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Project Management Professional (PMP) Exam
Studying for the PMP Exam
65
Management
Professional
03/27/2011

Additional Management Flashcards

 


 

Cards

Term
Budget At Completion (BAC)
Definition
How much the whole project budget will be once done
Term
Earned Value (EV)
Definition
Costs budgeted for % completed.
% complete x BAC.
So if BAC is $100K, and 25% complete, EV = $25K
Term
Actual Costs (AC)
Definition
How much was actually spent (e.g. actually spent $27K at 25% completion)
Term
Planned Value (PV)
Definition
How much the project should be worth at this time (e.g. at month 6 should be at 50% of BAC, or $50K)
Term
Cost Variance (CV)
Definition
How much actual vs budgeted (over budget right now?)
CV = EV – AC
($25K - $27K = - $2K; i.e. costs have been $2K more than budgeted for)
Term
Schedule Variance (SV)
Definition
How far behind scheduled value are you?
SV = EV – PV
($25K - $50K = - $25K; i.e. have $25K less value than expected by now)
Term
Cost Performance Index (CPI)
Definition
How much you get for your $1 (closer to 1 is good)
CPI = EV / AC = $25K/$27K = 0.93
(so losing 7c per dollar spent)
Term
Schedule Performance Index (SPI)
Definition
How doing in comparison to where should be (closer to 1 is good)
SPI = EV / PV = $25K/$50K = 0.5 or only 50% of where should be
Term
Estimate At Completion (EAC)
Definition
Forecast value of project when complete (est’d when partway thru) - over budget?
EAC = BAC/CPI = $100K / 0.93 = $107,526 (feeds into VAC to tell you that you’re $7.5K over budget)
Term
Estimate To Complete (ETC)
Definition
How much more do you need to complete this project
ETC = EAC - AC = $107,526 - $27K = $80,526 (from today onward, we will need $80.5K to finish up)
Term
To-Complete Performance Index (TCPI)
Definition
Variation 1 - Can the project meet the Budget At Completion? (under 1 is likely; over 1 unlikely)
TCPI = (BAC – EV) / (BAC – AC)
TCPI = ($100K - $25K) / ($100K - $27K)
TCPI = ($75K) / ($73K) = 1.027
(may not be able to meet BAC; start watching costs closely, but not big concern)


Variation 2 – Can the project meet the Estimate at Completion (under 1 is likely; over 1 unlikely)
TCPI = (BAC – EV) / (EAC – AC)
TCPI = ($100K - $25K) / ($107,526 - $27K) = ($75K) / ($80,526) = 0.93
(quite likely will be able to make EAC)
Term
Variance At Completion (VAC)
Definition
How far above/below if things continue as-is
VAC = BAC – EAC = $100K - $107,526 = - $7.5K (how much in the hole compared to budget)
Term
Magic Communications Channels Formula
Definition
N (N-1) / 2
10 people on project, 10(9)/2 = 45 comms channels
Term
Present Value
Definition
FV / (1 + r)^n
Term
Net Present Value (NPV)
Interpretation
Definition
Bigger is better (NPV)
Term
Internal Rate of Return (IRR)
Interpretation
Definition
Bigger is better (IRR)
Term
Expected Monetary Value (EMV)
Definition
Probability * Impact
Term
Functional Organization Structure
Definition
Functional (specialties, grouped by function, hierarchies) – little PM authority

Pluses: enduring organizational structure, clear career paths – can specialize, clear chain of command

Minuses: PMs have little to no authority, projects compete for resources, teams are loyal to functional mgr not PM
Term
Matrix Organizational Structures
Definition
Blend of functional and projectized. Employees report to both functional mgr – find work and admin support - and PM – assign project work

Weak Matrix: closer to functional organization (functional mgr has more power/responsibility)

Balanced Matrix: functional mgr and PM balance power/responsibilities.

