Numericals
Topic
Formula
RoI  ARR
PV 
Benefit-Cost
Analysis;
Project
Selection
criteria
FV
(1 r ) N
N
NPV  
i 0
CFi
(1  r ) i
IRR
𝐵𝐶𝑅 =
Time
Management
I
𝑃𝑉 𝑜𝑓 𝐵𝑒𝑛𝑒𝑓𝑖𝑡𝑠
𝑃𝑉 𝑜𝑓 𝐶𝑜𝑠𝑡𝑠
Total Float = LS – ES
= LF – EF
𝜇 = (𝑂 + 4𝑀 + 𝑃)/6
σ = (P – O)/6
Earned Value
Management
Channels of
communication
Risk
Management
CV = EV – AC
SV = EV – PV
CPI = EV/AC
SPI = EV/PV
𝐵𝐴𝐶 − 𝐸𝑉
𝐸𝐴𝐶 = 𝐴𝐶 +
𝐶𝑃𝐼𝑒𝑠𝑡
VAC = BAC – EAC
(𝐵𝐴𝐶 − 𝐸𝑉)
𝑇𝐶𝑃𝐼 =
(𝑇𝑎𝑟𝑔𝑒𝑡 − 𝐴𝐶)
𝐶 =𝑛∗
(𝑛 + 1)
2
𝐸𝑀𝑉 = ∑(𝑃 ∗ 𝐼)𝑖
Description
RoI = Return on Investment
ARR = Average Rate of Return
I = Initial Investment
PV = Present Value
FV = Future Value
R = Rate of discounting
N = Number of years
NPV = Net Present Value
CFi = Cash flow for year I
r = Rate of discounting
N = Number of years
IRR = Internal rate of return; Rate of discount at which
the Present Value of benefits = Present Value of costs;
i.e. In the NPV formula; treat “r” as a variable and
equate NPV to zero
BCR = Benefit/Cost Ratio
LS = Latest Start Time; LF = Latest Finish Time
ES = Earliest Start Time; EF = Earliest Finish Time
μ = Expected time
σ = Standard deviation
O = Optimistic Time estimate
P = Pessimistic Time estimate
M = Most likely Time estimate
CV = Cost Variance; SV = Schedule Variance
CPI = Cost Performance Index; SPI = Schedule
Performance Index
EV = Earned Value; PV = Planned Value; AC = Actual Cost
EAC = Estimate at Complete; BAC = Budget at Complete
ETC = Estimate to Complete
CPIest = Estimated CPI for the remaining period
VAC = Variance at Completion
TCPI = To-complete cost performance index ; to manage
overall spent to Target
C = Number of channels of communication
N = Number of team members
EMV = Expected Monetary Value
P = Probability of event i
I = Impact of event i
Definitions/Concepts
Term
Project
Program
Portfolios
Stakeholder
Payback
period
Opportunity
cost
Configuration
management
systems
Product
scope
Project scope
Control
account
Work
package
Rolling wave
planning
Leads and
Lags
Critical path
Crashing
Fast tracking
Resource
optimization
Depreciation
Quality
Grade
Cost of
quality
RACI
Definition
Temporary endeavor undertaken to create a unique product, service or result
A group of projects managed in a coordinated way to obtain benefits or control not
available from managing them individually
A collection of projects, programs, sub-portfolios and operations managed as a group
to achieve strategic objectives
An individual, group or organization who may affect, be affected by or perceive itself
to be affected by a decision, activity or outcome of a project
Number of time periods it takes to recover the initial investment
The value of the opportunity that was available but had to be given up in order to
pursue another opportunity
A set of procedures used to apply technical and administrative direction and
surveillance to identify and document the functional and physical characteristics of a
product, service or a result component
Features and functions that characterize a product
The work that must be done to deliver a product, service or result with the specified
features and functions
The level of work at which the management wishes to exercise control
A unit of work or deliverable at the leaf node of a work package
An iterative planning technique in which the work to be accomplished in the near
term is planned in greater detail while the work to be done in the future is planned at
a higher level
A successor activity is said to have a lead when it can start in advance of the
predecessor; it is said to have a lag when it has to wait for a certain period after the
predecessor
Longest path from start to finish in a project network diagram; All activities on the
critical path have zero float
Achieving reduction in time taken by increasing the cost
Achieving reduction in time taken by increasing the work being done in parallel
Applying optimization techniques to achieve the desired level of utilization of
resources
An accounting practice or entry that takes into consideration the reduction in the
value of an asset over time
The degree to which a set of inherent characteristics fulfills requirements
