Project Management Professional (PMP) Exam Flashcards

Terms Definitions
Budget At Completion (BAC)
How much the whole project budget will be once done
Earned Value (EV)
Costs budgeted for % completed.% complete x BAC. So if BAC is $100K, and 25% complete, EV = $25K
Actual Costs (AC)
How much was actually spent (e.g. actually spent $27K at 25% completion)
Planned Value (PV)
How much the project should be worth at this time (e.g. at month 6 should be at 50% of BAC, or $50K)
Cost Variance (CV)
How much actual vs budgeted (over budget right now?)CV = EV – AC($25K - $27K = - $2K; i.e. costs have been $2K more than budgeted for)
Schedule Variance (SV)
How far behind scheduled value are you?SV = EV – PV($25K - $50K = - $25K; i.e. have $25K less value than expected by now)
Cost Performance Index (CPI)
How much you get for your $1 (closer to 1 is good)CPI = EV / AC = $25K/$27K = 0.93 (so losing 7c per dollar spent)
Schedule Performance Index (SPI)
How doing in comparison to where should be (closer to 1 is good)SPI = EV / PV = $25K/$50K = 0.5 or only 50% of where should be
Estimate At Completion (EAC)
Forecast value of project when complete (est’d when partway thru) - over budget?EAC = BAC/CPI = $100K / 0.93 = $107,526 (feeds into VAC to tell you that you’re $7.5K over budget)
Estimate To Complete (ETC)
How much more do you need to complete this projectETC = EAC - AC = $107,526 - $27K = $80,526 (from today onward, we will need $80.5K to finish up)
To-Complete Performance Index (TCPI)
Variation 1 - Can the project meet the Budget At Completion? (under 1 is likely; over 1 unlikely)TCPI = (BAC – EV) / (BAC – AC) TCPI = ($100K - $25K) / ($100K - $27K) TCPI = ($75K) / ($73K) = 1.027 (may not be able to meet BAC; start watching costs closely, but not big concern)Variation 2 – Can the project meet the Estimate at Completion (under 1 is likely; over 1 unlikely)TCPI = (BAC – EV) / (EAC – AC) TCPI = ($100K - $25K) / ($107,526 - $27K) = ($75K) / ($80,526) = 0.93(quite likely will be able to make EAC)
Variance At Completion (VAC)
How far above/below if things continue as-isVAC = BAC – EAC = $100K - $107,526 = - $7.5K (how much in the hole compared to budget)
Magic Communications Channels Formula
N (N-1) / 210 people on project, 10(9)/2 = 45 comms channels
Present Value
FV / (1 + r)^n
Net Present Value (NPV) Interpretation
Bigger is better (NPV)
Internal Rate of Return (IRR)Interpretation
Bigger is better (IRR)
Expected Monetary Value (EMV)
Probability * Impact
Functional Organization Structure
Functional (specialties, grouped by function, hierarchies) – little PM authorityPluses: enduring organizational structure, clear career paths – can specialize, clear chain of commandMinuses: PMs have little to no authority, projects compete for resources, teams are loyal to functional mgr not PM
Matrix Organizational Structures
Blend of functional and projectized. Employees report to both functional mgr – find work and admin support - and PM – assign project workWeak Matrix: closer to functional organization (functional mgr has more power/responsibility)Balanced Matrix: functional mgr and PM balance power/responsibilities.Strong Matrix: closer to projectized (PM has more power/responsibility)
Projectized Organizational Structure
Projectized (focus around project, PM have authority and generally report directly to CEO) – high PM authorityPros: PMs have most/all authority, team mbrs are loyal to projectCons: team members may be out of work once project is done, may have inefficient resource allocation
Triple Constraints of Project Management
TimeCostScope
Constrained Optimization Methods
When choosing between several projects, have to compare tangible benefitsConstrained Optimization Methods are Mathematical selection modelsEgs:-Linear-Dynamic-Integer-Nonlinear-Multi-objective programming
Benefit selection models (or decision models)
A benefit selection model for choosing between several projectsoCost-benefit analysisoScoring modelsoCash Flow Analysis (payback period, discounted cash flows - future and present values)oNet Present Value (NPV)oInternal Rate of Return (IRR)
Future Value (FV)
FV = PV (1+i)^nBrings today’s dollars into future dollars
Net Present Value (NPV) Interpretation
-If NPV is positive (more than 0), accept project. If negative (less than 0), reject the project.-Higher NPV is good
Internal Rate of Return (IRR) Interpretation
discount rate when present value of cash inflows = original investment.-Choose highest IRR value-IRR is the discount rate when NPV = 0-IRR assumes that cash inflows are reinvested at the IRR value
Project Management Plan subsidiary plans
•Requirements mgt plan
•Scope baseline
•Resource calendar
•Schedule baseline
•Schedule mgt plan
•Cost mgt plan
•Cost baseline
•Quality mgt plan
•Comms mgt plan
•Risk mgt plan
•Risk register
•Procurement mgt plan
*•Milestone list
8/80 Rule
WBS work package should take at least 8 hours and not more than 80 hours to create.
Lowest level of WBS
Work Package
Components of WBS
oWBS (the chart)oWBS dictionary (the meat - component work: what is it, who responsible, milestones, costs, activities, resources, quality reqs, tech references, contract info)oScope baseline - made up of project charter, WBS, WBS dictionaryoProject document updates – IDs what has to be updated (eg PM Plan)
What Process Group costs the most?
