Project Selection Method Key Terms - Opportunity and Sunk Cost

Opportunity Cost is:

• The opportunity given up by selecting one project over another.
  

Sunk Cost is:

• Non-recoverable project spent on the existing or last project. This is not related to bad debt as bad debt is over budget).

Project Selection Methods Key Terms - Depreciation

For Depreciation, it means that large assets (eg equipment) purchased by the company lose value over a period of time. In accounting terms, there are:

• Straight Line Depreciation
  The same amount of depreciation is taken each year.
  
  
• Accelerate Depreciation
  Depreciates faster than straight-line (eg Double declining Balance).
  
  

Project Selection Methods Key Terms - Benefit Cost Ratio

For Benefit Cost Ratio, it relates to the project cost and to determine what work should be done. In general,

• if the value is > 1, it means the benefits are greater than the cost.
• if the value is < style="font-weight: bold;">costs are greater than the benefits.
• if the value is = 1, it means the costs and benefits are the same.

Project Selection Methods Key Terms - Payback Period

In PMP, the term "Payback Period" means:

• The time period it takes to recover your investment in the project before the company starts to accumulate profit.
  

Present & Net Present Value

What are Present Value and Net-Present Value (in terms on PMI PMP)?

Present Value is:

• future value of the money in the today's terms.
• Formula: PV = FV / (1+r)ⁿ
  (where PV = Present Value, FV = Future Value, r = interest rate, n = number of period)

Net Present Value is:

• the present value of the otal benefits (income or revenue)
• allowed for a comparison of many projects and to select the best to initiate
  

Project Measurement

Benefit Measurement Methods that are comparative approaches which include:

• Scoring models
• Peer review
• Economic models

Mathematical models (Constrained Optimisation) that use:

• Linear programming
• Dynamic programming
• Integer programming
• multi-objective programming
  

Project Selection Method

In PMP, Project Selection Method is any systematic approaches used to analyse the value of a proposed project. The evaluation may be formal or informal.

• Feasibility analysis may be conducted using a formal study or an informal brainstorming session. It may also be used to compare alternative solutions to select the one that is the best fit for the organization.
• Cost-Benefit analysis compares the predicted costs and benefits of a project.
  

Configuration Management System

In PMP, all change systems should integrate with Change Control System. On the other hand, all project related matter should be stored into Configuration Management Systems.

The following areas should be integrated into Change Control System:

• Scope
• Cost
• Schedule
  
• Contract
• Risk
• Manage Team
• Manage Stakeholder
• Quality

New Version of PMP Credentials Handbook

The PMI has recently released a new version of the PMP Credentials Handbook. The new handbook simply contains more detailed information about the exam. You may want to find the latest version in the link below:

http://www.pmi.org/PDF/PDC_ PMPHandbook.pdf

Common Project Estimation Techniques

In PMP, the common project estimation techniques include:

Analogous Estimation (Top-down)

• Pros
  Can ensure no work is inadvertently omitted from work estimate
• Cons
  Can sometimes be difficult for lower-level managers to apportion cost estimates.

Bottom-up Estimation

• Pros
  Is very accurate and gives lower-level managers more responsibility.
• Cons
  May be very time consuming and can only be used after the work breakdown structure (WBS) has been well defined.

Parametric Estimation

• Pros
  Using parametric model is not time consuming.
• Cons
  May be inaccurate depending on the integrity of the historical information used.

Responsibilities of Project Management Office (PMO)

In PMP, the role and responsibilities of Project Management Office (PMO) includes:

• Manage the interdependence between projects
• Help provide resources including software, tools, templates, policies, etc
• Help gather lessons learned and make them available to other projects
• Terminate projects
• Involves more heavily during project initiation than later in the project.

Revised PMP Credential Examination Test Knowledge Areas - for PMP Exam Preparation

I have recently received the following information on the revised PMP credential examination test knowledge areas and I have enclosed the new figures below (please click on the picture to enlarge the picture). You may want to review how this may affect your preparation for your test.

Who recognizes the PMP certification?

Major companies and government agencies worldwide recognize the PMP certification. Several Fortune 1000 companies demand that all of their employees or subcontractors that are engaged in project management activities should be PMPs. In other words, the PMP certification has become a market differentiator; companies that do not have PMP certification programs are at a competitive disadvantage.

Some of the major companies that support project management certification include AT&T, Bell South, Bell Core, Bell Atlantic, US West, Motorola, GSK, Novartis, Citibank, HSBC, IBM, EDS, HP, ABB, Pacer International, Barclays, Microsoft, BBC, NCR, Eurotel, Shell, BP, and many others. Government agencies supporting PMP certification include the U.S. Defense Systems Management College, the U.S. Department of Energy, and Canada’s Department of National Defense.

