Book Details

• Full Title: The PMP Exam: How to Pass on Your First Try, Sixth Edition

• Author: Andy Crowe

• ISBN/URL: 978-0-9909074-7-3

• Reading Period: 2020.06.21–2020.08.01

• Source: Googl-ing on how to pass the PMP exam, found this book recommended in quite a few different places

General Review

• A good book focused on helping the reader pass the PMP exam by emphasizing what is important for the exam, and what approaches are favored on the exam.

  • At the same time, the book highlights areas that are actually important in actual projects—this is very valuable as PMP itself seems focused on the traditional ways of doing things.

Specific Takeaways

Chapter 4 - Integration Management

Project Charter

• Ways to select projects for execution include:

  • Benefit Cost Ratio: Positive ratio means benefits outweight costs

  • Economic Value Added: Values the project by taking into account opportunity costs (e.g., cost of capital is deducted from net profits streaming in from the project)

  • Internal Rate of Return: The project's returns expressed as an interest rate (think of it as the organization investing the capital into the project, hence the interest rate measures the growth of the capital)

  • Opportunity Cost: Cost of the other opportunities given up

  • Payback Period: How long it will take to recoup an investment

  • Present Value / Net Present Value: Discounting future income by the "time value of money"

  • Return On Investment: The excess of benefits over costs, expressed as a percentage of the cost: (benefit-cost)/cost. Note that cost is generally calculated including the whole of the capital invested.

  • Return On Invested Capital (ROIC): A measure of how well the capital is being deployed. A general formula would be: (after tax profits - cost) / capital invested. Note that the capital itself is not included in the numerator calculation; also, this figure is usually calculated on a yearly basis.

Chapter 5 - Scope Management

Create WBS

• Process Flow: Develop Project Charter -> Identify Stakeholders -> Collect Requirements -> Define Scope -> Create WBS

• When deciding whether work packages have been broken down into sufficiently small packages, ask yourself the following questions:

  • Are your work packages small enough to be estimated for time and cost?

  • Are the project manager and project team satisifed that the current level of detail provides enough information to proceed with subsequent project activities?

  • Is each work package small enough to be able to be assigned to a single person or group that can be made responsible for the results?

Chapter 6 - Schedule Management

Define Activities

• An activity is different from a work package in that work package is deliverable-based whereas activity is effort and task-based.

Sequence Activities

• A lead is one activity getting a jump-start on another. For example, if task A and task B has a finish-to-start dependency, a lead of 3 days would mean that task B can start 3 days before the finish of task A.

• A lag is when a waiting period must occur, where the project team does no work in relation to the tasks.

Estimate Activity Durations

• Process flow: Plan Schedule Management -> Define Activities -> Estimate Activities Resources (under Project Resource Management) -> Estimate Activity Durations

• PERT (Program Evaluation and Review Technique) estimation:

  • Beta Distribution:

    • Estimate = (pessimistic + 4 x realistic + optimistic) / 6

    • Standard deviation = (pessimistic - optimistic) / 6

  • Triangular Distribution:

    • Estimate = (pessimistic + realistic + optimistic) / 3

• Critical Path vs Critical Chain

  • Critical Path is the traditional approach of sequencing activities and calculating the total duration required based on the longest path (AKA the critical path). Any delay in relation to activities on the critical path will result in overal project delay. Activities not on the critical path usually have certain "float" where delays in such activities will no cause project delay.

    • Free Float: Maximum amount of delay of that particular activity that will not cause delay in the early start of any other activity.

    • Total Float: Maximum amount of delay of that particular activity that will not cause overall project delay.

  • Critical Chain is the newer approach where the estimation is resource-optimized, and an overall project buffer is added to the critical chain.

Develop Schedule

• Resource Optimization: Resource Leveling vs Resource Smoothing

  • Resource leveling is the application of resource constraints on the activity network diagram. Recall that the activity diagram sets out activity duration estimates that are unconstrained by resource availability.

  • Resource smoothing does not change the critical path or the completion date, but merely shifts activities within their float.

• Schedule Compression: Crashing vs Fast-Tracking

  • Crashing involves adding resources to a project activity so that it will be completed more quickly. Crashing almost always increases costs.