Strong Matrix: closer to projectized (PM has more power/responsibility)
Term
Projectized Organizational Structure
Definition
Projectized (focus around project, PM have authority and generally report directly to CEO) – high PM authority

Pros: PMs have most/all authority, team mbrs are loyal to project

Cons: team members may be out of work once project is done, may have inefficient resource allocation
Term
Triple Constraints of Project Management
Definition
Time

Cost

Scope
Term
Constrained Optimization Methods
Definition
When choosing between several projects, have to compare tangible benefits

Constrained Optimization Methods are Mathematical selection models

Egs:
-Linear
-Dynamic
-Integer
-Nonlinear
-Multi-objective programming
Term
Benefit selection models (or decision models)
Definition
A benefit selection model for choosing between several projects

oCost-benefit analysis
oScoring models
oCash Flow Analysis (payback period, discounted cash flows - future and present values)
oNet Present Value (NPV)
oInternal Rate of Return (IRR)
Term
Future Value (FV)
Definition
FV = PV (1+i)^n
Brings today’s dollars into future dollars
Term
Net Present Value (NPV) Interpretation
Definition
-If NPV is positive (more than 0), accept project. If negative (less than 0), reject the project.
-Higher NPV is good
Term
Internal Rate of Return (IRR)
Interpretation
Definition
discount rate when present value of cash inflows = original investment.
-Choose highest IRR value
-IRR is the discount rate when NPV = 0
-IRR assumes that cash inflows are reinvested at the IRR value
Term
Project Management Plan subsidiary plans
Definition

•Requirements mgt plan

•Scope baseline

•Resource calendar

•Schedule baseline

•Schedule mgt plan

•Cost mgt plan

•Cost baseline

•Quality mgt plan

•Comms mgt plan

•Risk mgt plan

•Risk register

•Procurement mgt plan

*•Milestone list

Term
8/80 Rule
Definition
WBS work package should take at least 8 hours and not more than 80 hours to create.
Term
Lowest level of WBS
Definition
Work Package
Term
Components of WBS
Definition
oWBS (the chart)
oWBS dictionary (the meat - component work: what is it, who responsible, milestones, costs, activities, resources, quality reqs, tech references, contract info)
oScope baseline - made up of project charter, WBS, WBS dictionary
oProject document updates – IDs what has to be updated (eg PM Plan)
Term
What Process Group costs the most?
Definition
The “Executing” Process Group, since most of the time and resources are used during this process
Term
QA vs QC
Definition
•QA is orgAnization-wide (Six-Sigma) – focused on prevention
•QC is projeCt-wide (peer reviews) – based on inspection
Term
Costs of Quality
-Conformance
-Nonconformance
Definition
Cost of conformance to requirements (cost of quality)
oSafety measures, team devt/training, proper materials

Cost of non-conformance to requirements (cost of poor quality)
oLoss of life or limb, unsatisfied customers, poor team morale, gold plating
Term
Deming's Chain Reaction
Definition
•Quality improvements helps org and community

