Everything You Must Know

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As promised, this section covers all of the information you must know going into the exam. It's highly recommended that you create a method to recall this information. Here goes.

The 39 Project Management Processes

Table A-1 shows the 39 project management processes. The intersection of the Knowledge Area and each stage (Initiating, Planning, Executing, Controlling, and Closing) describes the activity that happens at that point in the project. For example, follow the Project Scope Management row and the Controlling column to find Scope verification and change control. -

Table A-1: The 39 Project Management Processes

Knowledge Area	Initiating	Planning	Executing	Controlling	Closing
Project Integration Management		Developing the project plan.	Project Plan Execution	Integrated Change Control
Project Scope Management	Project Initiation	Creating and defining the project scope.		Scope verification and change control
Project Time Management		Defining activities, their sequence and their estimated duration. Developing the project schedule.		Schedule control
Project Cost Management		Determining the required resources, their estimated costs, and completing cost budgeting.		Enforcing cost control.
Project Quality Management		Planning for quality.	Adhering to the performing organization's quality assurance requirements.	Enforcing quality control on the project.
Project Human Resources Management		Completing organizational planning and staff acquisition	Ensuring team development.
Project Communications Management		Creating the Communications Management Plan.	Distributing the required information to the appropriate parties.	Reporting on project performance.	Completing administrative closure.
Project Risk Management		Completing risk management planning, risk identification, qualitative and quantitative risk analysis, and risk responses.		Monitoring and controlling risk.
Project Procurement Management		Completing the procurement and solicitation planning.	Soliciting vendors to participate on the project. Completing source selection based on defined criterion, and then following-through with contract administration.		Completing the contract closeout.

Magic PMP Formulas

The following shows the major formulas you should know for the exam:

Earned Value Management Formulas

The following shows the EVM formulas you should know for the exam:

Quick PMP Facts

This section has some quick facts you should be know at a glance. Hold on, this moves pretty fast.

Organizational Structures

Organizational structures are relevant to the project manager's authority. A project manager has authority from weakest to highest in the following order:

• Functional

• Weak matrix

• Balanced matrix

• Strong matrix

• Projectized

WBS Facts

The Work Breakdown Structure is the big picture of the project deliverables: it is not the activities that will create the project, but the components the project will create. The WBS helps the project team and the project manager create accurate cost and time estimates. The WBS also helps the project team and the project manager create an accurate activity list. The WBS is an input to five planning processes:

• Cost estimating

• Cost budgeting

• Resource planning

• Risk management planning

• Activity definition

Project Scope Facts

Projects are temporary endeavors to create a unique product. Projects are selected by one of two methods:

• Benefit measurement methods These include scoring models, cost-benefit ratios, and economic models.

• Constrained optimization These include mathematical models based on linear, integer, and dynamic programming. (This probably won't be on the PMP exam as a viable answer.)

The project scope defines all of the required work, and only the required work, to complete the project. Scope management is the process of ensuring that the project work is within scope and protecting the project from scope creep. The scope statement is the baseline for all future project decisions, as it justifies the business need of the project. There are two types of scope:

• Product scope Defines the attributes of the product or service the project is creating

• Project scope Defines the required work of the project to create the product

Scope verification is the process completed at the end of each phase and of each project to confirm that the project has met the requirements. It leads to formal acceptance of the project deliverable.

Project Time Facts

Time can be a project constraint. Effective time management is the scheduling and sequencing of activities in the best order to ensure that the project completes successfully and in a reasonable amount of time. These are some key terms for time management:

• Lag Waiting between activities

• Lead Activities come closer together and even overlap

• Free float The amount of time an activity can be delayed without delaying the next scheduled activity's start date

• Total float The amount of time an activity can be delayed without delaying the project's finish date

• Float Sometimes called slack-a perfectly acceptable synonym

• Duration May be abbreviated as 'du'. For example, du=8d means the duration is eight days.

There are three types of dependencies between activities:

• Mandatory This hard logic requires a specific sequence between activities.

• Discretionary This soft logic prefers a sequence between activities.

• External Due to conditions outside of the project, such as those created by vendors, the sequence must happen in a given order.

Project Cost Facts

There are several methods of providing project estimates:

• Bottom-up Project costs start at zero and each component in the WBS is estimated for costs and then the 'grand total' is calculated. This is the longest method to complete, but provides the most accurate estimate.

• Analogous Project costs are based on a similar project. This is a form of expert judgment, but it is also a top-down estimating approach so it less accurate than a bottom-up estimate.

• Parametric Modeling Price is based on cost per unit; examples include cost per metric ton, cost per yard, cost per hour.

There are four types of costs attributed to a project:

• Variable costs The costs are dependent on other variables. For example, the cost of a food-catered event depends on how many people register to attend the event.

• Fixed costs The cost remains constant throughout the project. For example, a rented piece of equipment has the same fee each month even if it is used more in some months than others.

• Direct costs The cost is directly attributed to an individual project and cannot be shared with other projects (for example, airfare to attend project meetings, hotel expenses, and leased equipment that is used only on the current project).

• Indirect costs These are the cost of doing business; examples include rent, phone, and utilities.

Quality Management Facts

The cost of quality is the money spent investing in training; in meeting requirements for safety and other laws and regulations; and in taking steps to ensure quality acceptance. The cost of nonconformance is the cost associated with rework, downtime, lost sales, and waste of materials.