  • Fast-tracking involves re-ordering the sequence of activities so that some of the activities are performed at the same time. Fast-tracking does not necessarily increase costs, but it almost always increases risk.

• An easy way to calculate float of a particular activity is to first determine the duration of the critical path, then find all the paths that include the relevant activity and calculate the duration of each of these paths. The float of the relevant activity is the duration of the critical path minus the duration of the other path containing the activity with longest duration.

• Negative float is when an activity's start date falls after it's finish date. This usually occur because of immovable constraints or milestones imposed by external forces, resulting in an impossible situation.

  • E.g., if an activity is scheduled to finish on 4 June, but can only start on 14 June due to certain constraints, it has negative float of 10 days.

• Delphi Techinque is a method of gathering expert judgment where the participants do not know who the others are and therefore are not able to influence each other's opinion. It is designed to prevent groupthink and to find out a participant's real opinion.

• Reserve time may be added on a project basis or on an activity basis; it may also be added as a lump sum, or as a percentage.

Chapter 7 - Cost Management

Estimate Costs

• Process flow: Define Scope -> Create WBS -> Define Activities -> Estimate Activity Resources -> Estimate Activity Durations -> Develop Schedule -> Estimate Costs

• Estimates are usually made at different levels of accuracy, less accurate at project initiation, and gradually made more accurate. A general sense of what are the different levels of accuracy is as follows: "rough order of magnitude" (-25% to +75%), "preliminary estimate" (-20% to +30%), and "definitive estimate" (-5% to +10%).

Develop Budget

• The cost baseline + management reserves makes up the project's budget.

• Terms

  • TCPI: To-Complete Performance Index

• Cost Variance is Earned Value - Actual Cost

• Estimate at Completion (EAC) is the amount we expect the project to cost when it is finished, based on where we are today.

• Indirect Costs: Costs that are shared and allocated among several or all projects (e.g., manager's salary).

Chapter 8 - Quality Management

• Total Quality Management (TQM) is the idea that everyone in the company is responsible for quality and is able to make a difference in the ultimate quality of the product. TQM applies to improvements in processes and in results.

• Continuous Improvement (AKA Kaizen) stresses constant process improvement. It seeks to make an ongoing series of small changes to improve the product and the process.

• Just-In-Time (JIT) is a manufacturing method that brings inventory don to zero or near zero levels, and forces a focus on quality since there is no excess inventory to waste.

  • YJ: It is not exactly clear how this leads to a focus on quality.

• ISO 9000 is a series of standards in relation to quality management.

• In relation to standard deviation of a normally-distributed variable:

  • 68.25% will fall within 1 s.d. from the mean.

  • 95.46% will fall within 2 s.d. from the mean.

  • 99.73% will fall within 3 s.d. from the mean.

  • 99.99966% will fall within 6 s.d. from the mean.

• Attribute Sampling vs Variable Sampling

  • When measuring quality, it is possible to choose either attribute sampling or variable sampling.

    • Attribute Sampling is binary: a set of tolerances is defined, and the product passes the tolerances or fail. E.g., in a production facility making prescription drugs, if a certain batch contains an amount of undesirable component that exceeds the pre-defined number of parts per million, the batch fails the quality check.

    • Variable Sampling rates the quality on a scale. E.g., in a production facility making prescription drugs, the amount of undesirable component is measured on a continuous scaled and evaluated against the ideal amount.

• Special Causes vs Common Causes

  • Within the topic of statistical process control, there is a concept of special causes and common causes.

    • Special Causes are unusual and preventable (by process improvement), whereas common causes are normal (and generally accepted).

• Tolerances vs Control Limits

  • Tolerances represent the range within which the product is acceptable. E.g., if it is specified that the product is acceptable if its weight is between k and j grams, the range from k to j is the tolerance.

  • Control limits is a more complex concept, and are typically set at 3 standard deviations above and below the mean. As long as the results fall within the control limits, the process is considered to be in control.

  • One way to distinguish the two is that tolerances focus on whether the product is acceptable, while control limits focus on whether the process itself is acceptable.

    Plan Quality Management

• A useful flowcharting tool for quality management is the SIPOC value chain: Suppliers, Inputs, Process, Output, Customer. More specifically, it visualize the flow of suppliers and inputs through the process to create outputs to the customers.