PMP Examination Preparation Tips

I have received a mail from PMP-Preparation goole group on tips to take the PMP exam. I found that it is a very good article and I would like to share this with you. For more information, please refer to PMP-Preparation Group at the link below:

http://groups.google.com/group/PMP-Preparation



Tips on taking the PMP exam

The PMP certification examination is a computer-based exam that is offered at PMI locations in the United States, Canada, and in other countries worldwide.The exam is based on information from the entire project management body of knowledge. The “Guide to the Project Management Body of Knowledge” (PMBOK), which is published by PMI, provides an outline of the topics covered.

Because the exam is computer based, participants can find out how they scored by reading the detailed report on performance that is available when the exam is completed.

Questions on the PMP exam are grouped by project management processes.The basic PMP exam is not industry specific. The PMI Certificate of Added Qualification (CAQ), which tests your knowledge of a particular industry, can be added to certify your expertise in Information Technology Project Management, Establishing a Project Management Office, and Project Management in the Automotive Industry.Tips for taking the PMP examPassing the PMP exam requires extensive preparation. Use the following tips and techniques as part of that preparation, which should also include developing a comprehensive understanding of the PMBOK concepts and terminology, practicing previous exam questions when possible, and attending a few project management-training courses.


Question-oriented tips

• There are certain questions that contain extra information. This information is irrelevant and it does not relate to the correct answer. Beware of such questions and remember it isn't necessary to use all the information provided to answer the question.
• Each question has only one correct answer. You need to select the most appropriate answer. Beware of choices that represent true statements but are not relevant. Be sure to read all the options before you select any one.
• You need to answer the questions from a PMI perspective—not from your own perspective, which you acquired through experience. Remember that PMI is trying to present an ideal environment for project managers that might be different from your own experience.
• Beware of answer choices that represent generalizations, which may be characterized by words such as always, never, must, or completely; these are often the incorrect choices.
• Look out for choices that represent special cases. These choices tend to be correct and are characterized by words such as often, sometimes, may, generally, and perhaps.
• The correct answer may not be grammatically correct.

PMI concept-oriented tips

• The project manager takes an active approach to the job by not waiting until a risk materializes and becomes a problem. This is an extremely important concept that might affect many questions on an exam. The project manager does not escalate problems to upper management or to the customer before fully analyzing them and identifying options. When answering a question related to what the project manager should do in a specific situation, you should rephrase the question to: What is the first thing the project manager will do given such a situation and given his or her proactive nature?
• Assume that lessons learned and historical databases are available. This might not be true in a real life situation.
• PMI does not approve adding extra functionality without benefits or gold plating.
• Project managers have all kinds of soft and hard skills.
• The Work Breakdown Structures (WBSs) are wonderful tools.
• Roles and responsibilities need to be properly defined.
  
  

General tips

• You should memorize all formulas, especially the Earned Value and PERT.
• Practice eliminating the completely implausible options first.
• There is no penalty for guessing; thus, do not leave any question blank.
• There will always be those situations where you have no idea what the question is asking.
• Use educated guessing to select the most appropriate option. Remember, you have only 80 seconds for each question. If you do not know the answer of a question, mark it and move on and revisit it later if you have time.
• Answer the questions based on the PMBOK concepts first, then consider your experience. If they are in conflict, the PMBOK wins.

Project Management Process

In a project, it includes the following processes:

• Initiating Process
  
  Involve defining the need for the project and obtain a commitment to proceed.
  


• Planning Process
  
  Use to develop a strategy for how to accomplish the work in a project.
  


• Executing Process
  
  Involve carry out the strategy for the project.
  


• Controlling or Monitoring the Process
  
  Check and measure the required progress in the project. This also includes any corrective actions needed to get back on track.
  


• Closing Process
  
  Involve handing off the project, gain formal acceptance and perform administrative and contractual closure.

Project Management Balance Contraints

The balance constraints include:

• Customer satisfaction
• Cost
• Time
• Risk
• Scope
• Quality

These constraints are set by priority and impact of changes involved directly or indirectly.

Furthermore, it is to note that a change to anyone of the constraints, the overall project should be evaluated to ensure that other constraints are not affected.

Organizational Structure Pop Quiz for PMP Exam

1. In a weak matrix, the majority of the project authority is held by:
A. Functional Manager
B. Team Member
C. Project Manager
D. Technical Manager


2. Project team member are most likely to work full-time on a project in which of the following organizational structures?
A. Functional
B. Weak Matrix
C. Strong Matrix
D. Projectized


3. Tim is the project manager of the XXX project. His organization is a classic functional environment. His level of authority as a project manager can be best described as:
A. Low
B. Moderate
C. Balanced
D. High


4. Complex projects involving cross-disciplinary efforts are most effective managed by:
A. Multiple lead project manager
B. A function organization
C. A strong matrix organization
D. A strong traditional manager

(To see the answers, highlight this whole topic by right click on the mouse and drag down. If you are not able to do this, please leave me a comment.)

Answers:
1. A
2. D
3. A
4. C