PMP.Essentials.150121

PMP Essentials
21-Jan-2015
Compiled by Rakesh P
This document contains essentials only, for detailed study you may refer PMBOK 5th Ver.
Please check the latest version for updated PPT

PMP
• Project Coordinator
• Project expeditor
• Project Lead • Project Manager
• Resources from many countries
• More than 100 people
• Project Management Team
• Projects last longer than one year
• High Budget
• Ethics based on Ideal situations
illusion
PMP is all about the best practices….
vs
29-49

Project Management Fundamentals
Stake
holder
Enterprise
Environmental Factors
(EEF)
Organizational Process
Assets (OPA )
Project
Program
Portfolio
Project Life Cycle
Organizational
Structure
Functional Matrix Projectized
Organizational Project
Management (OPM)
Constraints
Stakeholders
Project Phases
Project Management
Office (PMO)

Process Groups - 5
Knowledge Areas- 10
Processes- 47
Stake
holder
About 185
Inputs
Tools &
techniques
Outputs

Knowledge Areas 1.
Initiating
2.
Planning
3.
Executing
4. Monitoring
& Controlling
5.
Closing
1. Integration  .  .  .  .  .
2.Scope  .  .
3.Time  .  .
4.Cost  .  .
5.Quality  .  .  .
6.Human Resource  .  .
7.Communication  .  .  .
8.Risk  .  .
9.Procurement  .  .  .  .
10.Stakeholder  .  .  .  .
13 % 24 % 30 % 25 % 8 %
The PMP exams does not test on the Code of ethics and professional
conduct explicitly although the standards are integrated into the test
For all 5 process groups-
Proficient - Above average
Moderate Proficient – Average
Below Proficient- Below average
PMP Results
PASS / FAIL

PMP (Project Management Professional) Exams
• Multiple choice (4) questions
• No negative marking
• Calculators are built into the Computer Based Test Exam
200 questions
4 Hours
175 questions
25 questions randomly placed "pre test
questions" are included, and do not
count towards the pass/fail
determination

www.pmi.org
• PMP (Project Management Professional)
• Based on PMBOK 5th version
PMBOK - (Project Management Body of Knowledge)
• www.pmi.org membership (Optional)
myPMIRegister/Login
PMI Membership $ 129 + $ 10 and get free PMBOK 5th Edition
also get free e-books & sample questions.
• Project Management experience :
For Graduate - 4,500 hours
For High School – 7,500 hours
• 35 Contact hours ( Mandatory)
• Apply online for exams for ‘Confirmation on eligibility’
- Membership is not mandatory for applying.
- PMI will review your application for completeness. And response in 5 working
days.
3 years , within last 8 years
5 years , within last 8 years

PMP Examination Fees
Total 3 attempts in a year

Exams eligibility
Eligibility of exams – one year after getting audit confirmation
21-49

Confirmation on Exams eligibility
After 5 to 7 working days , Confirmation on eligibility ( for one year)

www.prometric.com/pmi
Look at the availability for slots, select test location and month

View your PMP certificate details

Formulate a Plan
1. On first round , which you can answer within one minute each
2. Have a break of 10 minutes
3. On second round- these questions will take you a little longer to answer, but you may improve
the speed
4. Have a break of 10 minutes
5. On third round, you will now be left most difficult / lengthy questions & review.
45 Questions in 30 minutes
120 Questions in 2:40 hours
30 Questions in 1 hour

Answer all questions
You do not get any credit for an unanswered question.
If you are completely stumped by a question there are only four possible alternates.
You have at least 25% chance of getting it right.
2
If you can eliminate at least two apparently incorrect answers you chances have
improved to 50-50.
Always answer a question even if time is running out

PMBOK 5th Edition
Initial Course Material from PMI
A Guide to the Project Management Body of Knowledge (PMBOK® Guide) -
5th Edition (Initial Course Material from PMI), 2013 version
Errata:
http://www.pmi.org/PMBOK-Guide-and-
Standards/~/media/PDF/Standards/PMBOK_Guide_5th_Errata_2ndPrinting.ashx

PMI Standards Extensions
• Software Extension to the PMBOK® Guide Fifth Edition
• Construction Extension to the PMBOK® Guide Third Edition
• Government Extension to the PMBOK® Guide Third Edition
Practice Guides
• Implementing Organizational Project Management: A Practice Guide
• Navigating Complexity: A Practice Guide
• Managing Change in Organizations: A Practice Guide
www.pmi.org membership benefits, Library of PMI global standards
Foundational Standards
• A Guide to the Project Management Body of Knowledge (PMBOK® Guide)—Fifth Edition
• PMBOK Guide 5th Edition in various languages
Chinese, French, German, Hindi, Italian, Japanese, Korean, Portuguese, Russian,
and Spanish translations of the Fifth Edition are available for PMI members to download. Sections
of the Arabic translation are available for PMI members.
• The Standard for Program Management—Third Edition
• The Standard for Portfolio Management—Third Edition
• Organizational Project Management Maturity Model (OPM3®)—Third Edition
Practice Standards and Frameworks
• Practice Standard for Project Risk Management
• Practice Standard for Earned Value Management—Second Edition
• Practice Standard for Project Configuration Management
• Practice Standard for Work Breakdown Structures—Second Edition (Reaffirmed)
• Practice Standard for Scheduling—Second Edition
• Practice Standard for Project Estimating
• Project Manager Competency Development Framework—Second Edition
http://pmi.books24X7.com (PMP Exam Prep: Questions, Answers & Explanations by Christopher Scordo)

Few Suggested course material-
Suggested Study material
 PMP Exam Prep - 8th Edition - Rita Mulkahy
(Study “Knowledge area wise”)
 PMP Certifications DUMMIES- 2nd edition- Cynthia Snyder
(Revise “Project Process Group: wise)
 www.edwel.com
(Free complimentary course material and questions)

Suggested Mock test sites
For PMI members
http://pmi.books24x7.com
(PMP Exam Prep: Questions, Answers, & Explanations by Christopher Scordo)
Few other free sites
http://www.oliverlehmann.com/pmp-self-test/75-free-questions.htm#providers_
www.pmstudy.com
www.pmFinal.com
www.certchamp.com
You may try paid sites also for mock test