  Manage Quality

• Design for X is a methodology where design is applied to certain select priorities. E.g.,:

  • Design for Cost (DfC): Designing with cost efficiency being the key priority.

  • Design for Assembly (DfA): Designing to prioritize for ease, accuracy, and efficiency of assembly of the components.

  • Design for Manufacturing (DfM): Design to prioritize around the best way to manufacture he product and its components.

  • Design for Logistics (DfL): Designing to prioritize sourcing componentns from the most efficient locations.

  • Design for Serviceability (DfS): Designing to prioritize optimal ease of repair and service.

• A common problem solving approach is as follows:

  • Define the Problem -> Root Cause Analysis -> Identify Possible Solutions -> Choose a Solution -> Implement the Solution -> Verify the Solution

• Quality Report is an output of the Manage Quality process.

  • YJ: Is this because quality can be considered part of the scope, and hence the quality report is part of the deliverable. And as a parallel, evaluation of the quality report (as a deliverable) under the Control Quality process is the counterpart to Control Scope / Validate Scope.

    Control Quality

• "Any time you find a part being inspected for quality, you can be sure that you are in Control Quality".

  • YJ: Does this mean that on difference between the Manage Quality process and the Control Quality process is that the former relates to the "doing" (together with the data generated alongside), and the latter relates to the "checking"?

  • YJ: Does this mean that Manage Quality is concerned more about the process, whereas Control Quality is concerned more about the product? The book seems to suggest so.

• A control chart shows the metrics per datapoint against the overall mean and +/- three standard deviations from the mean.

  • One interesting rule in relation to control charts is the rule of seven — if seven or more consecutive data points fall on one side of the mean, they should be investigated, even if the seven data points are within the control limits.

Chapter 9 - Resource Management

• Be prepared to see questions on Tuckman's Ladder, Maslow's Hierarchy, Herzberg's Hygiene Factors, and other theories.

  Plan Resource Management

• The resource management plan has three main components: identification of resources, plan for acquiring resources, and staffing roles and responsibilities.

• A resource histogram shows the resource usage for a given period of time.

  Estimate Activity Resources

• Process Flow: Create WBS -> Define Activities -> Estimate Activity Resources -> Estimate Activity Durations -> Develop Schedule.

  • This process usually goes hand-in-hand with Estimate Costs.

    Develop Team

• Tuckman's Ladder defines five levels of team performance:

  • Forming is the first stage where the team understands the project and their roles.

  • Storming is the stage where the team begins to do the work, but there is typically a good bit of conflict and difficulty. This stage may be chaotic.

  • Norming is the satge where the behavior normalizes and members begin to work as a team. In this stage, the project manager shares more leadership with the team.

  • Performing is the stage where the team is working at an efficient level that exceeds what individuals could accomplish alone. The project manager's role changes to be one of overseeing and delegating.

  • Adjourining is the stage where the project is closed and the team is released. Since individuals tend to fear change, this stage can be difficult on everyone.

• Maslow's Hierarchy of Needs defines five basic category of human motivation:

  • Physiological -> Security -> Acceptance -> Esteem -> Self-Actualization

• Expectancy Theory states that team members make choices based on expected outcomes. I.e., team members will only work hard towards a goal if they believe that goal is achievable.

• McGregor's Theory X and Theory Y states that there are two ways to categorize and understand people in the workplace:

  • Theory X: Team members are only interested in their own selfish goals. They are unmotivated, they dislike work, and they must be forced to do productive work. –> Constant supervision is necessary to achieve desired results on a project.

  • Theory Y: People are naturally motivated to do good work. –> Team members need very little external motivation and can be trusted to work toward the organization's or project's goals.

• Contingency Theory states that a leader's effectiveness is contingent upon two sets of factors: (a) whether the leader is task-oriented or relationship-oriented; and (b) how stressful the environment is.

  • In stressful times, a task-oriented leader will be more effective; in relatively calm times, a relationship-oriented leader will function more effectively.

• Herzberg's Motivation-Hygiene Theory states that the presence of certain factors does not make someone satisfied, but their absence can make someone unsatisfied. In particular, hygiene factors must be present, but they do not motivate by themselves; motivation factors will motivate, but they will not work without the hygiene factors in place.

