# Shared Flashcard Set

## Details

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

## Cards Return to Set Details

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 projectETC = 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-isVAC = BAC – EAC = \$100K - \$107,526 = - \$7.5K (how much in the hole compared to budget)
Term
 Magic Communications Channels Formula
Definition
 N (N-1) / 210 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 authorityPluses: enduring organizational structure, clear career paths – can specialize, clear chain of commandMinuses: 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 workWeak 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 authorityPros: PMs have most/all authority, team mbrs are loyal to projectCons: team members may be out of work once project is done, may have inefficient resource allocation
Term
 Triple Constraints of Project Management
Definition
 TimeCostScope
Term
 Constrained Optimization Methods
Definition
 When choosing between several projects, have to compare tangible benefitsConstrained Optimization Methods are Mathematical selection modelsEgs:-Linear-Dynamic-Integer-Nonlinear-Multi-objective programming
Term
 Benefit selection models (or decision models)
Definition
 A benefit selection model for choosing between several projectsoCost-benefit analysisoScoring modelsoCash 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)^nBrings 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 dictionaryoProject 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 communityImprove 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 chartsoProject structureoStakeholder responsibility relationships (who provides what to what)oDepartments and disciplinesoLocale of team and stakeholdersoInternal and external information needsoStakeholder 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 \$2.5KoBuy at \$17K, monthly fee \$2.7KoDiff: product \$8K, monthly fee \$200oMonths 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 managementoSecond, follow company policies (not accepting bribes even if country standards)oThird, follow customs of countryoFourth, follow ethics of countryoFifth, 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” diagramReveals 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 companySole-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 meetsStorming - when the project team moves through power struggles over who's in charge of the project.Norming - once the project team settles into their rolesPerforming – 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 / somethingCost 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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