Refer PMP handbook for details
http://www.pmi.org/Certification/~/media/PDF/Certifications/pdc_pmphandbook.as
hx
PMI Lexicon of Project Management – Common Vocabulary
Code of Ethics and Professional Conduct
http://www.pmi.org/PMBOK-Guide-and-Standards/~/media/Registered/PMI_Lexicon_Final.ashx
http://www.pmi.org/en/About-Us/Ethics/~/media/PDF/Ethics/ap_pmicodeofethics.ashx
http://www.pmi.org/en/Certification/Project-Management-Professional-
PMP/~/media/PDF/Certifications/PMP%20Examination%20Content%20Outline_2010.ashx
Examination Content Outline

Project Management Experience
The PMI does occasionally audit the information that is presented in applications
in order to ensure that all the requisites are in order. You want to make sure that
you are honest about the information that is being presented. If your application is
audited your approval will be delayed until the audit is completed. Up to 10% of
PMI applications are audited.
Filling the PMP credential application
44-51

Project
Title
Role Designation Start End months Initiating
(Hour)
Planning
(Hour)
Executing
(Hour)
M & C
(Hours)
Closing
(Hours)
Total
(Hours)
Project
Summary
Total
The PMI does occasionally audit the information that is presented in applications
in order to ensure that all the requisites are in order. You want to make sure that
you are honest about the information that is being presented. If your application is
audited your approval will be delayed until the audit is completed. Up to 10% of
PMI applications are audited.
Filling the PMP credential application

Project Management Experience- overlapping
Jan, Feb, Mar, Apr – Project 1
May, Jun – Project 2
Jul, Aug, Sep, Oct, Nov- Project 3

Sample Form
Sample form for filling online project details for PMP. Fill project wide details
Project Management Experiences:
Application Development: OVERVIEW
Started
Sep 2008
Through
Mar 2010
Project Role
Project Manager
Primary Industry
IT/Software
Application Development: ORGANIZATION DETAILS
Job Title
Organization Name
Address Line 1
Address Line 2
Address Line 3
City State/Providence/Territory Zip/Postal Code
Country
Phone Number
Contact Name
Contact Relationship
Contact E-mail Contact Phone Number
Application Development: PROJECT DETAILS
Initiating Domain
760.00
Planning Domain
1,500.00
Executing Domain
3,000.00
Controlling Domain
2000.00
Closing Domain
600.00
Project details
City
Contact Relationship
Contact Name
Organization Name
Address Line 1
Contact E-mail Contact Phone Number
Zip/Postal Code
Job Title
Phone Number
Country
√√
√
√
√
350 to 550 character
√
√

Application Development: PROJECT DETAILS
Initiating Domain
760.00
Planning Domain
1,500.00
Executing Domain
3,000.00
Controlling Domain
2000.00
Closing Domain
600.00
Projectdetails
Project details (350 to 550 character)
• A brief, one-sentence project objective Project deliverables
IN-
PL-
EX-
MC-
CL-
• A brief, one-sentence project outcome
Important-
Overlapping hours
Number of working hours in a month - ?

Project Management Experience- Example
A brief, one-sentence project objective including project name and client
Project deliverables summarized by following process areas:
IN-Helped in writing Project Charter, Identified project phases, Identified key
stakeholders, understood business case etc.
PL- Created Project Management plan and subsidiary plans, Requirement
gathering, WBS, developed schedule and budget, Identified major risks,
created Change Management Plan, Kickoff meeting etc.
EX- Acquired final team, Hold meetings, Assigned task to team, gathered
status data, Issue tracking, Quality Audit, implemented approved change
requests, etc.
MC- Weekly status reports, Testing, Forecasting, UAT, Performance reporting,
etc.
CL- Final acceptance, Financial and Procurement closure, documented lesson
Learned, etc.
* A brief, one-sentence project outcome (ROI)

Relationships Among Portfolios, Programs, and Projects contd…
• Organizational strategies and priorities are linked
• Have relationships between portfolios and programs
Organizational planning impacts the projects by means of project
prioritization based on risk, funding, and other considerations relevant
to the organization’s strategic plan.
Program Management
Group of related projects
Obtain benefits and control not
available from managing them
individually
Portfolio Management
To achieve Strategic business
objectives
Prioritize resource allocations

What is Project Management? Balancing Project Constraints
Resource Quality Risk
Expended to…
Customer
satisfaction
13-28

A strategy execution framework utilizing
– project, program, and portfolio management
– as well as organizational enabling practices
to consistently and predictably deliver organizational strategy
producing
– better performance,
– better results,
– and a sustainable competitive advantage.
Organizational Project Management (OPM)
Organizational
Project Management
(OPM)
Portfolio Management
Program Management
Project Management
examines an enterprise’s project management
process capabilities.
OPM
Organizational Project
Management Maturity Model (OPM3®)

Organization Structure
Functional
Head 1
Head of
Projects
Project
Manager
Functional
Head 2
Functional
Head 3
Staff
Staff
Staff/
Expeditor /
Coordinator
Staff
Staff
Staff
Project
Manager
Functional
Weak Matrix
Balance Matrix
Strong Matrix
Staff Staff
Project
Manager
Staff
Staff
ProjectizedCEOCoordination

