PMI PMP Exam Tips_EV

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PMI PMP Exam Tips PMP Certification Study Notes 7 Project Cost Management by Edward Chung · November 4, 2015 Introduction: This part of the PMP® exam study notes is based on chapter 7 of PMBOK® Guide 5th Edition. More information on my PMP® certification exam preparation can be found at my PMP® exam and certification journey here. sunk cost cost already incurred in the past and cannot be recovered, do not consider anymore opportunity cost difference in value between one path vs alternative (= 100% of value of next best alternative) value analysis/ engineering cost reduction without affecting the scope Benefit Cost Analysis (BCA) / Cost Benefit Analysis (CBA) determine feasibility, bigger benefit/cost ratio (BCR) Payback Period the length of time to recover the investment Return on Investment (ROI) the efficiency of investment = (Gain-Cost)/Cost Time Value of Money Present Value (PV) = value / (1+interest rate)*year, Future Value (FV) = value * (1+interest rate)*year Net Present Value (NPV) = PV of cash inflows PV of cash outflows (cost) funding for project: self-fund, funding with equity, funding with debts discount rate rate used to calculate present value of expected yearly benefits and costs
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