Brain Dump for PMP preparation

Numerical/Formulae:
Section

Formula/Equation

RoI ARR

PV
Benefit-Cost
Analysis;
Project
Selection
criteria

Time
Management

FV
(1 r ) N

NPV
i 0

CFi
(1 r ) i

IRR

Total Float = LS ES
= LF EF

= (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 = Present 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
= Expected time
= 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

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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 work 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 of 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
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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 projects 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 sellers 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

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Process groups of project management

Influence of organizational structure on projects

Organisation Type
Project Characteristics

Matrix
Functional Weak Matrix Balanced Matrix Strong Matrix Projectized

Project Manager's Authority

Little or
None

Limited

Low or Moderate

Moderate to
Hogh

High to
almost
total

Virtually
None

0-25%

15-60%

50-95%

85-100%

Part-time

Full-time

Full-time

Full-time

Project
Manager /
Program
Manager

Project
Manager /
Program
Manager

Full-time

Full-time

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

Part-time
Project
Coordinat
or /
Project
Leader

Project
Coordinator Project Manager
/ Project
/ Project officer
Leader

Part-time Part-time

Part-time

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Change management steps:

Determine that a change is necessary or has occurred

Evaluate the impact of the change

Come up with alternatives

Discuss internally

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
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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
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-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 make sure it is in control
o Cause and effect (or Ishikawa or Fish-bone) diagram: For root cause analysis
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o
o
o
o
o

Flowcharting: Visualizing the flow in a process

Histogram: To assess frequency for a certain category
Pareto diagram: Based on 80-20 rule; used for prioritization
Scatter diagram: To assess the correlation between two variables
Checksheets: To organize data for inspection or presentation

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
Maslows hierarchy: Physiological, Safety, Social, Esteem, Self Actualization
Herzbergs theory: Hygiene factors, Motivating agents
Mcgregors theory: X theory (people want to avoid work) and Y theory (people are self
motivated)
Leadership styles: Autocratic/Authoritarian, Participative/Democratic, Delegative/Laissez Faire
McKinseys 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
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Used when the scope and duration is uncertain

Time and Material: Buyer pays at a certain rate
Seller doesnt have to worry about scope buyer is in control
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

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