  • Examples of motivation factors: achievement, recognition, work, responsibility, advancement, growth.

  • Examples of hygiene factors: paycheck, personal life, status, security, relationship with co-workers, company policy, supervision, good relationship with boss, working conditions.

• McCelland's Three Need Theory (AKA Achievement Theory) states that employees are motivated out of three primary needs:

  • Achievement: Team members with a high need for achievement have a need to stand out. They gravitate toward other team members with a need for achievement. High risk projeccts are not appealing to them since their individual effort may be thwarted by the risk of the project. Low risk projects may not ab appealing since individual effort may not be recognized.

  • Power: Team members with the need for power generally desire either institutional (social) power or personal power. Individuals with a desire for social power are usually more effective team members than those with a desire for personal power.

  • Affiliation: Individuals with the need for affiliation want to belong to a team. They seek to maintain good relationships and do well in customer-facing team positions.

• There are various forms of power that a project manager may have.

  • Reward Power

  • Expert Power

  • Legitimate (AKA Formal Power)

  • Referent Power

  • Punishment (AKA Coercive Power)

  • Note: The PMP exam favors reward and expert powers, and dislike punishment.

    Manage Team

• Work Performance Reports are output of the process. Recall that reports should be actionable.

• There are several ways of handling conflict:

  • Problem-Solving: Confronting the problem and resolving the root causes.

    • Note: This is highly favored by PMP exam.

    • Note 2: This is sometimes known as confrontation.

  • Collaboraton: Individuals (or teams) work together to come to a solution.

  • Compromise (AKA reconcile): Both parties sacrifice something for the sake of reaching an agreement. This might be presented on the test as "lose-lose".

  • Forcing

  • Smoothing (AKA accommodating): Play down the problem, and turns attention to what is going well. Smoothing merely tries to diminish the problem instead of solving it.

  • Withdrawal

• Types of team roles:

  • Constructive

    • Initiators

    • Information Seekers

    • Informaiton Givers

    • Encouragers

    • Clarifiers

    • Harmonizers

    • Summarizers

    • Gate Keepers

  • Destructive

    • Aggressors

    • Blockers

    • Withdrawers

    • Recognition Seekers

    • Topic Jumpers

    • Dominators

    • Devil's Advocates

• Style of leadership will generally need to change as the project progresses.

  • Directing Leadership -> Coaching Leadership -> Facilitating Leadership -> Supporting Leadership

    Control Resources

• This process is about physical resources (not human resources).

Chapter 10 - Communications Management

• The project manager need not vet through each and every communications; his role is to manage the communication process and not each and every communication.

  Plan Communications Management

  Manage Communications

  Monitor Communications

Chapter 11 - Risk Management

Plan Risk Management

Identify Risks

• Use the "five why's" technique to identify root causes: i.e., ask why consecutive for five times, and by the fifth time, the response would be near the root cause. E.g.:

  • Problem: The vehicle failed its annual emissions test.

  • Why? The check engine light was on.

  • Why? The oxygen sensor had failed.

  • Why? The fuel injectors had not been properly cleaned, resulting in an improper burn.

  • Why? The mechanic did not follow manufacturer's guidelines.

  • Why? The staff was not factory trained for maintenance.

• Consider using prompt lists to generate ideas:

  • PESTLE (political, economic, social, technological, legal, environmental)

  • TECOP (technical, environmental, commercial, operational, political)

  • VUCA (volatility, uncertainty, complexiyt, ambiguity)

Perform Qualitative Risk Analysis

Perform Quantitative Risk Analysis

Plan Risk Response

• The strategies for dealing threats (i.e., negative risks) include:

  • Escalate: I.e., bring the problem to someone else. Note: this is not a preferred approach for PMP exam.

  • Avoid: E.g., choosing to use an older but more reliable technology, instead of going for the cutting-edge stuff.

  • Mitigate: I.e., to reduce the impace.

  • Accept: Merely acknowledege the risk. Passive acceptance requires no proactive steps, active acceptance may involve setting aside contingency reserve.