Process
Process Groups: I P E M&C C
Knowledge Areas:
I Scoped Time Cost and Quality with my HR to Communicate Risks
on Procurement to our Stakeholders.
Communicating Quality is 3. 3 X 2 6
Cost of Procurement to HR and Stakeholders is 4 4X4 16
Integrating Risk and Scope is 6. 6X3 18
Time is more costly at 7. 7X1 7
Total 47
Processes:

processes
Initiating Planning Executing M&C Closing
1 Integration  1  1
2 Scope
3 Time
4 Cost
5 Quality
6 HR
7 Communications
8 Risk
9 Procurement  1
10 Stakeholder  1
Mark 4 boundaries for 4 process, right down above one
2 initiating ( develop project charter, 2.Identify stakeholder)
2 Closing ( Close project or phase, 2. Close procurements)

processes
1 Integration 0+2
2 Scope 1+1
3 Time 1
4 Cost 1
5 Quality 1
6 HR
7 Communications 1
8 Risk 1
9 Procurement 1
10 Stakeholder 1
11 processes in Monitoring & controlling
No controls in HR
8 controls ( Knowledge area wise)
2 integration-1. Monitor and control project work 2- Perform integrated change Control
1 scope- 1. control scope, 2. validate scope
1.Monitor & Control Project Work
2.Perform Integrated Change Control
1.Validate Scope

processes
1 Integration 1
2 Scope 1+3
3 Time 1+5
4 Cost 1+2
5 Quality 1
6 HR 1
7 Communications 1
8 Risk 1+4
9 Procurement 1
10 Stakeholder 1
Total 24 processes in planning –
 10 planning processes in each knowledge areas
 14 in Scope, Time, Cost and Risk
3 Scope: 1.Collect Requirements, 2.Define Scope, 3.Create WBS,
5 Time: 1.Define Activities, 2.Sequence Activities, 3.Estimate Activity Resources, 4.Estimate
Activity Duration's and 5.Develop Schedule.
2 Cost: 1.Estimate Costs and 2.Determine Budget.
4 Risk: 1.Identify Risks, 2.Perform Qualitative Risk Analysis, 3.Perform Quantitative) Risk
Analysis, 4.Plan Risk Responses.)
1.Collect Requirements, 2.Define
Scope, 3.Create WBS,
1.Estimate Costs, 2.Determine Budget.
,
1.Identify Risks, 2.Perform Qualitative Risk
Analysis, 3.Perform Quantitative Risk Analysis,
4.Plan Risk Responses
1.Define Activities, 2.Sequence
Activities, 3.Estimate Activity
Resources, 4.Estimate Activity
Duration's and 5.Develop Schedule.

processes
1 Integration 1
2 Scope
3 Time
4 Cost
5 Quality 1
6 HR 3
7 Communications 1
8 Risk
9 Procurement 1
10 Stakeholder 1
8 processes in Executing:
3 HR –Acquire project team, 2.Develop project team, 3.Manage project team
5 integration, Quality, communication, procurement and stakeholders
(1.Direct & manage project work,
2.Perform QA,
3.Manage communications,
4. Conduct procurements
5. Manage stakeholder engagements,)

IntegrationManagement 1.Develop Project CharterOutputs1.Project Charter
 Economic Models for Project Selection
(Under Benefit Measurement Methods/Comparative approach)
1. Present Value (PV)
2. Net Present Value (NPV)
3. Internal Rate of return (IRR)
4. Payback Period
5. Cost benefit analysis

Present Value ( PV)
Value today of future cash flows
Qu: What is the present value of $ 300,000 received three years from now, if
we expect the interest rate to be 10 percent? Should the answer be more or less
than $ 300,000:
Ans- Less.
300,000/(1+.0.1) ³
= 300,000/(1.1 * 1.1 * 1.1)
= 300,000/1.331
= $ 225,394
Note: PV is also used for Planned Value (Cost Management)

Net Present Value(NPV)
Present value of the total benefits(income or revenue) minus the cost over many
time periods
How to Calculate NPV
If NPV is +ve the investment is a good choice
Project with the greatest NPV is typically selected
Qu: Two project to chose,
Project A will take 3 year to complete and has NPV of $45,000
Project B will take 6 years to complete and has NPV of $85,000
Ans: Project B, Higher the NPV,
Time Period Income/Revenue PV of Income @ 10%
interest rate
Costs PV of cost @ 10%
interest rate
0 0 0 200 200
1 50 45 100 91
2 100 83 0 0
3 300 225 0 0
353 291
NPV = 353-291 = $ 62

Internal Rate of Return (IRR)
• Think of Bank account ( interest rate)
• If a company has more than one project in which to invest, select with highest
return
• The rate (“interest rate”) at which the project inflows(revenues) and project
outflows (costs) are equal.
 Higher the IRR number, the better
Qu. Project A with an IRR of 21 % and Project B with an IRR of 15
%. Which one is a better option
Ans. Project A ( Higher return)

Payback Period
Length of time it takes to recover its investment in the
project before it starts accumulating profit
Select Lesser payback period project

Cost Benefit analysis
Compares the expected costs of the project to the potential benefits
Benefits are same as revenue. Revenue is not the same as profit.
It is expressed as a decimal or ratio.
Greater than means the benefits are greater than cost
The BCR is the ratio benefits to cost.
Example: Sale price (1500)/ Cost(1000) = 1.5 to 1
You get $1.5 of benefit for every $1.00 of cost. Greater than one
indicates the benefits are greater than costs.
20/34

Project A Project B Which Project
would you select?
Net present value Rs 95,000 Rs 75,000 A
IRR 13 per cent 17 per cent B
Payback period 16 months 21 months A
Benefit(Revenue)
Cost Ratio
2.79 1.3 A
Examples
Select Higher value
Select Lower value

IntegrationManagement 3.Direct and Manage Project WorkOutputs
Work Performance Data (Basic raw data)
The raw observations and measurements identified during activities being performed
to carry out the project work.
This includes # of change request, # of defects, Technical performance measure,
Actual cost, Actual Schedule
-------------------------------------------------------------------------------------------------
Work Performance Information (Foundation for project decisions)
The performance data collected from various controlling processes, analyzed in
context and integrated based on relationships across areas
Implementation status of change requests , Forecasted estimates to complete, Status
of deliverables
Work Performance Report (Formal reports)
The physical and electronic representation of work performance information compiled
in project documents. Intended to generate decisions, actions, or awareness
Status report, recommendations ,Memos, justifications
Work Performance Data

Work performance data, Information, Reports
1. Validate Scope
2. Control Scope
3. Control Schedule
4. Control Cost
5. Control Quality
6. Control Communications
7. Control Stakeholder
Engagement
8. Control Risks*
9. Control Procurement**
Work performance
Data
# of change request,
# of defects, Technical
performance measure,
Actual cost, Actual
Schedule
Work performance Information
Foundation for project decisions-
• Implementation status of change
requests
• Forecasted estimates to complete
• Status of deliverables
Monitor & control
Project work
Work performance
Reports
Status report,
recommendations ,
Memos, justifications
Perform Integrated
Change Control
Direct & Manage
Project work
Control Risks*
Control procurements**

