Brain Dump for PMP preparation Numerical/Formulae:
Section
Formula/Equation ARR RoI RoI ARR
PV
Benefit-Cost Analysis; Project Selection criteria
I
FV (1 r ) N
N
NPV
CF i
(1 i 0
r ) i
IRR
Time Management
Total Float = LS – ES = LF – EF
σ = (P – O)/6
CV = EV – AC SV = EV – PV CPI = EV/AC SPI = EV/PV
Earned Value Management
VAC = BAC – EAC
Channels of communication
Legend RoI = Return on Investment ARR = Average Rate of Return I = Initial Investment PV = Present Value FV = Future Value R = Rate of discounting N = Number of years NPV = Net Present Value CFi = Cash flow for year I r = Rate of discounting N = Number of years IRR = Internal rate of return; Rate of discount at which the Present Value of benefits = Pr esent Value of costs; i.e. In the NPV formula; treat “r” as a variable and equate NPV to zero BCR = Benefit/Cost Ratio
LS = Latest Start Time; LF = Latest Finish Time ES = Earliest Start Time; EF = Earliest Finish Time μ = Expected time σ = Standard deviation O = Optimistic Time estimate P = Pessimistic Time estimate M = Most likely Time estimate CV = Cost Variance; SV = Schedule Variance CPI = Cost Performance Index; SPI = Schedule Performance Index EV = Earned Value; PV = Planned Value; AC = Actual Cost EAC = Estimate at Complete; BAC = Budget at Complete ETC = Estimate to Complete CPIest = Estimated CPI for the remaining period VAC = Variance at Completion TCPI = To-complete cost performance index ; to manage overall spent to Target C = Number of channels of communication N = Number of team members
www.simplilearn.com || Email:
[email protected] ||
Risk Management
∑
EMV = Expected Monetary Value P = Probability of event i I = Impact of event i
Important definitions
Term Project Program Portfolios Stakeholder Payback period Opportunity cost Configuration management systems Product scope Project scope Control account Work package Rolling wave planning Leads and Lags Critical path Crashing Fast tracking Resource optimization Depreciation
Definition Temporary endeavor undertaken to create a unique product, service or result A group of projects managed in a coordinated way to obtain benefits or control not available from managing them individually A collection of projects, programs, sub-portfolios and operations managed as a group to achieve strategic objectives An individual, group or organization who may affect, be affected by or perceive itself to be affected by a decision, activity or outcome of a project Number of time periods it takes to recover the initial investment The value of the opportunity that was available but had to be given up in order to pursue another opportunity A set of procedures used to apply technical and administrative direction and surveillance to identify and document the functional and physical characteristics of a product, service or a result component Features and functions that characterize a product The work that must be done to deliver a product, service or result with the specified features and functions The level of work at which the management wishes to exercise control A unit of work or deliverable at the leaf node of a work package An iterative planning technique in which the work to be accomplished in the near term is planned in greater detail while the wor k to be done in the future is planned at a higher level A successor activity is said to have a lead when it can start in advance o f the predecessor; it is said to have a lag when it has to wait for a certain period after the predecessor Longest path from start to finish in a project network diagram; All activities on the critical path have zero float Achieving reduction in time taken by increasing the cost Achieving reduction in time taken by increasing the work being done in parallel Applying optimization techniques to achieve the desired level of utilization of resources An accounting practice or entry that takes into consideration the reduction in the value of an asset over time www.simplilearn.com || Email:
[email protected] ||
Quality Grade Cost of quality RACI Risk Contract
Cost reimbursable contract Fixed price contract
The degree to which a set of inherent characteristics fulfills requirements A category assigned to deliverables having the same functional use but different technical characteristics All the costs incurred over the life of a product to ensure that it conforms to the requirements A common type of responsibility assignment matrix that uses responsible, accountable, consult and inform statuses to define the involvement of stakeholders An uncertain event or condition that, if it occurs can have a positive or negative effect on a project’s objectives A mutually binding agreement that obligates the seller to provide the specified products or services or results and the buyer to provide the monetary or other valuable consideration A form of contract that requires the buyer to pay the seller for all the costs incurred, plus a fee representing the seller’s profit A form of contract that sets the fee to be paid for a defined scope of work regardless of the cost of effort to deliver it
Important concepts/mind-maps Knowledge areas of project management
www.simplilearn.com || Email:
[email protected] ||
Process groups of project management
Influence of organizational structure on projects Organisation Type Project Characteristics
Matrix Functional Weak Matrix Balanced Matrix Strong Matrix Projectized
