michael newell (amacom) - preparing pmp exams

TEAMFLY Team-Fly ® Preparing for the Project Management Professional (PMPா) Certification Exam 9618$$ $$FM 09-06-02 14:57:59 PS 9618$$ $$FM 09-06-02 14:57:59 PS This Page Intentionally Left Blank Preparing for the Project Management Professional (PMPா) Certification Exam Second Edition Michael W. Newell, PMP, ENP American Management Association New York • Atlanta • Brussels • Buenos Aires • Chicago • London • Mexico City San Francisco • Shanghai • Tokyo • Toronto • Washington, D.C. 9618$$ $$FM 09-06-02 14:58:00 PS Special discounts on bulk quantities of AMACOM books are available to corporations, professional associations, and other organizations. For details, contact Special Sales Department, AMACOM, a division of American Management Association, 1601 Broadway, New York, NY 10019. Tel.: 212-903-8316 Fax: 212-903-8083 Web site: www.amacombooks.org This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. ‘‘PMI’’ and the PMI logo are service and trademarks registered in the United States and other nations; ‘‘PMP’’ and the PMP logo are certification marks registered in the United States and other nations; ‘‘PMBOK’’, ‘‘PM Network’’, and ‘‘PMI Today’’ are trademarks registered in the United States and other nations; and ‘‘Project Management Journal’’ and ‘‘Building professionalism in project management’’ are trademarks of the Project Management Institute, Inc. Library of Congress-Cataloging-in-Publication Data Newell, Michael W., 1945– Preparing for the project management professional (PMP) certification exam / Michael W. Newell.—2nd ed. p. cm. Includes bibliographical references and index. ISBN 0-8144-7172-2 (pbk.: alk. paper) 1. Project management—Examinations, questions, etc. I. Title. HD69.P75 N49 2002 658.4Ј04Ј076—dc21 2002010223 ᭧ 2002 Michael W. Newell. All rights reserved. Printed in the United States of America. This publication may not be reproduced, stored in a retrieval system, or transmitted in whole or in part, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of AMACOM, a division of American Management Association, 1601 Broadway, New York, NY 10019. Printing number 10987654321 9618$$ $$FM 09-06-02 14:58:00 PS This book is dedicated to my wife, Saralee, who corrects my spelling and puts up with all my foolishness. 9618$$ $$FM 09-06-02 14:58:01 PS 9618$$ $$FM 09-06-02 14:58:01 PS This Page Intentionally Left Blank Contents Preface xv Introduction 1 What Is Project Management Anyway? 2 Advantages of Project Management 6 Organizing for Project Management 7 The Projectized Organization 7 The Traditional Organization 9 The Matrix Organization 10 The Project Office 12 How the Project Manager Makes Projects Successful 13 The Project Life Cycle 14 Project Processes 14 Summary 15 1. Scope Management 16 Initiation of the Project 17 Project Charter 17 Constraints and Assumptions 18 Who Are Those Stakeholders? 18 Cost and Its Relationship to Price 19 Overbid or Underbid: Which Is Better for Your Company? 20 Getting to the Scope Baseline 23 Work Breakdown Structure 25 Systems Approach to Work Breakdown Structure 28 Additional Project Breakdown Structures 30 Change Management 30 Project Justifications 31 The Break Even Chart 32 Problems with Break Even Charts 33 Average Rate of Return on Investment 34 Present Value of Money 34 Internal Rate of Return on Investment 39 Summary 44 vii 9618$$ CNTS 09-06-02 14:58:10 PS viii Contents 2. Time Management 46 Activity Definition 46 Activity Sequencing 47 Activity on Arrow Diagramming 48 Precedence Diagramming Method (PDM) 49 Logical Relationships 50 Finish-Start Relationship (FS) 50 Start-Start Relationship (SS) 52 Finish-Finish Relationship (FF) 53 Start-Finish Relationship (SF) 53 Leads and Lags 54 Diagramming Relationships 55 Project Start and Project Finish Events 55 Logical Precedence Diagram 56 Activity Durations 56 Building the Network Diagram 57 Buffering the Schedule 63 Reverse Resource Allocation Scheduling 67 Critical Path Method (CPM) 67 Program Evaluation and Review Technique (PERT) 68 Monte Carlo Simulation 73 The Simulation 74 Output from the Monte Carlo Simulation 75 Summary 75 3. Cost Management 77 Why We Need Cost Management 77 Project Life Cycle and Project Cost 78 Using the Work Breakdown Structure 78 Cost Estimating 79 Types of Estimates 80 Top Down Estimates 80 Bottom Up Estimates 80 Analogous Estimates 80 Parametric Estimates 81 Definitive Estimates 81 Cost Budgeting 83 9618$$ CNTS 09-06-02 14:58:11 PS ixContents Cost Control 85 Earned Value Reporting 85 Cumulative Reporting 85 Earned Value Parameters 86 Difficulties in Data Collection 87 Reporting Work Complete 89 Examples 89 Calculated Values for Earned Value Reports 90 Financial Measures 94 Return on Sales 97 Return on Assets 98 Economic Value Added 99 Depreciation 100 Straight Line Depreciation 100 Accelerated Depreciation 101 Sum of the Years’ Digits 101 Double Declining Balances 102 Summary 102 4. Human Resources Management 104 Project Manager Roles and Responsibilities 104 Strong Matrix, Weak Matrix, and Balanced Matrix 106 Strong Matrix 106 Weak Matrix 106 Balanced Matrix 108 Making Matrix Management Work 109 Personnel and Personal Evaluations 109 Motivation 110 Importance of Motivation 110 Industrial Revolution 110 Scientific Management 111 Learning Curve Theory 111 Depression Era 112 World War II 112 Post–World War II 112 Motivational Ideas 112 Procedures versus Motivation 113 Expectancy Theory 113 Maslow’s Hierarchy of Needs Theory 115 Hertzberg’s Motivation/Hygiene Theory 117 9618$$ CNTS 09-06-02 14:58:11 PS [...]