Some common quality management charts and methods include the following:

• Ishikawa diagrams (are also called fishbone diagrams) are used to find cause-and-effects that contribute to a problem.

• Flow charts show the relationship between components and the flow of a process through a system.

• Pareto diagrams identify project problems and their frequencies. These are based on the 80/20 Rule: 80 percent of project problems stem from 20 percent of the work.

• Control charts plot out the result of samplings to determine if projects are 'in control' or 'out of control.'

• Kaizen technologies comprise approaches to make small improvements in an effort to reduce costs and achieve consistency.

• Just-in-time ordering reduces the cost of inventory but requires additional quality because materials would not be readily available if mistakes occur.

Human Resource Facts

There are several human resource theories the PMP candidate should be familiar with on the PMP Exam. They are the following:

• Maslow's Hierarchy of Needs There are five layers of needs for all humans: physiological, safety, social needs (such as love and friendship), self-esteem, and the crowning jewel, self-actualization.

• Herzberg's Theory of Motivation There are two catalysts for workers: hygiene agents and motivating agents.

  • Hygiene agents These do nothing to motivate, but their absence demotivates workers. Hygiene agents are the expectations all workers have: job security, a paycheck, clean and safe working conditions, a sense of belonging, civil working relationships, and other basic attributes associated with employment.

  • Motivating agents These are the elements that motivate people to excel. They include responsibility, appreciation of work, recognition, opportunity to excel, education, and other opportunities associated with work other than just financial rewards.

• McGregory's Theory of X and Y This theory states 'X' people are lazy, don't want to work, and need to be micromanaged. 'Y' people are self-led, motivated, and can accomplish things on their own.

• Ouchi's Theory Z This theory holds that the workers are motivated by a sense of commitment, opportunity, and advancement. Workers will work if they are challenged and motivated. Think participative management.

• Expectancy Theory People will behave based on what they expect as a result of their behavior. In other words, people will work in relation to the expected reward of the work.

Communication Facts

Communicating is the most important skill for the project manager. With that in mind, here are some key facts on communications:

• Communication channels formula: N(N-1)/2. N represents the number of stakeholders. For example, if you have 10 stakeholders the formula would read 10(10-1)/2 for 45 communication channels. Pay special attention to questions wanting to know how many additional communication channels you have based on added stakeholders. For example, if you have 25 stakeholders on your project and have recently added 5 team members, how many additional communication channels do you now have? You'll have to calculate the original number of communication channels, 25(25-1)/2=300; then calculate the new number with the added team members, 30(30-1)/2=435; and finally, subtract the difference between the two: 435-300=135, the number of additional communication channels.

• 55 percent of communication is nonverbal.

• Effective listening is the ability to watch the speaker's body language, interpret paralingual clues, and decipher facial expressions. Following the message, effective listening has the listener asking questions to achieve clarity and offering feedback.

• Active listening requires receivers of the message to offer clues, such as nodding the head to indicate they are listening. It also requires receivers to repeat the message, ask questions, and continue the discussion if clarification is needed.

• Communication can be hindered by trendy phrases, jargon, and extremely pessimistic comments. In addition, other communication barriers include noise, hostility, cultural differences, and technical interruptions.

Risk Management Facts

Risks are unplanned events that can have positive or negative effects on the projects. Most risks are seen as threats to the project success-but not all risks are bad. For example, there is a 20 percent probability that the project will realize a discount in shipping, which will save the project $15,000. If this risk happens the project will save money, if the risk doesn't happen the project will have to spend the $15,000. Risks should be identified as early as possible in the planning process. A person's willingness to accept risk is the Utility Function (also called the Utility Theory). The Delphi Technique can be used to build consensus on project risks.

The only output of the risk planning is the Risk Management Plan. There are two broad types of risks:

• Business risk The loss of time and finances (where a downside and upside exist).

• Pure risk The loss of life, injury, and theft (where only a downside exists).

Risks can be responded to in one of four methods:

• Avoidance Avoid the risk by planning a different technique to remove the risk from the project.

• Mitigation Reduce the probability or impact of the risk.

• Acceptance The risk's probability or impact may be small enough that the risk can be accepted.

• Transference The risk is not eliminated but the responsibility and ownership of the risk is transferred to another party (for example, through inurance).

Procurement Facts

A Statement of Work (SOW) is provided to the potential sellers so they can create accurate bids, quotes, and proposals for the buyer. A bidders' conference may be held so sellers can query the buyer on the product or service to be procured.

A contract is a formal agreement, preferably written, between a buyer and seller. On the PMP exam, procurement questions are usually from the buyer's point of view. All requirements the seller is to complete should be clearly written in the contract. Requirements of both parties must be met, or legal proceedings may follow. Contract types include the following:

• Cost-reimbursable contracts require the buyer to assume the risk of cost overruns.

• Fixed-price contracts require the seller to assume the risk of cost overruns.

• Time-and-material contracts are good for smaller assignments but can impose cost overrun risks to the buyer if the contract between the buyer and seller does not include a 'not to exceed clause.' This clause, commonly called an NTE clause, puts a cap on the maximum amount for the contract time and materials.

• A purchase order is a unilateral form of contract.

• A letter of intent is not a contract, but shows the intent of the buyer to purchase from a specific seller.

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