Brain Dump for PMP preparation

Numerical/Formulae:

Section Formula/Equation Legend

RoI  ARR RoI = Return on Investment
I ARR = Average Rate of Return
I = Initial Investment
FV PV = Present Value
PV  (1 r ) N FV = Future Value
R = Rate of discounting
Benefit-Cost N = Number of years
N
CFi NPV = Net Present Value
NPV  
Analysis;
Project (1  r ) i CFi = Cash flow for year I
i 0
Selection r = Rate of discounting
criteria N = Number of years
IRR IRR = Internal rate of return; Rate of discount at which
the Present Value of benefits = Present Value of costs;
i.e. In the NPV formula; treat “r” as a variable and
equate NPV to zero
BCR = Benefit/Cost Ratio

Time Total Float = LS – ES LS = Latest Start Time; LF = Latest Finish Time

Management = LF – EF ES = Earliest Start Time; EF = Earliest Finish Time
μ = Expected time
σ = Standard deviation
O = Optimistic Time estimate
σ = (P – O)/6 P = Pessimistic Time estimate
M = Most likely Time estimate
CV = EV – AC CV = Cost Variance; SV = Schedule Variance
SV = EV – PV CPI = Cost Performance Index; SPI = Schedule
CPI = EV/AC Performance Index
SPI = EV/PV EV = Earned Value; PV = Planned Value; AC = Actual Cost
Earned Value EAC = Estimate at Complete; BAC = Budget at Complete
Management ETC = Estimate to Complete
VAC = BAC – EAC CPIest = Estimated CPI for the remaining period
VAC = Variance at Completion
TCPI = To-complete cost performance index ; to manage
overall spent to Target
Channels of C = Number of channels of communication
communication N = Number of team members

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 Risk ∑ EMV = Expected Monetary Value
Management P = Probability of event i
I = Impact of event i

Important definitions

Term Definition
Project Temporary endeavor undertaken to create a unique product, service or result
Program A group of projects managed in a coordinated way to obtain benefits or control not
available from managing them individually
Portfolios A collection of projects, programs, sub-portfolios and operations managed as a group to
achieve strategic objectives
Stakeholder 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
Payback Number of time periods it takes to recover the initial investment
period
Opportunity The value of the opportunity that was available but had to be given up in order to
cost pursue another opportunity
Configuration A set of procedures used to apply technical and administrative direction and
management surveillance to identify and document the functional and physical characteristics of a
systems product, service or a result component
Product Features and functions that characterize a product
scope
Project scope The work that must be done to deliver a product, service or result with the specified
features and functions
Control The level of work at which the management wishes to exercise control
account
Work A unit of work or deliverable at the leaf node of a work package
package
Rolling wave An iterative planning technique in which the work to be accomplished in the near term
planning is planned in greater detail while the work to be done in the future is planned at a
higher level
Leads and A successor activity is said to have a lead when it can start in advance of the
Lags predecessor; it is said to have a lag when it has to wait for a certain period after the
predecessor
Critical path Longest path from start to finish in a project network diagram; All activities on the
critical path have zero float
Crashing Achieving reduction in time taken by increasing the cost
Fast tracking Achieving reduction in time taken by increasing the work being done in parallel
Resource Applying optimization techniques to achieve the desired level of utilization of resources
optimization
Depreciation An accounting practice or entry that takes into consideration the reduction in the value
of an asset over time

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Quality The degree to which a set of inherent characteristics fulfills requirements
Grade A category assigned to deliverables having the same functional use but different
technical characteristics
Cost of All the costs incurred over the life of a product to ensure that it conforms to the
quality requirements
RACI A common type of responsibility assignment matrix that uses responsible, accountable,
consult and inform statuses to define the involvement of stakeholders
Risk An uncertain event or condition that, if it occurs can have a positive or negative effect
on a project’s objectives
Contract 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
Cost A form of contract that requires the buyer to pay the seller for all the costs incurred,
reimbursable plus a fee representing the seller’s profit
contract
Fixed price A form of contract that sets the fee to be paid for a defined scope of work regardless of
contract the cost of effort to deliver it

Important concepts/mind-maps
Knowledge areas of project management

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Process groups of project management

Influence of organizational structure on projects

Organisation Type Matrix

Project Characteristics Functional Weak Matrix Balanced Matrix Strong Matrix Projectized
High to
Little or Moderate to
Project Manager's Authority Limited Low or Moderate almost
None Hogh
total
Percent of Performing
Organization's Personnel Virtually
0-25% 15-60% 50-95% 85-100%
Assigned Full Time to None
Project Work
Project Manager's Role Part-time Part-time Full-time Full-time Full-time
Project
Project Project Project
Coordinat
Common Titles for Project Coordinator Project Manager Manager / Manager /
or /
Manager's Role / Project / Project officer Program Program
Project
Leader Manager Manager
Leader
Project Management
Part-time Part-time Part-time Full-time Full-time
Administrative staff

Change management steps:

• Determine that a change is “necessary” or has occurred

• Evaluate the impact of the change

• Come up with alternatives

• Discuss internally

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 • 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 Top-down
 Expert
 Analogous
 Parametric
o 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

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 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 mean
• Float or Slack: The amount of time that an activity can be delayed without delaying the project
• 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 operates on JIT (just-in-
time) 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 make 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 category
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

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HR management concepts:
• Stages of team formation: Forming, Storming, Norming, Performing 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 reserves 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 Cost reimbursable: Buyer pays all costs plus a profit
 Cost risk lies with the buyer
 Used when the scope and duration is uncertain
o Time and Material: Buyer pays at a certain rate
 Seller doesn’t have to worry about scope – buyer is in control

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  Used for small assignments or to get started or staff augmentation
o 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

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