Deliverables
Validate Scope
c
Accepted deliverables
deliverables Control Quality
Validated deliverables
(verified deliverables)
Direct & Manage project
work
Close project or phase

ScopeManagement Summary
Control Quality
Validate Scope
Direct and Manage
Project work
Closing
Development
Close Project
or Phase
Testing

6.Control ScopeScopeManagement
No
Gold plating
• Gold plating a project (adding extras) is not allowed
• Any change to scope must be evaluated for its effect on time,
cost, risk, quality, resources, and customer satisfaction
• No changes to scope are allowed without an approved
change request
• Scope changes should not be approved if they relate to work
that does not fit within the project charter
• You need to continuously determine what is and is not
included in the project

2.Collect Requirements T&T5.Group Decision-Making techniquesScopeManagement
An assessment process having multiple alternatives with an expected outcome in the
form of future actions. These techniques can be used to generate, classify, and
prioritize product requirements.
There are various methods of reaching a group decision, such as:
1. Unanimity. A decision that is reached whereby everyone agrees on a single
course of action. One way to reach unanimity is the Delphi technique, in which a
selected group of experts answers questionnaires and provides feedback regarding
the responses from each round of requirements gathering. The responses are only
available to the facilitator to maintain anonymity.
2. Majority. A decision that is reached with support obtained from more than 50 % of
the members of the group. Having a group size with an uneven number of
participants can ensure that a decision will be reached, rather than resulting in a tie.
3. Plurality. A decision that is reached whereby the largest block in a group decides,
even if a majority is not achieved. This method is generally used when the number of
options nominated is more than two.
4. Dictatorship. In this method, one individual makes the decision for the group.

4. Estimate Activity ResourcesOutputsTimeManagement
.1 Activity resource requirements
.2 Resource breakdown structure
.3 Project documents updates
.2 Resource breakdown structure
A hierarchical representation of resources by category and type
Another way to display resource requirements is a resource histogram
It is a bar chart showing the amount of time that a resource is scheduled to work over
series of time period
For example: skill set needed and the months they are needed
1 Activity resource requirements
The types and quantities of resources required for each activity in a work package

TimeManagement
PERT ( Program Evaluation and Review Technique)
1. Beta Distribution
Expected Value = (Optimistic+ 4 * Most Likely + Pessimistic)
____________________________________
6
2. Triangular Distribution
Expected Value = (Optimistic+ Most Likely + Pessimistic)
____________________________________
3
5. Estimate Activity DurationsT&T4. Three-point estimating

TimeManagement
`
Standard Deviation = (Pessimistic-Optimistic)
6
if you have multiple task, square SD for each task, total it . Take a square
root of the total.
5. Estimate Activity DurationsT&T4. Three-point estimating5. Estimate Activity DurationsT&T4. Three-point estimating
1 Sigma - + 68.26 %
2 Sigma - + 95.44 %
3 Sigma - + 99.73%

TimeManagement 6.Develop ScheduleT&T2.Critical Path Method
The critical path is the longest duration path through a network diagram and
determines the shortest time to compete the project
Critical path
Path Duration
Start, 1,2,4,5,End 3+3+8+4 =18
Start, 1,,3,5, End 3+6+4=13
Activity
1
Activity
3
Activity
2
Activity
5
Activity
4
3
6
3 8
4
Shown with bold arrows is the longest duration path, hence Critical path,
18 weeks long

TimeManagement 6. Develop ScheduleT&T2.Critical Path Method
1
3 3
Activity 1
1
0 3
4
6 9
Activity 3
9
Float
=5
14
7
8 14
Activity 4
6
o 14 15
4 18
Activity 5
15
0 18
Start
4
3 6
Activity 2
4
0 7
Float formula:
Late finish-Early Finish = 14-9 =5
Late Start – Early Start = 9-4 =5
End
ES Duration EF
Activity Name
LS Total Float LF
Forward
Pass
Backward
Pass
ES-Early Start, LS-Late Start,
EF-Early Finish, LF-Late Finish
Calculate float
Any mistake ?

Change request, Approved change requests, Validated changes
PL
Plan Procurement Management
EX
Direct and Manage Project Work
Perform Quality Assurance
Manage Project team
Manage stakeholder engagement
Conduct procurements
MC
Validate scope
Control scope
Control schedule
Control cost
Control Quality
Control Communications
Control Risks
Control Procurements *
Control stakeholders Engagement
1.Direct & Manage Project Work
2.Control procurements*
Validated changes
Change
Request
Perform Integrated
change control
Approved Change
Requests
Control Quality
Monitor & control project work**

TimeManagement
Applying leads and lags
Lead: allowing successor activity to be scheduled earlier
3.Sequence ActivitiesT&T 3. Leads and Lags
Plastering
Painting
FS+2 d
Lag: gap is inserted waiting time between activities,.
Activity B
Activity A
SS-5d

CostManagement 2.Estimate CostsT&T
12-54
Standard project estimating accuracy ranges
Type Range Use
Rough Order of magnitude
(ROM)
-25% to +75% In concept phase.
Top down, Little information
Budgetary -10% to +25% In the planning phase
Decomposed from top down
Some information
Definitive -5% to +10% In production
Bottom-Up
Detailed information

Quality 1.Plan Quality ManagementT&T
Cost of Quality
benefits of meeting quality requirements
Failure costs are also known as cost of poor quality
Cost of Conformance
Money spent during the project to avoid failures
1. Prevention Cost – Training, Document processes
2. Appraisal Cost – Testing, Inspections
Cost of Nonconformance (Cost of Poor Quality)
Money spent during and after the project because of failure
1. Internal Failure Cost – Rework, Scrap
2. External Failure Cost- Warranty, Lost Business, Liability

