PMP Study Notes Formula Guide

Project Management Professional (PMP)
PMP Study Notes & Formula Guide
Knowledge Areas (9)

Project Integration Management Project Scope Management Project Time Management
Project Cost Management
Project Quality Management
Project Human Resource Management Project Procurement Management

2
Project Communications Management
Project Risk Management
Leverage Blueprint - PMP Study Notes & Formula Guide
Processes (5)
Initiation
Planning
Execution
Monitor and Control
Closing
Project Management Processes (42)

Develop Project Charter Develop Project Management Plan Direct / Manage Project Execution Monitor / Control Project Work Perform Integrated Change Control Close Project or Phase
Leverage Blueprint - PMP Study Notes & Formula Guide 4
Project Integration Management

Project Scope Management
Collect Requirements Define Scope Create WBS Verify Scope Control Scope
5

Define Activities
Project Time Management
Sequence Activities
Estimate Activity Resources

Estimate Activity Durations Develop Schedule Control Schedule

Project Cost Management
Estimate Costs Determine Budget Control Costs

Project Quality Management
Plan Quality Perform Quality Assurance
Perform Quality Control

Project Human Resource Management
Develop Human Resource Plan Acquire Project Team Develop Project Team Manage Project Team
9

Project Communications Management
Identify Stakeholders Plan Communications
Distribute Information
Manage Stakeholder Expectations Report Performance
10

Plan Risk Management
Project Risk Management
Identify Risks Perform Qualitative Risk Analysis Perform Quantitative Risk Analysis Plan Risk Responses Monitor and Control Risks
11

Project Procurement Management
Plan Procurements Conduct Procurements Administer Procurements Close Procurements
12
Network Diagram
Activity Duration = EF ES + 1 or Activity Duration = LF LS + 1
Total Float = LS - ES or Total Float = LF EF
Free Float = ES of Following - ES of Present - DUR of Present
EF = ES + duration - 1
ES = EF of predecessor + 1
LF = LS of successor - 1
LS = LF - duration + 1
13
Project Selection
PV = FV / (1+r)^n FV = PV * (1+r)^n NPV = Formula not required. Select biggest number.
ROI = Formula not required. Select biggest number.
IRR = Formula not required. Select biggest number.
Payback Period = Add up the projected cash inflow minus expenses until you reach the initial investment.
BCR = Benefit / Cost
CBR = Cost / Benefit
Opportunity Cost = The value of the project not chosen.
14
Earned Value Management

BAC = Budget At Completion EV = Actual % * BAC PV = Planned % * BAC AC = Sum of all incurred costs
CPI = EV / AC
CV = EV - AC SV = EV - PV
< 1 = Over Budget > 1 = Under Budget
SPI = EV / PV
< 1 = Behind Schedule > 1 = Ahead of Schedule
EAC = BAC / CPI
EAC = AC + ETC
EAC = AC + (BAC + EV) / CPI
ETC = EAC - AC
VAC = BAC - EAC
BCWS = PV
BCWP = EV
ACWP = AC
15
TIPS: Earned Value Management

Negative is bad Positive is good If Variance: EV - Something
If Index: EV / Something
If Cost related use AC
If Time related use PV
Most formulas start with EV

PERT
PERT 3-point = (Pessimistic+(4*Most Likely)+Optimistic)/6 PERT = (Pessimistic Optimistic) / 6
PERT Activity Variance = ((Pessimistic Optimistic) / 6)^2

PERT Variance all activities = sum((Pessimistic Optimistic) / 6)^2

17
Values
1 sigma = 68.26% 2 sigma = 95.46% 3 sigma = 99.73%
6 sigma = 99.99%
Control Limits = 3 sigma from mean
Control Specifications = Defined by customer; looser than the control limits
Order of Magnitude estimate = -25% to +75%
Preliminary estimate = -15% to + 50%
18
Values
Budget estimate = -10% to +25% Definitive estimate = -5% to +10% Final estimate = 0%
Float on the critical path = 0 days
Pareto Diagram = 80/20
Time a PM spends communicating = 90%
Crashing a project = Crash least expensive tasks on critical path.
JIT inventory = 0% (or very close to 0%.)
Minus 100 = (100) or -100
19
Procurement
PTA = ((Ceiling Price - Target Price) / Buyer's Share Ratio) + TargetCost

Depreciation
Double Declining Balance Method: Depr. Rate = 2 * (100% / Useful Life)
Straight-line Depreciation: Depr. Expense = Asset Cost / Useful Life Depr. Rate = 100% / Useful Life Depr. Expense = Depreciation Rate * Book Value at Beginning of Year Book Value = Book Value at beginning of year - Depreciation Expense
Sum-of-Years' Digits Method: Sum of digits = Useful Life + (Useful Life - 1) + (Useful Life - 2) + etc.
Depr. rate = fraction of years left and sum of the digits (i.e. 4/15th)
21
Human Resource Management

Organizational Structures:
Functional, Matrix (weak, balanced, strong) , Projectized, Composite
Maslows Hierarchy of Needs:

