Table of Contents

Chapter 1: Numerical Formulas

Chapter 2: Important Definitions
Chapter 3: Essential Concepts/Mindmaps
Chapter 4: Influence of Organizational Structure on Projects
Chapter 5: Change Management
Chapter 6: Group Creativity Techniques
Chapter 7: Group Decision Making Techniques
Chapter 8: Time Management
Chapter 9: Quality Management
Chapter 10: HR Management
Chapter 11: Risk Management
Chapter 12: Procurement Management
Chapter 13: Data Flows in Project Management
What is PMP?
PMP (Project Management Professional) Certification is the most in-demand professional credential in project management offered by PMI to
professionals who successfully clear the PMP Exam. Compiled by our PMP Experts, this ebook contains essential formulas and concepts to
support you en route your PMP preparation.
Numerical Formulas
Section Formula/Equation
Legend
Benefit-Cost Analysis; Project
Selection criteria
RoI = Return on Investment
ARR = Average Rate of Return
I = Initial Investment
1
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

=
+
=
N
i
i
r
i
CF
NPV
0
) 1 (
BCR = Benefit/Cost Ratio
IRR = Internal rate of return

N
r
FV
PV
) 1 ( +
=
IRR
Time Management
Total Float = LS ES or LF EF
=(O+4M+P)/6
= (P O)/6
(SD)^2
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
Variance of an activity
Earned Value Management
EAC = Estimate at Complete; BAC = Budget at Complete
ETC = Estimate to Complete
VAC = Variance at Completion
TCPI = To-complete cost performance index; to manage overall
spent to Target

I
ARR
RoI =
BCR =
PV of Benefits
PV of Costs
EAC=
BAC
CPI
C=n*
CV = EV AC
SV = EV PV
CPI = EV/AC
SPI = EV/PV
Channels of communication
C = Number of channels of communication
N = Number of team members
Risk Management
EMV = Expected Monetary Value
P = Probability of event i
I = Impact of event i
EAC=AC+(BAC-EV)
EAC=AC+Bottom-up ETC
EAC=AC+
(BAC-EV)
(CPI X SPI)
TCPI=
(BAC-EV)
(BAC-AC)
TCPI=
(BAC-EV)
(EAC-AC)
VAC=BAC-EAC
Same rate of spending
Use when Initial Estimates are flawed and no longer valid
Use when future variances are atypical
Considering SPI and CPI which influences remaining work
CV = Cost Variance; SV = Schedule Variance
CPI = Cost Performance Index; SPI = Schedule Performance Index
EV = Earned Value; PV = Planned Value; AC = Actual Cost
EMV= (P*I)i
(n-1)
2
Important definitions
2
Term Definition
Project Temporary endeavor undertaken to create a unique product, service or result
Program
A group of related 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
Configuration management
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
Payback period Number of time periods it takes to recover the initial investment
Opportunity cost The value of the opportunity that was available but had to be given up in order to pursue another opportunity
Product scope Features and functions that characterize a product
Project scope The work that must be done to deliver a product, service or result with the specified features and functions
Control account The level of work at which the management wishes to exercise control
Work package A unit of work or deliverable at the leaf node of a work package
Rolling wave planning
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
Leads and Lags
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
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 optimization Applying optimization techniques to achieve the desired level of utilization of resources
Depreciation An accounting practice or entry that takes into consideration the reduction in the value of an asset over time
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 quality All the costs incurred over the life of a product to ensure that it conforms to the requirements
Risk
An uncertain event or condition that, if it occurs can have a positive or negative
effect on a projects 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
RACI
A common type of responsibility assignment matrix that uses responsible, accountable, consulted and
informed statuses to define the involvement of stakeholders
Float or Slack
The amount of time that an activity can be delayed without delaying the project
Cost reimbursable contract
A form of contract that requires the buyer to pay the seller for all the costs incurred, plus a fee representing
the sellers profit
Fixed price contract
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
Knowledge areas of project management
Process groups of project management
Important concepts/Mindmaps
3
Quality
Scope
Cost Time
Risk
HR
Stakeholder
Communication
Procurement
Integration
Initiating Planning Processes Executing Processes
Controlling Closing Processes
Influence of organizational structure on projects
Organization Type
Matrix
Project Manager's Authority
4
Change
management steps
5
Weak Matrix Balanced Matrix
Project Characteristics
Strong Matrix
Little or None Low Low or Moderate Moderate to High
High to almost
total
Resource Availability Little or None Low Low or Moderate Moderate to High High to almost
total
Who manages the project budget Functional
Manager
Functional
Manager
Mixed Project Manager
Project Manager
Project Management Administrative staff Part-time Part-time Part-time Full-time Full-time
Project Manager's Role
Part-time
Determine that a change is
necessary or has occurred
Evaluate the impact of the change
Come up with alternatives
Discuss internally
Discuss externally
Time management concepts
8
Group decision
making techniques
7
Unanimity
Majority
Plurality
Dictatorship
Group
creativity techniques
6
Brainstorming
Nominal group technique
Idea/Mind mapping
Affinity diagram
Multi-criteria decision analysis
Relationship types
Finish to Start
Start to Start
Finish to Finish
Start to Finish
Dependency types
Internal vs. External
Mandatory vs. Discretionary
Network diagramming techniques
PDM or AON: Activities on the node; arrows indicate relationships
ADM or AOA: Activities on arrows; direction indicates relationships
Types of estimation
Top-down
Expert
Analogous
Parametric
Bottom up or detailed
Critical chain method: A schedule method that allows the project team to place buffers on any project schedule
path to account for limited resources and project uncertainties.
Functional Functional
Part-time Full-time Full-time Full-time
Properties of normal distributions
68% observations between 1 std deviation of the mean
95% observations between 2 std deviation of the mean
99.73% observations between 3 std deviation of the mean
99.999966% observations between 6 std deviation of the mean
Schedule compression techniques
Crashing: Increasing cost to save time
Fast-tracking: Performing activities in parallel to save time
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:
Total quality management (TQM): Integrated management philosophy
Kaizen: Small improvements to make things better
Deming cycle: PDCA (Plan-Do-Check-Act)
Kanban: A pull-based system for management of inventory that operates on JIT (just-in-time) principles
Quality Assurance
Is ongoing during execution
Focuses on the process
Audits, reviews, etc.
Quality Control
Inspects specific results or deliverables
Focuses on the product or results
Testing, Inspection, etc.
Cost of quality = Cost of conformance + Cost of non-conformance
Cost of conformance = Prevention costs (Training, Documentation, etc.) + Appraisal costs (Testing, etc.)
Cost of non-conformance = Internal failure costs (Rework, scrap, etc.) + External failure costs (Warranty, recall, etc.)
7-basic quality tools
Control charts: Observe variation in a process to make sure it is in control
Cause and effect (or Ishikawa or Fish-bone) diagram: For root cause analysis
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
Quality management concepts
9
Stages of team formation: Forming, Storming, Norming, Performing and Adjourning
Sources of conflict: Resources, Scheduling, Personality
Conflict resolution techniques:
Withdraw/Avoid
Smooth/Accommodate
Compromise/Reconcile
Force/Direct
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
HR management concepts
10
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
McKinseys 7-S: Hard elements Strategy, Structure, Systems; Soft elements: Shared values, Skills, Style, Staff
Contingency reserves are for known unknowns, management
reserves for unknown unknowns
Strategies for responding to pure risks or threats:

Avoid
Transfer
Mitigate
Accept
Strategies for responding to positive risks or opportunities:
Exploit
Share
Enhance
Accept
Risk management concepts
11
Data flows in project management
13
Contract types:
Cost reimbursable: Buyer pays all costs plus a profit
Cost risk lies with the buyer
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
Procurement management concepts
12
Project Initiator
or Sponsor
Enterprise or
Organization
Customer
Sellers
Initiating Process
Group
Planning Process
Group
Executing Process
Group
Closing
Process Group
Project
Documents
Monitoring and Controlling Process Group
P
r
o
j
e
c
t

S
o
W

B
u
s
i
n
e
s
s

C
a
s
e

a
g
r
e
e
m
e
n
t
s
Project Charter
Stakeholders Register
Stakeholder management strategy
Procurement
documents
Organizational process
Assets
Enterprise environmental factors
Requirements
Resource
calendars
Approved Change
requests
Quality control
measurements
Performance reports
Deliverables
Change requests
Work performance
information
Selected Sellers
Project management plan
Make-or-buy decisions
Source selection criteria
A
c
c
e
p
t
e
d

d
e
l
i
v
e
r
a
b
l
e
s

P
r
o
c
u
r
e
m
e
n
t

d
o
c
u
m
e
n
t
a
t
i
o
n
Contract award
Seller proposals
Final product,
service or result
If you feel ready, please use this link to access Simplilearns free full length PMP mock test.
We also invite you to join our official Linkedin Group and access more ebooks, videos and mock tests for 80+
other professional certification courses on www.simplilearn.com
About Simplilearn
Simplilearn is a leading provider of professional certification courses that addresses the unique learning needs
of working professionals. Having trained 1, 00,000+ professionals in over 150 countries across 80 courses, we
are a Global Registered Education Provider (REP) of PMI, USA and ten other internationally recognized
certification governing bodies.
With 24/7 online training, network of 2000+ certified trainers and unlimited support, we assure you a
comprehensive and rewarding certification experience.
Happy Learning!