CostManagement 4.Control CostT&T1. Earned Value management
Actual Cost
(AC)
Management Reserves
(BAC)
Budget at
Completed
Estimate at Compl
(EAC)
•  Project Cost
As on date Planned
Completion
Date
Revised
Completion
Date
•  Cost Baseline
Cumulativecost
Time
Planned value
(PV)
Earned value
(EV)
Forecast
Forecast
Forecast

Example of Earned value
1. Based on % of work done as on today
PV (Planned value )= $ 10,000
If Work done = 50%
What is the value of work done = 10,000X50%= $ 5,000  Earned value
2. Based on aggregation of work package as on today
PV (Planned value)= $ 10,000 (Work package 1,3,4,6,7,8)
( 2000+1000+2000+1000+2000+2000)
If Work done = work package 1,3,4
What is the value of work done = 2,000+1,000+2,000
= $ 5,000  Earned value
CostManagement 4.Control CostsT&T1. Earned Value Management ( EVM)

Integrates scope, time and cost measures
PV – Planned Value (as on date), BAC- Budget at Completion (Total project cost)
AC – Actual Cost (as on date)
EV – Earned Value (value of planned work done as on a date)
• Schedule Variance SV=EV-PV
NEGATIVE is behind schedule, POSITIVE is ahead of schedule.
• Cost Variance CV=EV-AC
NEGATIVE is over budget, POSITIVE is under budget.
“Greater EV is better for project”
• Schedule Performance Index SPI = EV/PV
> 1 ahead of schedule
We are (only) progressing at ……… % of the rate originally planned.
• Cost Performance Index CPI =EV/AC
> 1 under budget
We are getting ………cents worth of work out of every $1 spent.

Example:
• As on Today
PV=10,000
EV=10,000X50%= 5,000 (50% of planned work done)
AC=15,000
• CV=EV-AC=5,000-15,000 = (-) 10,000, more than budgeted
• SV=EV-PV=5,000-10,000= (-) 5,000, behind schedule
• CPI=EV/AC=5,000/15,000=.33 We are only getting 33 cents out of every
dollar we put in the project
• SPI=EV/PV=5,000/10,000=.5 We are only progressing at 50 % of the rate
planned
CostManagement 4. Control CostsT&T1. Earned Value Management ( EVM)

CostManagement 4.Control CostsT&T1.Earned Value Management ( EVM)
Ans next…
34-54
If actual cost = 400, earned value = 350, planed value = 325, what is the cost
variance
A.350
B. -75
C. 400
D. -50

D = -50
If actual cost = 400, earned value = 350, planed value = 325, what is the cost
variance
A.350
B. -75
C. 400
D. -50
CV = EV-AC
= 350-400
= -50

CostManagement 4.Control CostT&T2.Forecasting
Actual Cost
(AC)
Management Reserves
(BAC)
Budget at
Completed
Estimate at Compl
(EAC)
•  Project Cost
As on date Planned
Completion
Date
Revised
Completion
Date
•  Cost Baseline
Cumulativecost
Time
Planned value
(PV)
Earned value
(EV)
Forecast
Forecast
Forecast

Estimate at Completion (EAC),
may differ from Budget at Completion (BAC)
1. PM develops forecasted EAC, if BAC is no longer viable.
EAC=AC+ bottom-up ETC(Estimate to complete)
( most common bottom up simulation)
2. If problem will not occur in future
EAC = AC+BAC-EV
3. If expected to continue as earlier performance as per same CPI ( Cost)
EAC=BAC/CPI
4. If expected to perform at efficiency rate considers both CPI and SPI
EAC=AC+[(BAC-EV)/(cumulative CPI x Cumulative SPI)]
Stop work , if there is no budget or time included for this
Note : Estimate to Complete , ETC = EAC-AC

• PV=3000
• EV=2500
• AC=2800
• CV=-300 we are over budget by $300
• CPI=.893
• SV=-500 we are behind schedule
• SPI=.833
• BAC=4000
• EAC=BAC/CPI = 4000/.893=4479, We currently estimate that the total
project will cost $ 4479
• ETC= EAC-AC = 4479-2800=1679, We need to spend $1679 to finish the
project
38-54

CostManagement 4. Control CostT&T 2. Forecasting
Progress Reporting of WBS Components
Rule When begins When completed
50/50 Rule 50% 100%
20/80 Rule 20% 100%
0/100 Rule 0% 100%
The status of any activity is considered as follows , when begins
and completed and the forecast will very based on following options:
PMBOK
221

CostManagement 4. Control CostT&T3.To-Complete Performance Index (TCPI)
A measure of cost performance that must be achieved when the remaining
resources in order to meet a specified management goal, expressed as the rate of
the cost to finish the outstanding work to the budget available
TCPI = work remaining ( BAC-EV)
fund remaining (BAC-AC)
To achieve BAC or new EAC get $.... Worth of value for every dollar
you spend
Note, EAC = BAC/CPI,(if work continues at same cost efficiency)
If TCPI is greater than 1 Harder to complete
The efficiency that must be maintained
in order to complete on plan (BAC)
BAC-EV
BAC-AC
The efficiency that must be maintained
in order to complete the current ETC
BAC-EV
EAC-AC

CostManagement 4.Control Cost T&T4.Performence Reviews
VAC= 4000-4479
= - 479,
We currently expect to be $ 479 over budget when the project is completed
Variance analysis.
Indicator of weather project is over or under the Budge at Completion ( BAC)
Variance At Completion
VAC = BAC – EAC
Budget at Completion-Estimate at Completion
+ve project is under budget
-ve project is over budget
=0 project is on budget
example

COST
COST COST
COST
Name Formula
Cost variance CV = EV - AC
Schedule variance SV = EV - PV
Cost performance Index CPI = EV / AC
Schedule performance index SPI = EV / PV
Name Formula
Estimate at completion - 1 EAC = AC + New ETC
Estimate at completion - 2 EAC = AC + BAC-EV
Estimate at completion - 3 EAC = BAC / CPI
Estimate at completion - 4 EAC = AC + ( BAC-EV) / CPIC X SPIC
To-Complete-Performance
Index
TCPI= BAC-EV or BAC-EV
BAC-AC EAC-AC
Estimate To Complete ETC = EAC- AC
Variance At Completion VAC = BAC-EAC
Type Range Use
Rough Order of
magnitude
(ROM)
-25% to
+75%
In concept phase.
Top down, Little
information
Budgetary -10% to
+25%
In the planning phase
Decomposed from top
down
Some information
Definitive -5% to
+10%
In production
Bottom-Up
Detailed information
COST OF QUALITY
of Conformance
Money spent during the project to avoid failures
1. Prevention Cost – Training, Document processes
2. Appraisal Cost – Testing, Inspections
Cost of Nonconformance (Cost of Poor Quality)
Money spent during and after the project because of failure
1. Internal Failure Cost – Rework, Scrap
2. External Failure Cost- Warranty, Lost Business, Liability

