KEY CONCEPT AND FORMULAS FOR PMP EXAM

Earn Value Formulas

PV (Planned Value) = BCWS (Budgeted Cost of Work Scheduled EV (Earned Value) = BCWP (Budgeted Cost of Work Performed) AC (Actual Cost) = ACWP (Actual Cost of Work Performed) SV = EV PV (minus is behind schedule) CV = EV AC (minus is over budget) SPI = EV/PV (Less than 1 is behind schedule) CPI = EV/AC (Less than 1 is over budget) EAC = AC + (BAC-EV) Use when variances are atypical

TUTOR CONFLUX

EAC = AC + [(BAC-EV)/CPI] Use when variances are typical (Note: This is the same as EAC = BAC/CPI) VAC = BAC EAC ETC = BAC EV Use when variances are atypical ETC = (BAC EV)/CPI Use when variances are typical ETC = EAC AC Use when original estimates were flawed

Network Diagram
Precedence Diagramming Method (PDM)

Also called Activity on Node (AON): Activities are in boxes Most commonly used today Has 4 relationships: F-S, S-S, F-F, S-F No dummies (zero duration dependencies) allowed Can analyze using either Three-Point Estimates or CPM Also called Activity on Arrow (AOA) Only 1 relationship: F-S Can have dummies Can analyze using either Three-Point Estimates or CPM Graphical Evaluation and Review Technique (GERT) - Allows loops and repetitive activities

Arrow Diagramming Method (ADM)

Three Point Estimates, or PERT

PERT = PROGRAM Evaluation and Review Technique Holds schedule and lets cost float 3 estimates for each task: Optimistic, Pessimistic, and Most Likely

Effective Learning for Sure Success

Page 1

KEY CONCEPT AND FORMULAS FOR PMP EXAM

Mean Estimate = (O + 4*ML + P)/6 Standard Deviation (s) = (P O)/6 Variance = s2 , or [(P O)/6]2 Standard deviation of tasks on CP = Sum of variances

TUTOR CONFLUX

Standard Deviation Ranges:

If 95% is confidence rating. Range = (2 x ) to + (2 x ) Powers of a Project Manager

1. 2. 3. 4. Expert: Best, earned on your own Reward: Next best. Based on PM position Formal: Power, based on PM position Referent: Referring to positions of others 1. 5. Penalty: Worst. Based on PM position

Sources of Conflict (Order of Priority)

1. 2. 3. 4. 5. 6. 7. Schedules Priorities Manpower (Resources ) Technical Opinions Procedures Personality Cost

Channels of Communication
Between Team Members = N(N-1)/2

Project Selection Financials Effective Learning for Sure Success Page 2

KEY CONCEPT AND FORMULAS FOR PMP EXAM

NPV (Net Present Value) = FV/(1+r)n FV= Future Value, r= interest rate, n= no. of time periods Higher NPV is better IRR (Internal Rate of Return) = Solve the NPV equation for r Also called Hurdle Rate Higher IRR percentage is better BCR (Benefit/Cost Ratio) Higher BCR is better. Beware, exam can call it CBR, where lower is better ROI (Return on Investment) = Earnings/Investment Higher ROI is better Payback Period = Time to recover cost of the project Lower payback period is better Cash Flow = Cash In Cash Out

TUTOR CONFLUX

Calculating Stack or Float

Total Float (also called Slack, Float, or Project Float) is the total amount of time an activity can be delayed without delaying the project finish date. Free Float/Slack is the amount of time an activity can be delayed without delaying its successor (following activity).

LS ES: Calculates slack with forward pass LF EF: Calculates slack with backwards pass Lag Time: Inserted wait time between activities Lead Time: Overlapping activities, also called paralleling or fast tracking. Lead In; Lag Out

Accuracy of Estimates
Order of Magnitude:-50% to +50% Budget Estimate:-10% to +25% Definitive Estimate:-5% to +10%

Conflict Resolution (Best to Worst)

1. 2. 3. 4. 5. Problem Solving: Also called Confronting Compromising: Solutions satisfy both parties Withdrawal: Postponing a decision Smoothing: Emphasis on agreement Forcing: One viewpoint at expense of another.

Effective Learning for Sure Success

Page 3

KEY CONCEPT AND FORMULAS FOR PMP EXAM

Herzbergs Motivators
1. 2. 3. 4. 5. 6. Achievement Recognition Challenge of the work itself Responsibility Advancement Growth

TUTOR CONFLUX

Closing
Project is closed when administrative closure is complete. Administrative closure is done at end of each Project Phase and at the end of the Project. Contract closure: verification that deliverables were acceptable; it is done once at the end of the contract. Contract Closure Procedure is produced under Close Project

Effective Learning for Sure Success

Page 4