A category assigned to deliverables having the same functional use but different
technical characteristics
All the costs incurred over the life of a product to ensure that it conforms to the
requirements
A common type of responsibility assignment matrix that uses responsible,
accountable, consult and inform statuses to define the involvement of stakeholders
Risk
Contract
Cost
reimbursable
contract
Fixed price
contract
An uncertain event or condition that, if it occurs can have a positive or negative effect
on a project’s objectives
A mutually binding agreement that obligates the seller to provide the specified
products or services or results and the buyer to provide the monetary or other
valuable consideration
A form of contract that requires the buyer to pay the seller for all the costs incurred,
plus a fee representing the seller’s profit
A form of contract that sets the fee to be paid for a defined scope of work regardless
of the cost of effort to deliver it
Mind-Maps
Knowledge areas of project management
Scope
Time
HR
Integration
Quality
Cost Risk
Procure
ment
Stakeho
lder
Communic
ation
Process groups of project management
Initiating
Processes
Planning
Processes
Controlling
Processes
Executing
Processes
Closing
Processes
Influence of organizational structure on projects
Organisation Type
Project Characteristics
Matrix
Functional Weak Matrix Balanced Matrix Strong Matrix Projectized
Little or
Project Manager's Authority
None
Percent of Performing
Organization's Personnel
Assigned Full Time to
Project Work
Project Manager's Role
Common Titles for Project
Manager's Role
Project Management
Administrative staff
Virtually
None
Part-time
Project
Coordinat
or /
Project
Leader
Limited
Moderate to
Low or Moderate
Hogh
High to
almost
total
0-25%
15-60%
50-95%
85-100%
Part-time
Full-time
Full-time
Full-time
Project
Manager /
Program
Manager
Project
Manager /
Program
Manager
Full-time
Full-time
Project
Coordinator Project Manager
/ Project
/ Project officer
Leader
Part-time Part-time
Part-time
Change management steps:
•
Determine that a change is “necessary” or has occurred
•
Evaluate the impact of the change
•
Come up with alternatives
•
Discuss internally
•
Discuss externally
Group creativity techniques:
•
Brainstorming
•
Nominal group technique
•
Idea/Mind mapping
•
Affinity diagram
•
Multi-criteria decision analysis
Group decision making techniques:
• Unanimity
•
Majority
•
Plurality
•
Dictatorship
Time management concepts:
• Relationship types
o Finish to Start
o Start to Start
o Finish to Finish
o Start to Finish
• Dependency types
o Internal vs. External
o Mandatory vs. Discretionary
• Network diagramming techniques
o PDM or AON: Activities on the node; arrows indicate relationships
o ADM or AOA: Activities on arrows; direction indicates relationships
• Types of estimation
o Top-down
 Expert
 Analogous
 Parametric
o Bottom up or detailed
• Critical chain method: Including logical and resource dependencies simultaneously to produce a
critical path
•
•
•
Properties of normal distributions
o 68% observations between 1 std deviation of the mean
o 95% observations between 2 std deviation of the mean
o 99.73% observations between 3 std deviation of the mean
o 99.999966% observations between 6 std deviation of the mean
Float or Slack: The amount of time that an activity can be delayed without delaying the project
Schedule compression techniques
o Crashing: Increasing cost to save time
o Fast tracking: Performing activities in parallel to save time
Quality management concepts:
• Marginal quality (optimal quality) is reached when the cost of achieving additional quality is
matched by the additional revenue it fetches
• Philosophies for quality management:
o Total quality management (TQM): Integrated management philosophy
o Kaizen: Small improvements to make things better
o Deming cycle: PDCA (Plan-Do-Check-Act)
o Kanban: A pull based system for management of inventory that operates on JIT (just-intime) principles
• Quality Assurance
o Is ongoing during execution
o Focuses on the process
o Audits, reviews, etc.