Quality Quality Theorists
is defined as the degree to which the project fulfills requirements
required specs poor quality
(not as per specs)
refers to a general category or classification for a deliverable or
resource that indicates common function, but varying technical specifications
Grade, directly relates to reduced or additional functionality, influenced by cost.
Schedule, market condition etc
Symmetrical item, good grade
Low quality is always a problem; low grade may not be
Quality
Grade

Quality Quality
• Precision and Accuracy are not equivalent.
• Precision is consistency that the value of repeated
measurements are clustered and have little scatter.
(An assessment of exactness)
• Accuracy is correctness that the measured value is very
close to the true value.
(An assessment of correctness)
• Precise measurement are not necessarily accurate.
Precision Accuracy

Quality Quality Theorists -2. Proprietary Approach
Deming He developed 14 points to total quality management and
advocated the Plan-Do-Check-Act (PDCA) cycle’ as the basis for
quality improvement . 85% of cost of quality is management
responsibility.
Juran He developed the 80/20 principle, advocated top management
involvement and defined quality as ‘fitness for use”
Defined by customer
Crossby Do the right the first time. The cost of non conformance is high. He
popularized the concept of the cost of poor quality and advocated
prevention over inspection and ‘zero defects’. He believed that
quality is conformance to requirements
Kaizen Continuous improvement Sustained gradual small improvements
Taguchi Loss Function. Taguchi suggests that there is
increasing loss, for the producer, the customer, and society,
associated with increasing variability, or deviation from a target
value that reflects the "ideal state."
This relationship to variability can be expressed as a loss function

Quality
3. Seven Basic Quality Tools
1.Plan Quality ManagementT&T
1. Cause & Effect Diagram
2. Flowcharts
3. Check sheets
4.Pareto Diagrams
5. Histograms
6. Control charts
7. Scatter Diagrams

Quality 1.Plan Quality ManagementT&T3. Seven basic quality tools
The causes are found by looking at the problem statement and asking “why” until the
actionable root cause has been identified
1. Cause & Effect Diagram- Fishbone or Ishikawa diagram

SIPOC Model
(Supplier-Input-Process-Output-Customer)
How a process or system flows from beginning to end
Determine the cost of quality
2. Flow charts

They are especially useful for gathering attributes data while
performing inspections to identify defects.
A checksheet or tally sheet is a type of checklist that can be used to keep
track of data such as quality problems uncovered during inspections. This
data collected can in turn be translated into other format such as a Pareto
diagram .
3. Check sheet
Defect Frequency
Too long 8
Too narrow 4
Too wide 6
Too Short 2

80/20 principle ( 80% of problems due to 20% root cause)
Help focus attention on the most critical issues
Prioritize potential ‘causes” of the problems
Arrange data from most frequent to least frequent
4. Pareto Diagram

Pareto Diagram- calculation

A Histogram is a variation of a bar chart in which data values are grouped together
and put into different classes. This grouping allows you see how frequently data in
each class occur in the data set. Higher bars represent more data values in a class.
Lower bars represent fewer data values in a class.
5. Histogram

It is used to determine whether or not a process is stable or has predictable
performance.
Upper and lower specification limits are based on requirements of the agreement.
6. Control Chart
Inspection number
NumberofDefects
Average

Quality
Rule of Seven (heuristic)- Process is out of control, if there are either at least 7
data points are in a row above or below the average, or 7 consecutive data points
with an upward or downward trend
This type of situation needs investigation and a cause should be found.
1.Plan Quality ManagementT&T3. Seven basic quality tools
6. Control Chart

There are two types of control charts;
Variable Charts- which are used with continuous data , 1,2,3,4,9, etc
Attributes charts, for use of discrete data. Have only two values-Pass/fail,
present/absent Attribute data, Yes/No
6. Control Chart

relationship between two variables
•Scatter diagrams, plot ordered pairs (X, Y) and are sometimes
called correlation charts because they seek to explain a
change in the dependent variable, Y, in relationship to a change
observed in the corresponding independent variable, X.
7. Scatter Diagram

Quality 2.Perform Quality Assurance-T&T
1. Affinity diagrams.
2. Process decision program charts (PDPC).
3. Interrelationship digraphs.
4. Tree diagrams. Also known as systematic diagrams
5. Prioritization matrices
6. Activity network diagrams
7. Matrix diagrams
1. Quality Management and Control Tools (7)
.1 Quality management and control tools
.2 Quality audits
.3 Process analysis.

Quality 2. Perform Quality AssuranceT&T1. Quality Management and Control Tools (7)
Used to consolidate a large amount of information into groupings of ideas
that have a natural 'affinity',
similar to mind-mapping techniques in that they are used to generate ideas that
can be linked to form organized patterns of thought about a problem.
Mind mapping technique used to consolidate ideas created through individual
brainstorming sessions into a single map to reflect commonality and differences
in understanding and to generate new ideas.
Flip chart may be used
Cards may be used
1.1. Affinity Diagram

Used to understand a goal in relation to the steps for getting to the goal. The
PDPC is useful as a method for contingency planning because it aids teams in
anticipating intermediate steps that could derail achievement of the goal..
1.2. Process decision program charts (PDPC).