Physiological, Safety, Social, Selfesteem, Self-actualization.
McGregor:
Theory X, Theory Y.
Ouchi:
Theory Z. Motivated by commitment, opportunity advancement.
Herzbergs Theory of Motivation:

Hygiene factors, Motivating Agents.
Leadership Styles:
Directing, Facilitating, Coaching, Supporting, Autocratic, Consultative, Consensus.
Project Manager Powers:

Formal (legitimate,) Reward, Penalty (coercive), Expert, Referent.
Conflict Management:
Withdraw (avoid), Smooth (accommodate), Compromise, Force, Collaborate, Confront (problem solving.)
22
Quality Management
Ishikawa = Fishbone Diagram: cause and effect. Pareto Diagram: Identify problems and frequency. 80/20 Rule.
Flow Charts; Control Charts.
Just in Time: Reduces inventory; requires additional quality control.
Quality Theories: Kaizen (continuous improvement,) Six Sigma, TQM (total quality management.)
Kaizen: Small improvements to reduce costs and improve consistency.
Deming Cycle: Plan, Do Check, Act
23
Risk Management
Risk Strategies (threats):
Avoid Transfer Mitigate Accept
Risk Strategies (opportunities):

Exploit Share Enhance Accept
Qualitative Risk Analysis: Chance and impact of risk occurrence Results in prioritized list of risks; risk ranking. Tools:
Quantitative Risk Analysis: Numerical analysis of probability and impact.
Interviews Sensitivity Analysis Decision Tree Analysis Simulation Monte Carlo Analysis
24
Communications
Communication Channels = n * (n-1) / 2

Probability
EMV = Probability * Impact in currency

Rules Based on Numbers

80 Hour Rule = Max size of work packages
80/20 Rule = Paretos Law
20% of causes responsible for 80% of problems
0/50/100 = Work package completion

No credit until 50% complete No additional credit until 100% complete
27
Contact Details
28
Contact Detail
Postal
P.O. Box CT 6440, Cantonments Accra, Ghana
Telephone
233 (0) 200 116 119
Email
blueprint@leverage-blueprint.com
Website
www.leverage-blueprint.com
Skype
leverage.blueprint
Facebook
www.facebook.com/leverage.blueprint.com
Twitter
www.twitter.com/levBlueprint

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Project Management Professional (PMP)

PMP Study Notes & Formula Guide

Knowledge Areas (9)

Project Cost Management

Project Quality Management

Project Human Resource Management Project Procurement Management

Project Communications Management

Project Risk Management

Leverage Blueprint - PMP Study Notes & Formula Guide

Monitor and Control

Leverage Blueprint - PMP Study Notes & Formula Guide

Project Management Processes (42)

Project Integration Management

Project Management Processes (42)

Leverage Blueprint - PMP Study Notes & Formula Guide

Project Management Processes (42)

Project Time Management

Estimate Activity Resources

Leverage Blueprint - PMP Study Notes & Formula Guide

Project Management Processes (42)

Estimate Costs Determine Budget Control Costs

Leverage Blueprint - PMP Study Notes & Formula Guide

Project Management Processes (42)

Plan Quality Perform Quality Assurance

Perform Quality Control

Leverage Blueprint - PMP Study Notes & Formula Guide

Project Management Processes (42)

Project Management Processes (42)

Leverage Blueprint - PMP Study Notes & Formula Guide

Project Management Processes (42)

Project Risk Management

Leverage Blueprint - PMP Study Notes & Formula Guide

Project Management Processes (42)

Leverage Blueprint - PMP Study Notes & Formula Guide

Total Float = LS - ES or Total Float = LF EF

Free Float = ES of Following - ES of Present - DUR of Present

Leverage Blueprint - PMP Study Notes & Formula Guide

ROI = Formula not required. Select biggest number.

IRR = Formula not required. Select biggest number.

BCR = Benefit / Cost

CBR = Cost / Benefit

Opportunity Cost = The value of the project not chosen.

Leverage Blueprint - PMP Study Notes & Formula Guide

Earned Value Management

EAC = BAC / CPI

EAC = AC + (BAC + EV) / CPI

VAC = BAC - EAC

Leverage Blueprint - PMP Study Notes & Formula Guide

TIPS: Earned Value Management

If Cost related use AC

If Time related use PV

Most formulas start with EV

PERT Activity Variance = ((Pessimistic Optimistic) / 6)^2

PERT Variance all activities = sum((Pessimistic Optimistic) / 6)^2

Control Limits = 3 sigma from mean

Control Specifications = Defined by customer; looser than the control limits

Order of Magnitude estimate = -25% to +75%

Preliminary estimate = -15% to + 50%

Leverage Blueprint - PMP Study Notes & Formula Guide

Float on the critical path = 0 days

Pareto Diagram = 80/20

Time a PM spends communicating = 90%

Crashing a project = Crash least expensive tasks on critical path.

JIT inventory = 0% (or very close to 0%.)