Little or Project Manager's Authority None Percent of Performing Organization's Personnel Assigned Full Time to Project Work Project Manager's Role Common Titles for Project Manager's Role Project Management Administrative staff
Virtually None Part-time Project Coordinat or / Project Leader
Limited
Moderate to Low or Moderate Hogh
High to almost total
0-25%
15-60%
50-95%
85-100%
Part-time
Full-time
Full-time
Full-time
Project Project Coordinator Project Manager Manager / / P roject / Project officer Program Leader Manager
Part-time Part-time
Part-time
Project Manager / Program Manager
Full-time
Change management steps: •
Determine that a change is “necessary” or has occurred
•
Evaluate the impact of the change
•
Come up with alternatives
•
Discuss internally www.simplilearn.com || Email:
[email protected] ||
Full-time
•
Discuss externally
Group creativity techniques: Brainstorming •
•
Nominal group technique
•
Idea/Mind mapping
•
Affinity diagram
•
Multi-criteria decision analysis
Group decision making techniques: Unanimity •
•
Majority
•
Plurality
•
Dictatorship
Time management concepts: Relationship types •
•
•
•
o
Finish to Start
o
Start to Start
o
Finish to Finish
o
Start to Finish
Dependency types o
Internal vs. External
o
Mandatory vs. Discretionary
Network diagramming techniques o
PDM or AON: Activities on the node; arrows indicate relationships
o
ADM or AOA: Activities on arrows; direction indicates relationships
Types of estimation o
o •
Top-down
Expert
Analogous
Parametric
Bottom up or detailed
Critical chain method: Including logical and resource dependencies simultaneously to produce a critical path
•
Properties of normal distributions o
68% observations between 1 std deviation of the mean www.simplilearn.com || Email:
[email protected] ||
o
95% observations between 2 std deviation of the mean
o
99.73% observations between 3 std deviation of the mean
o
99.999966% observations between 6 std deviation of the m ean
•
Float or Slack: The amount of time that an activity can be delayed without delaying the projec t
•
Schedule compression techniques o
Crashing: Increasing cost to save time
o
Fast tracking: Performing activities in parallel to save time
Quality management concepts: Marginal quality (optimal quality) is reached when the cost of achieving additional quality is •
matched by the additional revenue it fetches •
Philosophies for quality management: o
Total quality management (TQM): Integrated management philosophy
o
Kaizen: Small improvements to make things better
o
Deming cycle: PDCA (Plan-Do-Check-Act)
o
Kanban: A pull based system for management of inventory that oper ates on JIT (just-intime) principles
•
•
•
Quality Assurance o
Is ongoing during execution
o
Focuses on the process
o
Audits, reviews, etc.
Quality Control o
Inspects specific results or deliverables
o
Focuses on the product or results
o
Testing, Inspection, etc.
Cost of quality = Cost of conformance + Cost of non-conformance o
Cost of conformance = Prevention costs (Training, Documentation, etc.) + Appraisal costs (Testing, etc.)
o
Cost of non-conformance = Internal failure costs (Rework, scrap, etc.) + External failure costs (Warranty, recall, etc.)
•
7-basic quality tools o
Control charts: Observe variation in a process to m ake sure it is in control
o
Cause and effect (or Ishikawa or Fish-bone) diagram: For root cause analysis
o
Flowcharting: Visualizing the flow in a process
o
Histogram: To assess frequency for a certain categ ory
o
Pareto diagram: Based on 80-20 rule; used for prioritization
o
Scatter diagram: To assess the correlation between two variables
o
Checksheets: To organize data for inspection or presentation
www.simplilearn.com || Email:
[email protected] ||
HR management concepts: Stages of team formation: Forming, Storming, Norming, Per forming and Adjourning •
•
Sources of conflict: Resources, Scheduling, Personality
•
Conflict resolution techniques: o
Withdraw/Avoid
o
Smooth/Accommodate
o
Compromise/Reconcile
o
Force/Direct
o
Collaborate/Problem solve
•
Forms of authority for the manager: Formal, Expert, Reward, Penalty, Referent
•
Maslow’s hierarchy: Physiological, Safety, Social, Esteem, Self Actualization
•
Herzberg’s theory: Hygiene factors, Motivating agents
•
Mcgregor’s theory: X theory (people want to avoid work) and Y theory (people are self
motivated) •
Leadership styles: Autocratic/Authoritarian, Participative/Democratic, Delegative/Laissez Faire
•
McKinsey’s 7-S: Hard elements – Strategy, Structure, Systems; Soft elements: Shared values,
Skills, Style, Staff
Risk management concepts: Contingency reserves are for known unknowns, management re serves for unknown unknowns •
•
•
Strategies for responding to pure risks or threats: o
Avoid
o
Transfer
o
Mitigate
o
Accept
Strategies for responding to positive risks or opportunities: o
Exploit
o
Share
o
Enhance
o
Accept
Procurement management concepts: Contract types: •
o
o
Cost reimbursable: Buyer pays all costs plus a profit
Cost risk lies with the buyer
Used when the scope and duration is uncertain
Time and Material: Buyer pays at a cert ain rate
Seller doesn’t have to worry about scope – buyer is in control
www.simplilearn.com || Email:
[email protected] ||
o
Used for small assignments or to get started or staff augmentation
Fixed price: Buyer pays a fixed fee
Cost risk lies with the seller
Used when the scope is well known and stable
Data flows in project management
o
www.simplilearn.com || Email:
[email protected] ||