... Project Management Professional certification and that you will embark on a long and prosperous career in project management I would appreciate your comments My e-mail address is: Mnewell@PSMconsult.com Preparing for the Project Management Professional (PMP ) Certification Exam This Page Intentionally Left Blank INTRODUCTION P roject management is quickly becoming the method of management for more and more... management profession In 2001 PMI received ISO 9001 recognition for its PMP certification program from the International Organization for Standardization (ISO) This indicates that PMI’s program for certifying individuals as PMPs meets the highest international quality standards Ac- See copyright page for full registration information 1 2 Preparing for the Project Management Professional Certification Exam... 1989 they boasted of having about five thousand members and a thousand Project Management Professionals (PMPs) Since 1989 the organization has experienced fantastic growth This year, 2002, as we enter a new century and a new millennium, PMI’s membership is ninety thousand, and the number of PMPs is thirty-seven thousand These numbers represent a growth greater than even PMI had anticipated Of course, all... Internet site at http://www.pmi.org/ certification/ This book is intended to cover the subject matter of the PMP exam Since the PMP exam is a comprehensive examination of your knowledge of project management tools and techniques, the book is also comprehensive Every answer to every question on the PMP examination is not in this book Nor is it in any other book PMI is constantly changing the examination... 213 214 214 215 216 10 What Is the PMP Exam Like? 218 Domain 1: Initiating the Project Domain 2: Planning the Project 219 220 xiv Contents Domain 3: Executing the Project Domain 4: Controlling the Project Domain 5: Closing the Project Domain 6: Professional Responsibility Types of Questions on the Exam Taking the Exam Use of Practice Questions The Application for PMP Certification The Education Qualification... the last three years but not more than past the last six years There is a criterion for people not holding a xv xvi Preparing for the Project Management Professional Certification Exam bachelor’s degree as well This requires more experience hours, 7,500, but allows them to be over a five-year period and not exceeding eight years In addition, as of the end of March 2002, there is a new requirement of 35... design group and perhaps some day be manager of a department Things changed and the company decided that it would like to diversify into some other businesses One of them involved a super lightweight vehi- 10 Preparing for the Project Management Professional Certification Exam cle This vehicle required the design of a disk brake assembly of the lightest weight possible For Sally this meant that she would... is very powerful is called a strong matrix organization If the balance of power is toward the functional managers, we end up with the traditional organization, only now we have a group of project man- 12 Preparing for the Project Management Professional Certification Exam AM FL Y agers as well Sooner or later someone will realize that the functional managers are assigning and monitoring all the work... businesses with this book, and we hope to encourage and help project managers learn more about the Guide to the Project Management Body of Knowledge (PMBOK௡) and pass the Project Management Professional (PMP ) examination If the professional organization for project managers, the Project Management Institute (PMI௡), has been instrumental in promoting project management, we should be able to get some idea... 228 229 230 230 Practice Questions 233 Practice Questions Answer Key 317 Appendix: Probability Distributions 375 Glossary 383 Bibliography 403 Index 405 PREFACE T his book has been written to help those preparing for the Project Management Professional Examination It is intended to cover all of the material that the Project Management Institute (PMI௡) considers important enough to be included in the exam . Inc. Library of Congress-Cataloging-in-Publication Data Newell, Michael W., 1945– Preparing for the project management professional (PMP) certification exam / Michael W. Newell. —2nd ed. p. cm. Includes. Team-Fly ® Preparing for the Project Management Professional (PMP ) Certification Exam 9618$$ $$FM 0 9-0 6-0 2 14:57:59 PS 9618$$ $$FM 0 9-0 6-0 2 14:57:59 PS This Page Intentionally Left Blank Preparing for. comments. My e-mail address is: Mnewell@PSMconsult.com. 9618$$ FRWD 0 9-0 6-0 2 14:58:18 PS Preparing for the Project Management Professional (PMP ) Certification Exam 9618$$ HFTL 0 9-0 6-0 2 14:58:26