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Key Concepts and Formulas for PMP Exam

Key Concept and Formulas for PMP Exam

Project Selection
Financials

NPV (Net Present Value) =

FV/(1+r)n
FV= Future Value, r= interest
rate, n= no. of time periods
Higher NPV is better
PV (Planned Value) = BCWS (Budgeted Cost of Work Scheduled

better

BCR (Benefit/Cost Ratio)

EAC = AC + (BAC-EV)

Use when variances are atypical

EAC = AC + [(BAC-EV)/CPI]

ETC = BAC EV

ETC = EAC AC

Use when original estimates were flawed

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

Network Diagram

Total Float (also called Slack,

Float, or Project Float) is the

boxes

finish date.

of time an activity can be

delayed without delaying its

pass

LS ES:

Calculates

LF EF:

Calculates

slack with backwards

Graphical Evaluation and Review Technique (GERT)

Allows loops and repetitive activities

pass
Lag Time: Inserted wait time
between activities
activities, also called
paralleling or fast tracking.
Lead In; Lag Out

Three Point Estimates, or PERT

Accuracy of Estimates

PERT = PROGRAM Evaluation and Review Technique

Order of Magnitude:-25% to

+75%

3 estimates for each task: Optimistic, Pessimistic, and Most

Budget Estimate:-10% to

Likely

+25%

Mean Estimate = (O + 4*ML + P)/6

Definitive Estimate:-5% to

+10%

Variance =

s2

, or [(P

O)/6]2

Sum of variances

Powers of a Project Manager

Conflict Resolution
(Best to Worst)
1.Problem Solving: Also
called Confronting

1. Expert: Best, earned on your own

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

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

Sources of Conflict (Order of Priority)

Herzbergs Motivators

1. Schedules

1. Achievement

2. Project Priorities

2. Recognition

3. Resources

3. Challenge of the work

4. Technical Opinions

itself

4. Responsibility

6. Cost

7. Personality

6. Growth

Key Concepts and Formulas for PMP Exam

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

Closing
Project is closed when
complete.
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

si
Using CV and SV to Analyze Project Risk
If CV = 0 and SV = 0

Then
The project is on budget
and on schedule

The project is under budget

and behind schedule; the
task has not started, or it
has started and not enough
resources have been applied

The project is over budget

and behind schedule

The Project is over budget

but ahead of schedule

The Project is under budget

and ahead of schedule.