• The strategies for dealing with opportunities (i.e., positive risks) include:

  • Escalate: E.g., if there is a potential technological breakthrough that impacts the whole organization and not just the project, it might be more appropriate for the opportunity to be handled at a higher level.

  • Exploit: E.g., if there is a possibility that the project work is finished early, a way to exploit it will be to direct more resources to increase such likelihood.

  • Share: I.e., collaboratig with another party to improve the chances of the opportunity.

  • Enhance: I.e., Increase the likelihood by acting on the underlying triggers.

  • Accept: (Same as for threats. See previous list.)

Implement Risk Responses

• Risk response are implemented through change requests.

Monitor Risks

Chapter 12 - Procurement Management

• Summary: The main contract types for the exam are as follows:

  • Fixed Price

    • Risk borne by Seller: since the price is fixed, cost overruns may not be passed on to the buyer and must be borned by the seller.

  • Cost Plus Fixed Price

    • Risk borne by Buyer: sicne all costs must be reimbursed to th eseller, the buyer bears the risk of cost overruns.

  • Cost Plus Incentive Fee

    • Risk borne by Buyer and Seller: The buyer bears most of the risk here, but the incentive fee for the seller motivates that seller to keep costs down.

  • Time and Material

    • Risk borne by Buyer: The buyer pays the seller for all time and materials the seller applies to the project. The buyer bears the most risk of cost overruns.

• Fixed Price Contracts (AKA Lump Sum Contracts)

  • Firm Fixed Price

    • Risk is entirely shifted to the seller.

  • Fixed Price Incentive Fee

    • The price is fixed, with an incentive fee for meeting a target specified in the contract (such as finishiing the work ahead of schedule).

    • With FPIF contracts, both parties agree to a ceiling price, and all costs above the price ceiling must be covered by the seller.

  • Fixed Price Economic Price Adjustment

    • Popular in cases where fluctuations in the exchange rate or interest rate may impact the project.

    • In a FP-EPA contract, an economic stipulation may be included to protect the seller or the buyer. The economic stipulation may be based on the interest rate, the consumer price index, cost of living adjustments, currency exchange rates, or other indices.

• Cost Reimbursable Contracts: Buyer agrees to pay the seller for actual costs plu a fee that is actually the seller's profit.

  • Cost Plus Fixed Fee (CPFF)

    • The seller passes the cost back to the buyer and receives an additional fixed fee upon completion of the project. The fee is calculated as a percentage of the planned costs.

  • Cost Plus Incentive Fee (CPIF)

    • The seller passes the cost back to the buyer and gets an incentive fee for meeting a target (usually tied back to keeping the costs low) specified in the contract.

  • Cost Plus Award Fee (CPAF)

    • The seller passes the costs back to the buyer, but the seller's profit (award fee) comes from a decision on whether or not to grant it, made subjectively by the buyer based on the seller's performance. The decision may not be appealed by the seller.

• Time and Materials Contracts: Seller charges for time plus the cost of any materials needed to complete the work.

• Point of Total Assumption (PTA)

  • Particularly relevant when using Fixed Price Incentive Fee contracts.

  • PTA is the cost point in the contract where a subcontractor assumes responsibility for all additional costs.

  • E.g.:

    Contract Type	FPIF
    Estimate	$75,000
    Buyer's target cost	$71,000
    Target price to Seller	$75,000
    Seller's ceiling price to Buyer	$84,000
    Share ratio above target cost	3:1

    This means that for every dollar over the target cost ($71,000), the buyer will pay $0.75 and the seller will pay $0.25.

    YJ: The above means that the seller's best-case profit is $4,000, when the costs incurred is $71,000, and they get paid $75,000. When the costs is $83,000, the seller still gets paid only $84,000 (being the ceiling price), and thus bear the loss of profit (because $84,000 - $83,000 is only $1,000), and also the percentage of cost (0.25 of $83,000 - $71,000).

    Plan Procurement Management

• Source Selection Analysis: the ways to select a seller includes the following:

  • Least Cost: Applicable when quality is not in question. E.g., if the component purchased must comply with an ISO standard, it may reasonably be assumed that anything that complies would suffice for the projecct.

  • Qualifications Only: Applicable when the product or service is small enough and does not warrant an elaborate procurement process.

