Definitions
A detailed financial plan for a future period, usually involving expected costs and revenues.
What is a Budget?
The management process of comparing planned and actual costs and revenues to measure budgetary success.
What is Variance Analysis?
A section of a business responsible only for its own operational costs, like HR or Finance.
What is a Cost Centre?
A visual planning tool used to show the chronological sequence and timing of project tasks.
What is a Gantt Chart?
This "P" in the P-CAFÉ model helps a business prepare for its overall strategy and operations
What is Planning?
A discrepancy between a planned (budgeted) item of expenditure and the actual amount spent.
What is a Variance?
The mathematical formula used to determine the variance of a budget.
What is Actual Figure minus Budgeted Figure?
A section of a business held accountable for both the costs and the revenues it generates.
What is a Profit Centre?
A task that cannot begin until a previous task has been fully completed.
What is a Dependency?
A negative side effect of using profit centres where departments fight over resources.
What is unhealthy competition?
Tasks in a project that directly affect the total completion time; if these are delayed, the whole project is delayed
What are Critical Activities?
The type of variance that occurs when actual profits are higher than the budgeted amount.
What is a Favourable Variance?
A department like "Marketing" is usually classified as this type of centre because it spends money but does not sell products directly
What is a Cost Centre?
Term used for different tasks that can be performed at the same time to improve efficiency.
What are Concurrent Activities?
A major disadvantage of Gantt charts regarding the reliability of the initial plan.
What is that it depends on the accuracy of the initial data?
The "E" in the P-CAFÉ acronym for the importance of budgets.
What is Efficiency?
The type of variance that occurs when actual costs are higher than expected, lowering profit.
What is an Adverse Variance?
The "M" in the MAMA roles of centres that refers to encouraging better performance from managers.
What is Motivation?
If Task A takes 2 days and Task B (which depends on A) takes 3 days, this is the minimum total project time.
What is 5 days?
The "A" in the MAMA roles which allows for faster decision-making by local managers.
What is Autonomy?
The three primary ways to organize cost and profit centres.
What are Function, Product, and Geography?
One specific reason why an adverse revenue variance might occur in a business.
What is lower sales volume or a forced decrease in price?
A major limitation of profit centres involving the distribution of indirect costs like rent or electricity.
What is the subjective or arbitrary allocation of shared costs?
An element of project planning that a Gantt chart does not clearly show.
What is the specific workload or human resources required?
A reason why Gantt charts can become difficult to manage for very large or long-term projects.
What is that they need constant updating or become too complex?