)
Last-minute corrections to retain
- WACC is not actual ROI; capital plus a charge is not NPV.
- Refinery discounted inflows=$93.264m; true NPV after $100m outlay=−$6.736m.
- Practice 5 SPI=65/50, not 65/40.
- EV does not tell you actual cost; AC/PV alone does not tell you earned-value performance.
- Management reserve is outside the course baseline.
- Percentage shortfalls need denominators; duration forecasts use reciprocal SPI.
- Deferred change is not necessarily escalated change.
- A sponsor's suggested scope cut still requires impact analysis and authorization.
- Fixed unit rates do not fix a T&M total; CPFF fixes the fee, not the costs.
- BATNA is the no-deal alternative, not your list of concessions.
Work the practice set from memory, then review its explained answers.