  • Quality-Based (technical score): Sellers are ranked on quality scores.

  • Quality and Cost-Based: Sellers are ranked on quality scores and costs.

  • Sole Source: Buyer negotiates with sole seller.

  • Fixed Budget: Buyer discloses the budget to seller, and the parties negotiate on scope. Would not work well when scope changes are anticipated.

• Procurement Management Plan

  • Defines what will be procured on the project, how a seller will be selected, what types of contracts will be used, how risk will be managed, how sellers will be managed, including how their performance will be measured.

    Conducting Procurement

    Controlling Procurement

Chapter 13 - Stakeholder Management

Identify Stakeholders

• It might be useful to think about the influence that stakeholders have in terms of the directions: upwards, downwards, sidewards and/or outwards. (I.e., besides just saying that a stakeholder has high influence, also consider who that stakeholder has the high influence over.)

Plan Stakeholder Engagement

• Stakeholder engagement is often plotted on a matrix, indicating each stakeholder's current engagement level, and the desired engagement level.

  • The different engagement level may range from unaware, resistant, neutral, supportive to leading.

Manage Shareholder Engagement

• The project manager should be constantly thinking about the stakeholder's needs—how he/she might want to be involved in the project.

• The project manager should aim to align the interests of the stakeholders with project interests.

Monitor Stakeholder Engagement

Chapter 14 - How to Pass the PMP Exams

• Handling harder questions

  • Generally, on difficult questions, there might be a solution that looks correct, but are too vague or generic to be helpful.

    • E.g., the question is about how the project sponsor has requested a meeting with the project manager to discuss the CPI and SPI (both of which are slightly below 1) and also certain decisions made by the project manager and their consequencies. One of the choices may be "Evaluate why the sponsor wants to meet." While this may sound like a sensible thing to do, it doesn't really actually do anything to positively change affect the situation. The more appropriate answer might be "Explain to the sponse why he made the decisions he did."

• When guessing, think about which of the processes stage are relevant (initiating, planning, executing, monitoring and controlling, closing).

  • E.g., when asked which of the presented processes does not take organizational process assets (OPA) as input, it is useful to recall that OPA are usually used for initiating and planning activities, so if the presented processes fall within initiating or planning process group, then they are less likely to be the answer.

• Handling trick questions

  • When given a choice between a reasonable answer and an answer that confirms with PMI processes, choose the latter.

  • Avoid choosing answer that defer resolution of an issue.

  • PMI favors direct communication by project managers instead of beating about the bush / going through a third party. E.g., the project manager would communicate the bad news to customer directly, and the sooner the better.

• Formulas to memorize:

  • Earned value formulas (EV, PV, AC, CPI, CPI cumulative, SPI, CV, CS, BAC, EAC, ETC, TCPI cumulative).

  • Schedule management formulas for three-point estimates and standard deviation.

    • Beta distribution:

      • estimate = (pessimistic + (4 x realistic) + optimistic) / 6

      • standard deviation = (pessimistic - optimistic) / 6

  • Communication channels formula: num channels = num pax x (num pax - 1) / 2

  • Point of total assumption is target cost + (ceiling price - target price) / buyer's % share of cost overrun.

    Code of Ethics and Professional Conduct

• The four fundamental values are responsibility, respect, fairness, honesty.

• Each of the four values has two set of standards: aspirational and mandatory.

  • Mandatory standards generally relates to legal requirements (e.g., no bribery).

To Internalize Now

• When possible, try to think of everyday tasks as a mini-project, and "manage" it accordingly. E.g., try to identify risk, try to think about alternatives.

To Learn/Do Soon

• Check out other relevant professional certifications.

To Revisit When Necessary

Chapter 5 - Scope Management

Create WBS

• Refer to this section for an example of a WBS, a WBS dictionary, and terminologies related to the WBS / Scope Baseline.

Chapter 6 - Schedule Management

Develop Schedule

• Refer to this section for a worked example of resource leveling.

• Refer to this section for a list of terminologies (together with definitions and examples) used in relation to scheduling (e.g., discretionary dependency).

Chapter 7 - Cost Management

• Refer to this section for a list of terms and their definition, and also their equivalent and older versions that may still show up on the exam.

Other Resources Referred To

• N.A.