An adaptation of relationship diagrams.
It provide a process for creative problem solving in moderately complex scenarios that
possess intertwined logical relationships for up to 50 relevant items.
It may be developed from data generated in other tools such as the affinity diagram, the tree
diagram, or the fishbone diagram.
a. Develop the problem statement.
. Write this statement at the top of a white board or flip chart.
b. Develop issues related to the problem.
These issues may be the result of a previous activity such as an affinity diagram
or a brainstorming session, or the team may need to develop them now.
c. Arrange the issues in a circle.
Write the issues on the white board or flip chart.
d. Identify cause-and-effect relationships.
e. Draw arrows to indicate directions of influence.
f.Tally influence arrows. For each issue, clearly record the number of arrows
going in and going out.
A
B
1.3. Inter relationship diagram
C

Also known as systematic diagrams and may be used to represent
decomposition hierarchies such as the WBS, RBS (risk breakdown structure),
and OBS (organizational breakdown structure). In project management, tree
diagrams are useful in visualizing the parent-to-child relationships
in any decomposition hierarchy that uses a systematic set of rules that define a
nesting relationship.
Tree diagrams can be depicted horizontally (such as a risk breakdown structure) or
vertically (such as a team hierarchy or OBS). Because tree diagrams permit the
creation of nested branches that terminate into a single decision point, they are
useful as decision trees for establishing an expected value for a limited
number of dependent relationships that have been diagramed systematically..
1.4. Tree diagrams

Identify the key issues and the suitable alternatives to be prioritized as a set of
decisions for implementation. Criteria are prioritized and weighted before being
applied to all available alternatives to obtain a mathematical score that ranks the
options.
1.5. Prioritization matrices

Previously known as arrow diagrams. They include both the AOA (Activity
on Arrow) and, most commonly used, AON (Activity on Node) formats of a
network diagram. Activity network diagrams are used with project
scheduling methodologies such as program evaluation and review
technique (PERT), critical path method (CPM), and precedence
diagramming method (PDM).
1.6. Activity network diagrams

A quality management and control tool used to perform data analysis within the
organizational structure created in the matrix.
The matrix diagram seeks to show the strength of relationships between
factors, causes, and objectives that exist between the rows and columns that
form the matrix.
It display relationship among two different groups of ideas or tasks
a b c d e f g h
1
2
3
4
5
6
7
8
1.7. Matrix diagrams

Quality 1,2,3 & 6 Sigma
Accuracy of estimates
TIME MANAGEMENT
1 Sigma 68.26%
2 Sigma 95.44 %
3 Sigma  99.73 %

ProjectHumanResourceManagement 1.Plan HR Management Outputs 1. HR management plan
 Human Resource Management Plan
 Roles & Responsibilities,
 Project Organization Charts,
 Staffing Management Plan When ? the resource will be brought into the
project
 Staff acquisition.
 Resource Calendars
 Staff Release Plan
 Recognitions and Rewards
 Training Needs
 Compliance
 Safety
Resource Histogram
.1 Human Resource management plan
NumberofPeople
Technical writers
Junior Programmers
Business Analyst
Senior Programmer
Project Manager

ProjectHumanResourceManagement 3.Develop Project TeamT&T6.Recognition & Rewards
6. Recognition & Rewards
 Theories of motivation (Summary)
Sr By Theories
1 Maslow Hierarchy of needs Physiological, Safety, Belongingness
& love, Esteem, Self Actualization
PSBES
2 Herzberg Hygiene Theory Hygiene and Motivators HM
3 David
McClelland
Achievement Theory Achievement, Affiliation, Power
AAP
4 Victor Vroom Expectancy Theory Expectation of positive thing
Praise and Carrots PC
HMV

ProjectHumanResourceManagement 3.Develop Project TeamT&T6.Recognition & rewards
 Leadership Theories (Summary)
Sr By Theories
1 Douglas
McGregor
Theory X and Theory Y X- Needs Supervision
Y- Committed
2 William Ouchi Theory Z When jobs were offered for life
3 Contingency Theory Y and Hygiene
4 Tannenbaum
& Schmidt
Continuum
Management Theory Level of authority vs Freedom based
on maturity
5 Paul Hersey
and Ken
Blanchard)
Situational Leadership
Theory
Depends upon situations:
Directing, Coaching, Supporting,
Delegating
MOTH CMS

ProjectHumanResourceManagement
3.Develop Project TeamT&T6.Recognition & Rewards
1. Reward Power- PM can exhibit by offering perks etc
2. Expert power – Technical Power- Has to be earned
3. Legitimate power – Formal-Position because of position
4. Referent -respect by subordinates
 Personality
 Affiliation
5. Punishment Power – Coercive or penalty- afraid [Last]
Power of Leaders
Halo Effect

Control Stakeholder Engagement
Manage
stakeholder
Engagement
Issue log
Change log, Issue log
Manage Project Team
Control communications
Change log
Perform Integrated
Change Control

ProjectHumanResourceManagement 4.Manage Project TeamT&T3.Conflict Management
Six Conflict Resolution techniques
Problem Solving/Confronting (Best approach)
Compromise/Reconcile. Searching for solutions that bring some degree of satisfaction to all parties in
order to temporarily or partially resolve the conflict. (Second best approach)
--------------------------------------------------------------------------------------------------------------------------
Withdraw/Avoid. postponing the issue to be better prepared or to be resolved by others.
-------------------------------------------------------------------------------------------------------------------------
Smooth/Accommodate. Emphasizing areas of agreement rather than areas of difference; conceding
one’s position to the needs of others to maintain harmony and relationships.
Collaborate. Incorporating multiple viewpoints; requires a cooperative attitude typically leads to
consensus and commitment.
----------------------------------------------------------------------------------------------------------------------
Force/Direct. Pushing one’s viewpoint at the expense of others; offering only win-lose solutions,
usually enforced through a power position to resolve an emergency. (worst approach)
PC
SC

Communications 1.Plan Communications ManagementT&T3. Communication Models
• Encode- Prepare to speak/convey the message
• Transmit Message.
• Decode- Understand the message
• Acknowledge.
• Feedback/Response.
Sender
Encode Transmit message Decode
Acknowledge
Feedback message
EncodeDecode
Noise
Noise
ReceiverMedium

Communications 1.Plan Communications Management T&T3. Communication Models contd…
Non verbal- About 55 % of all communications
(based on physical mannerism – body language)
Para lingual (Vocal inflection) – 38 % Pitch and tone of voice
help to convey a message
Only 7% of message consists of the actual words that you use

