Budget and Cost Analysis Flashcards

In DoD cost estimating, what is the primary purpose of a Cost Estimating Relationship (CER)?

Answer: To statistically relate cost to one or more technical or physical characteristics

A CER is a mathematical expression that relates cost to measurable technical or physical parameters (e.g., weight, speed, power), derived through regression or engineering analysis.

Which Budget Activity (BA) under Operations and Maintenance (O&M) appropriations funds the day-to-day operations of active military forces?

Answer: BA 1 - Operating Forces

Budget Activity 1 (Operating Forces) funds the operational costs of combat and combat support forces conducting their primary missions.

What is 'Obligation Authority' (OA) in the context of DoD budgeting?

Answer: The legal authority to enter into binding agreements that will require future payments

Obligation Authority is the legal permission to commit the government to pay for goods or services, creating a financial liability against an appropriation.

Under the DoD Planning, Programming, Budgeting, and Execution (PPBE) process, what document does a Service submit to OSD that details its 5-year resource plan?

Answer: Program Objective Memorandum (POM)

The Program Objective Memorandum (POM) is the Service's formal proposal to OSD that aligns resources with strategy over the 5-year Future Years Defense Program period.

What cost concept does 'Should Cost' analysis emphasize in DoD acquisition?

Answer: An independent estimate of what a program ought to cost with management efficiency improvements

Should Cost analysis challenges historical spending patterns and identifies opportunities to reduce costs through improved management, better buying power, and eliminating inefficiencies.

Which type of appropriation remains available for obligation for more than one fiscal year but has a fixed expiration date?

Answer: Multi-year appropriation

Multi-year appropriations (e.g., 3-year Procurement funds) are available for obligation over a defined period of more than one but not an unlimited number of fiscal years.

In earned value management (EVM), what does a negative Schedule Variance (SV) indicate?

Answer: The project is behind schedule

Schedule Variance (SV = BCWP - BCWS) is negative when the Budgeted Cost of Work Performed is less than the Budgeted Cost of Work Scheduled, meaning less work was accomplished than planned.