Improve quality > costs down > productivity up > capture market > stay in business > provide more jobs
Term
Quality vs Grade
Definition
•Quality – fulfilling requirements (project or product scope, needs)
•Grade – category or rank (oak vs plywood, 1st class vs coach). If you agree on a grade (plywood) that’s cool – unless there are quality issues (bad plywood).
•Low quality is always a problem; low grade may not be
Term
Herzberg’s Theory of Motivation
Definition
•Motivating agents (promote performance) – opportunity, responsibility, appreciation, recognition, education
•Expected hygiene agents (required, but don’t promote performance) – job security, paycheck, acceptable working conditions, relationships
Term
McGregor’s Theory of X and Y
Definition
•2 kinds of management outlooks (and/ or kinds of people that you need to manage)
•X People – can’t be trusted (need to micromanage, no trust, lazy, avoid work)
•Y people – trust people (self-led, motivated, capable)
Term
McClelland’s Theory of Needs
Definition
•Acquired needs theory •Individuals needs are acquired over time •Shaped by life experiences (achievement or wanting to excel, affiliation or wanting to have good social, power or wanting to have influence) •Thematic Apperception Test (TAT) – helps you figure out what need is driving you or team members at this time
Term
Ouchi’s Theory Z
Definition
•Japanese management style; family environment, project teams involved in decisions
•Lifelong employment
Term
Expectancy Theory
Definition
People behave based on what they expect that their behavior will bring them (act differently around Grandma b/c can get candy from whining, or sit still for teacher b/c get praise for that)
Term
Halo Effect
Definition
•False belief based on a person’s experiences (just because someone worked on a kind of project doesn’t mean that she would want to be a PM of that kind of project, or even want to continue to work on that kind of project)
Term
Parts of a Communications Management Plan
Definition
oOrg charts
oProject structure
oStakeholder responsibility relationships (who provides what to what)
oDepartments and disciplines
oLocale of team and stakeholders
oInternal and external information needs
oStakeholder information (directory with contact info)
Term
Procurement Make or Buy decision process
Definition
Make or Buy decision: figure out difference for the actual product (between build vs buy), including monthly fees. Divide product difference/monthly difference to see how many months until see the difference.
oMake at $25K, monthly fee $2.5K
oBuy at $17K, monthly fee $2.7K
oDiff: product $8K, monthly fee $200
oMonths of support to pay for in-house solution: 8000/200 = 40 months. So buy if the software will be replaced within 40 months. Make if software will not be replaced within 40 months.
Term
Probability Impact Matrix
Definition
Shows risks, probability, impact to the projex, and then Expected Monetary Value (prob x impact). Add up for contingency reserve.
Term
Expected Monetary Value
Definition
-Within the Probability-Impact matrix
-Probability x Impact
Term
Rules of Thumb for Ethical Conduct
Definition
oFirst, always follow laws, regs, country where doing project management
oSecond, follow company policies (not accepting bribes even if country standards)
oThird, follow customs of country
oFourth, follow ethics of country
oFifth, follow “What would an angel do” [I swear they said this!] if you’re still not sure
Term
Sapir-Whorf Hypotheses
Definition
Language you speak affects how you think. If you learn that country’s language, can help you understand thought patterns
Term
Pareto Chart
Definition
A quality control histogram that shows categories of failure (e.g. equipment failure, software errors, human errors, drive conflicts)
Term
Gantt chart
Definition
A scheduling tool that shows project activities across a timeline or calendar.
Term
Network diagram
Definition
Shows the flow of activities.
Term
Ishikawa diagram
Definition
"cause-and-effect diagram" or “fishbone” diagram

Reveals potential problems that contribute to effects.
Term
Parkinson's Law
Definition
Work will expand to fill the amount of time allotted to it.
Term
The law of diminishing returns
Definition
states that increased labor doesn't always guarantee an increase in the yield, and can even diminish an organization's overall profit.
Term
Pareto's Law
Definition
is the 80/20 law; for example, 80 percent of your business comes from 20 percent of your customers.
Term
Contingency reserve
Definition
is time allotted for schedule slippage
Term
Single-source vs sole-source
Definition
Single-source – you prefer one specific company
Sole-source – there is only one company that does what you want
Term
SPI – Schedule Performance Index
Definition
, how close to being on schedule. SPI of 0.8 means behind schedule. SPI of 1 is on schedule.
Term
Critical Path
Definition
– the longest a project can take (circle graph with arrows from step to step)
Term
Form, Storm, Norm, Perform
Definition
Forming - when the team first meets
Storming - when the project team moves through power struggles over who's in charge of the project.
Norming - once the project team settles into their roles
Performing – once the project team focuses on getting the project work completed
Term
Utility Function
Definition
an organization’s willingness to accept risk
Term
Discount Rate
Definition
The "i" in time value of money calculations. It's the rate of return that could be earned on an investment in the financial markets with similar risk.
Term
NPV formula and explanation
Definition
NPV = Rn / [(1+i)n)]
All it is is the sum of all the Present Values of all the years (including cost of project). So long as you don’t lose money (in today dollars), can accept project – choose the project with the best return.
Term
Calculating Variances
Definition
“Variance” means EV – something
Cost Variance = EV – AC (25 – 27 = 2)
Schedule variance = EV – PV (25 – 50 = -50)
Term
Calculating Indices
Definition
“Index” means EV / something
Cost Perf Index = EV / AC (25/27 = .93)
Schedule Perf Index = EV / PV (25/50 = .5)
Term
WBS Dictionary parts
Definition
the meat - component work:
-What is it
-Who responsible
-Milestones
-Costs
-Activities
-Resources
-Quality reqs
-Tech references
-Contract info
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