• Quality Control
o Inspects specific results or deliverables
o Focuses on the product or results
o Testing, Inspection, etc.
• Cost of quality = Cost of conformance + Cost of non-conformance
o Cost of conformance = Prevention costs (Training, Documentation, etc.) + Appraisal
costs (Testing, etc.)
o Cost of non-conformance = Internal failure costs (Rework, scrap, etc.) + External failure
costs (Warranty, recall, etc.)
• 7-basic quality tools
o Control charts: Observe variation in a process to make sure it is in control
o Cause and effect (or Ishikawa or Fish-bone) diagram: For root cause analysis
o Flowcharting: Visualizing the flow in a process
o Histogram: To assess frequency for a certain category
o Pareto diagram: Based on 80-20 rule; used for prioritization
o Scatter diagram: To assess the correlation between two variables
o Checksheets: To organize data for inspection or presentation
HR management concepts:
• Stages of team formation: Forming, Storming, Norming, Performing and Adjourning
• Sources of conflict: Resources, Scheduling, Personality
• Conflict resolution techniques:
o Withdraw/Avoid
o Smooth/Accommodate
o Compromise/Reconcile
o Force/Direct
o Collaborate/Problem solve
• Forms of authority for the manager: Formal, Expert, Reward, Penalty, Referent
• Maslow’s hierarchy: Physiological, Safety, Social, Esteem, Self Actualization
• Herzberg’s theory: Hygiene factors, Motivating agents
• Mcgregor’s theory: X theory (people want to avoid work) and Y theory (people are self
motivated)
• Leadership styles: Autocratic/Authoritarian, Participative/Democratic, Delegative/Laissez Faire
• McKinsey’s 7-S: Hard elements – Strategy, Structure, Systems; Soft elements: Shared values,
Skills, Style, Staff
Risk management concepts:
• Contingency reserves are for known unknowns, management reserves for unknown unknowns
• Strategies for responding to pure risks or threats:
o Avoid
o Transfer
o Mitigate
o Accept
• Strategies for responding to positive risks or opportunities:
o Exploit
o Share
o Enhance
o Accept
Procurement management concepts:
• Contract types:
o Cost reimbursable: Buyer pays all costs plus a profit
 Cost risk lies with the buyer
 Used when the scope and duration is uncertain
o Time and Material: Buyer pays at a certain rate
 Seller doesn’t have to worry about scope – buyer is in control
 Used for small assignments or to get started or staff augmentation
o Fixed price: Buyer pays a fixed fee
 Cost risk lies with the seller
 Used when the scope is well known and stable
Data flows in project management
Project
Initiator
Project
SoW
Business
Case
Agreeme
Initiatin
nts
g
Enterpri
se or
Organizational
Process
Assets
Enterprise
Environmental
Procurement
Factors
documents
Plannin
g
Project Charter
Stakeholder register
Stakeholder
management strategy
o
Custom
er
Require
ments
Project
Docume
Teamin
g
Agreem
ents
Final
Product
,
Service
Seller
or
Propo
Result
sals
Executi
ng
Resour
ce
Calend Management
Project
ars
Plan
Make or buy decisions
Approved
Source selection
change requests
criteria
Quality control
measurements
Monitoring and Controlling Process
Group
Performance
reports
Sellers
Contr
act
Awar
d
Closing
Process
Accepted
Deliverables
Procurement
documentation
Deliverables
Change requests
Work performance
information
Selected Sellers