The “Executing” Process Group, since most of the time and resources are used during this process
QA vs QC
•QA is orgAnization-wide (Six-Sigma) – focused on prevention•QC is projeCt-wide (peer reviews) – based on inspection
Costs of Quality-Conformance-Nonconformance
Cost of conformance to requirements (cost of quality)oSafety measures, team devt/training, proper materials Cost of non-conformance to requirements (cost of poor quality)oLoss of life or limb, unsatisfied customers, poor team morale, gold plating
Deming's Chain Reaction
•Quality improvements helps org and communityImprove quality > costs down > productivity up > capture market > stay in business > provide more jobs
Quality vs Grade
•Quality – fulfilling requirements (project or product scope, needs)•Grade – category or rank (oak vs plywood, 1st class vs coach). If you agree on a grade (plywood) that’s cool – unless there are quality issues (bad plywood).•Low quality is always a problem; low grade may not be
Herzberg’s Theory of Motivation
•Motivating agents (promote performance) – opportunity, responsibility, appreciation, recognition, education•Expected hygiene agents (required, but don’t promote performance) – job security, paycheck, acceptable working conditions, relationships
McGregor’s Theory of X and Y
•2 kinds of management outlooks (and/ or kinds of people that you need to manage) •X People – can’t be trusted (need to micromanage, no trust, lazy, avoid work)•Y people – trust people (self-led, motivated, capable)
McClelland’s Theory of Needs
•Acquired needs theory •Individuals needs are acquired over time •Shaped by life experiences (achievement or wanting to excel, affiliation or wanting to have good social, power or wanting to have influence) •Thematic Apperception Test (TAT) – helps you figure out what need is driving you or team members at this time
Ouchi’s Theory Z
•Japanese management style; family environment, project teams involved in decisions•Lifelong employment
Expectancy Theory
People behave based on what they expect that their behavior will bring them (act differently around Grandma b/c can get candy from whining, or sit still for teacher b/c get praise for that)
Halo Effect
•False belief based on a person’s experiences (just because someone worked on a kind of project doesn’t mean that she would want to be a PM of that kind of project, or even want to continue to work on that kind of project)
Parts of a Communications Management Plan
oOrg chartsoProject structureoStakeholder responsibility relationships (who provides what to what)oDepartments and disciplinesoLocale of team and stakeholdersoInternal and external information needsoStakeholder information (directory with contact info)
Procurement Make or Buy decision process
Make or Buy decision: figure out difference for the actual product (between build vs buy), including monthly fees. Divide product difference/monthly difference to see how many months until see the difference.oMake at $25K, monthly fee $2.5KoBuy at $17K, monthly fee $2.7KoDiff: product $8K, monthly fee $200oMonths of support to pay for in-house solution: 8000/200 = 40 months. So buy if the software will be replaced within 40 months. Make if software will not be replaced within 40 months.
Probability Impact Matrix
Shows risks, probability, impact to the projex, and then Expected Monetary Value (prob x impact). Add up for contingency reserve.
Expected Monetary Value
-Within the Probability-Impact matrix-Probability x Impact
Rules of Thumb for Ethical Conduct
oFirst, always follow laws, regs, country where doing project managementoSecond, follow company policies (not accepting bribes even if country standards)oThird, follow customs of countryoFourth, follow ethics of countryoFifth, follow “What would an angel do” [I swear they said this!] if you’re still not sure
Sapir-Whorf Hypotheses
Language you speak affects how you think. If you learn that country’s language, can help you understand thought patterns
Pareto Chart
A quality control histogram that shows categories of failure (e.g. equipment failure, software errors, human errors, drive conflicts)
Gantt chart
A scheduling tool that shows project activities across a timeline or calendar.
Network diagram
Shows the flow of activities.
Ishikawa diagram
"cause-and-effect diagram" or “fishbone” diagramReveals potential problems that contribute to effects.
Parkinson's Law
Work will expand to fill the amount of time allotted to it.
The law of diminishing returns
states that increased labor doesn't always guarantee an increase in the yield, and can even diminish an organization's overall profit.
Pareto's Law
is the 80/20 law; for example, 80 percent of your business comes from 20 percent of your customers.
Contingency reserve
is time allotted for schedule slippage
Single-source vs sole-source
Single-source – you prefer one specific companySole-source – there is only one company that does what you want
SPI – Schedule Performance Index
, how close to being on schedule. SPI of 0.8 means behind schedule. SPI of 1 is on schedule.
Critical Path
– the longest a project can take (circle graph with arrows from step to step)
Form, Storm, Norm, Perform
Forming - when the team first meetsStorming - when the project team moves through power struggles over who's in charge of the project.Norming - once the project team settles into their rolesPerforming – once the project team focuses on getting the project work completed
Utility Function
an organization’s willingness to accept risk
Discount Rate
The "i" in time value of money calculations. It's the rate of return that could be earned on an investment in the financial markets with similar risk.
NPV formula and explanation
NPV = Rn / [(1+i)n)]All it is is the sum of all the Present Values of all the years (including cost of project). So long as you don’t lose money (in today dollars), can accept project – choose the project with the best return.
Calculating Variances
“Variance” means EV – something Cost Variance = EV – AC (25 – 27 = 2)Schedule variance = EV – PV (25 – 50 = -50)
Calculating Indices
“Index” means EV / somethingCost Perf Index = EV / AC (25/27 = .93)Schedule Perf Index = EV / PV (25/50 = .5)
WBS Dictionary parts
the meat - component work: -What is it-Who responsible-Milestones-Costs-Activities-Resources-Quality reqs-Tech references-Contract info
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