Knowledge Area Plans Additional Plan
Integration PROJECT MANAGEMENT
PLAN
Change management plan
Configuration Management
Plan
Scope Scope management plan Requirement management
plan
Scope baseline
(1. Project scope statement,
2. WBS, 3. WBS dictionary)
Time Schedule management plan Schedule baseline
Cost Cost management plan Cost baseline
Quality Quality management plan Process improvement plan
Human Resource HR management plan Staffing Management Plan
Communications Communication management
plan
Risk Risk management plan
Procurement Procurement management
plan
3.Control Communications InputProject Management PlanCommunications

3.Control CommunicationsCommunications
Project Documents (Other than Plan and baselines)
Change Log
Change Request
Project Charter
Resource Calenders
Work Performance data
Risk register
Project Statement of Work
Stakeholder register
Issue log
Project Schedule
Agreements etc.

Risk 1.Plan Risk ManagementInputs
• Risk categories,
• Common definitions of concepts and terms,
• Risk statement formats,
• Standard templates,
• Roles and responsibilities,
• Authority levels for decision making, and
• Lessons learned.
5. OPA

Risk 1.Plan Risk management
• Probability and Impact Matrix
A probability and impact matrix is a grid for mapping the probability
of each risk occurrence and its impact on project objectives if that risk occurs
Risk 6 Risk 9 Risk 1
Risk 4
Risk 3
Risk 7
Risk 2
Risk 5
Risk 11
Risk 8
Risk 10
Risk 12
Probability
High
Medium
Low
Low Medium High
Impact
Separate probability/impact matrix or chart for negative risks and positive risks

Risk 3.Perform Qualitative Risk Analysis2.Probability and Impact Matrix
0.90 0.27
Risk 6
0.54
Risk 9
.81
Risk 1
Risk 4
0.60 0.18
Risk 3
Risk 7
0.36
Risk 2
Risk 5
Risk 11
0.54
0.30 0.09
(watch list)
0.18
Risk 8
Risk 10
0.27
Risk 12
0.30 0.60 0.90
Probability
Impact

Risk 3.Perform Qualitative Risk AnalysisOutputs
.1 Project documents updates
Watch list
Low priority risks
Determined to be of to low priority and low impact
Watch list

Risk 2.Identify RisksT&T6.SWOT Analysis
S-Strength, W-Weakness
O-Opportunities T-Threats
S W
O T
Internal
External
Transform
Transform
M
a
t
c
h

Build or
Upgrade
Build
$ 100,000
Upgrade
$ 50,000
Success
(Opportunities)
Failure
(Threats)
Success
(Opportunities)
Failure
(Threats)
$ 50,000
-$ 90,000
$ 60,000
- $ 50,000
65%
35%
80%
20%
Risk- 4.Perform Quantitative Risk AnalysisT&T  2. Quantitative risk analysis and modeling
techniques
Decision Node Chance Node
Cost Revenue
EMV
=(0.65*50,000+0.35(-90000)
=32500-31500
=1000
EMV
=(0.8*60000+0.20(-50000)
=48000-10000
=38,000
 Higher the value, Select

Risk 5.Plan Risk ResponsesT&T
Avoid- Eliminate threat by eliminating cause
Mitigate – Reduce the probability
Transfer- Shift the impact to third party
Accept- Decides to acknowledge, but waits
1. Strategies for Negative Risk/Threats-
Exploit- To ensure it is realized, Counterpart of avoid risk
Enhance- Like mitigate, increase the probability
Share- Share with 3rd party
Accept- Same as threats
2.Strategies for Positive risks /Opportunities-
3. Contingent response strategies
Contingency plans or Fallback plans
Events that trigger the contingency response, such as missing intermediate
milestones
.1 Strategies for negative risks or threats
.2 Strategies for positive risks or opportunities
.3 Contingent response strategies
.4 Expert Judgment
ATM
Avoid
Transfer
Mitigate
SEE
• Share
• Enhance
• Exploit
Avoid
Mitigate
Transfer
Accept
Exploit
Enhance
Share
Accept

Risk 5.Plan Risk ResponsesT&T
3. Contingent response strategies
Contingency plans or Fallback plans
.Events that trigger the contingency response, such as missing intermediate
milestones
Secondary Risk: A risk that arise as a direct result of implementing a risk
response. This is a new risk
Residual risk: A risk that remains after risk response have been
implemented
.1 Strategies for negative risks or threats
.2 Strategies for positive risks or opportunities
.3 Contingent response strategies
.4 Expert Judgment
Secondary Risk
Residual Risk

Determine Budget
Estimate costs
Estimate activity
durations
Control Cost
Control Risks
Reserve Analysis

Stakeholder 1.Identify Stakeholders-T&T
1. Stakeholder Analysis –
(Power/Interest grid)
A to D are placement of Stakeholders
.1 Stakeholder analysis
.2 Expert judgment
.3 Meetings
Monitor

Code of ethics and professional conduct
Code of ethics and professional conduct
http://www.pmi.org/en/About-Us/Ethics/~/media/PDF/Ethics/ap_pmicodeofethics.ashx
2. Respect
3. Fairness
4. Honesty
1. Responsibility
58-71

- If you like this slide, please send your feedback, suggestions to
RakeshP.trg@gmail.com
Rakesh P
PMP, MBA
25 years in IT
Poses Project Management experience in India, USA and Middle East
PMP and Agile Coach
PMP Trainer since 2006 and Agile Coach since 2010.
Trained candidates from TCS, Infosys, Wipro, HCL, Dell, GE, IBM,
Oracle, PWC, mPhasis, ITC Infotech, HP, SAP, Atos, Accenture,
Phillips, CG-coreEL, Manipal Hospitals, Caterpillar, United Nations,
Healthedge Inc -USA, Convet Health-USA, California Water
Department , Saudi Railways- Telecom, CTS, Synergy, Novo, Cowen,
BAeHAL, Rambus, Bosch, ANZ, State Street, Cap Gemini, Temenos,
Quintiles etc

PMP.Essentials.150121

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